(BCN) Bacanora Minerals

07 August 2018

Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources



Bacanora Lithium plc ("Bacanora" or the "Company")

Quarterly Sonora Lithium Project Update



Bacanora Lithium plc (AIM: BCN), the London listed lithium exploration and development company, is pleased to provide an update on its activities at the Sonora Lithium Project in Mexico ("Sonora" or the "Project") where work to develop an initial 17,500 tonnes per annum ("tpa") lithium carbonate ("Li2CO3") operation is ongoing. Sonora has the potential to become a major supplier to fast growing lithium industries. With low first quartile operating costs estimated, the Project can remain a profitable producer of Li2CO3 in a wide range of market conditions.



The Company will be hosting a shareholder conference call at 3 pm UK time on 13 August 2018. The call will be hosted by CEO Peter Secker, who will discuss the recent financing announcements, along with an update on the Sonora Lithium Project.



Project Development

· The Front End Engineering Design ("FEED") for the Li2CO3 processing facility is currently scheduled to be completed in H2 2018 and the ongoing design scope includes the following critical areas:

o Pre-concentrator

o Roaster/Kiln

o Crystallisers/Evaporators

o IX and packaging

o Energy supply contracts

o Infrastructure and access

· The Company continues to build its Owners Management Team to work with and manage the FEED engineering groups

o The Company now has over 50 employees based in Hermosillo working on the FEED and being trained in the pilot plant

· The pilot plant continues to produce samples of battery grade Li2CO3 for distribution to potential end customers in Asia in addition to the ongoing metallurgical flow sheet optimisation work and other testwork

o Significant effort is being placed on training local personnel in all operational aspects of lithium process plant operations

· Modified environmental site permits ("MIA") were granted in May 2018 allowing the location for the Li2CO3 plant to be optimised for future production

· Once the FEED has been completed and all designs, cost estimates and process guarantee scopes are in place, orders for long lead items can be placed and earthworks can commence, subject to funding being in place. Subject to completion of funding discussions and FEED, the Stage 1 project commissioning target at Sonora is likely to be in H2 2020.



Financing

The recent US$150 million senior debt facility secured with RK Mine Finance and the US$65 million and US$25 million conditional equity commitments from the State General Reserve Fund of Oman ("SGRF"), and Bacanora's off-take partner, Hanwa Co., LTD ("Hanwa") for project development, provide independent endorsements of Sonora's strategic importance. To date US$240 million or 52% of the US$460 million required for Stage 1 production of 17,500 tpa of Li2CO3 at Sonora has been conditionally committed to the project development in the form of the above debt and equity funding. However, in mid-July the Company elected not to proceed with its proposed new equity placing due to current volatility in global commodities markets. The Company continues to work closely with existing shareholders and potential new investors to secure the remaining equity funds required to construct the Stage 1 operation at Sonora.



Lithium Market Update

During the quarter, reports from Goldman Sachs indicated that investor concerns about a wave of supply of the electric car battery material from new mines are unfounded, that it will be harder to develop new lithium mines than most people think, and that demand for lithium could rise fourfold by 2025 due to rising sales of electric cars.



Global lithium contract prices remain in the US$15-16,000/t range. The lithium spot market in China continued to correct to around US$20,000/t as stock levels were down by 2.7% during the month of July 2018. At current lithium contract prices, the Sonora lithium project continues to show very strong operating cash margins with contract pricing at US$15,000/t and feasibility operating costs of US$4,000/t.



SGRF strategic investment

SGRF's investment will comprise of a US$65 million equity investment, conditional on the Company securing the construction funding. In addition to the equity stake, Bacanora has entered into a Strategic Investment Agreement and Off-take Agreement with SGRF. The key terms of both agreements are:


· An off-take option to purchase up to 10,000 tpa of lithium carbonate produced at Sonora predominantly during Stage 2 for a period of 10 years; and

· SGRF will have the right to appoint a non-executive director to the Board


SGRF is a sovereign wealth fund of the Sultanate of Oman. It was established in 1980 by Royal Decree 1/80 with the objective of achieving long term sustainable returns on revenues generated from oil and gas that are surplus to the Sultanate's budgetary requirements. On behalf of the Sultanate of Oman, SGRF manages the reserves placed in its care to achieve the best possible long term returns with acceptable risks, through investing in a diversified portfolio of asset classes in more than 25 countries worldwide.



US$150 million RK Facility

In July 2018, the Company drew down the first US$25 million of the RK debt facility. The Company's cash balance as at 30 June 2018 amounted to US$13 million, excluding the first tranche drawn down from the RK debt facility. The Facility is structured as two separate Eurobonds to be listed in Jersey:


· Main bond: US$150 million nominal amount secured notes issued at a purchase price of US$138 million with a 6-year term and bearing an interest rate of three months LIBOR +8% per annum based on a nominal amount of US$150 million but payable only on drawn down principal. Interest will be capitalised every three months for the first 24 months and thereafter interest will be paid every three months in cash;

· Second bond: US$56 million nominal amount zero interest-bearing secured notes issued at a purchase price of US$12 million with a 20-year term. The nominal amount is repayable by reference to monthly production of lithium at a rate of US$160 per tonne of lithium produced, with any remaining amount repayable at the end of the 20-year term; and

· Grant of 6 million warrants exercisable over five years at a 20% premium to the 20-day VWAP, subject to normal anti-dilution provisions, cash settlement at the Company's option, and cashless exercise at either party's option.


The Facility may be drawn in three tranches of US$25 million, US$50 million and US$75 million, subject to certain Conditions Precedents, including: various matters in respect of the execution, registration and perfection of certain security and the granting of listing consent by The International Stock Exchange; a minimum equity raise of US$200 million, with energy and engineering contracts executed; and, the first and second issuance of Notes to have been listed. All drawdowns under the RK Facility will be pro-rata across the two eurobond instruments and the first drawdown has already taken place.


Bacanora CEO Peter Secker said: "Process plant design and preparatory work at the Sonora Project site continues to progress so that once the total funding package required to build an initial 17,500 tonnes lithium carbonate operation is in place, we will be able to immediately embark on an 18 month construction phase. Realising the potential of Sonora is our priority. If the ambitious targets for electric vehicle and renewable energy uptake that have been set by governments and manufacturers across the world are to be met, new large scalable deposits that can deploy conventional processing techniques to produce battery grade lithium carbonate will need to come on stream to satisfy demand. With a US$1.253 billion NPV based on a flat price of US$11,000/t for battery grade Li2CO3 over Life of Mine ("LOM"), a significant discount to the current Li2CO3 price range of US$16,000 - 20,000/t*, and LOM operating costs of US$3,910/t Li2CO3, the fundamentals of the Sonora Project remain strong and I look forward to providing further updates on our progress."



Conference Call

To participate in the conference call to be held at 3:00 pm UK time on Monday 13 August 2018, please dial 0808 109 0701, (if you are calling from outside of the UK, please dial +44 (0) 20 3003 2701) and enter participant pin 4558345# when prompted to do so. Please note that all lines will be muted with the exception of Company's management, however the Company invites shareholders to submit questions to its public relations adviser, St Brides Partners Ltd, ahead of the call via email. Questions should be sent to shareholderenquiries@stbridespartners.co.uk and should be submitted by 5:00 pm UK time on Friday 10 August 2018.


If you have any problems accessing the call, please contact St Brides Partners Ltd on shareholderenquiries@stbridespartners.co.uk or call +44 (0) 20 7236 1177.

(* https://seekingalpha.com/article/4189890-lithium-miners-news-month-july-2018)

 

Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources

2 October 2018

Bacanora Lithium plc ("Bacanora" or the "Company")

Annual Report and Update on Holding in Company


Bacanora Lithium plc (AIM: BCN), the London listed lithium exploration and development company, announces that the Company's audited final results for the 12 months ended 30 June 2018 will be released later this month and will include a full update to shareholders on progress at its Sonora lithium project in Mexico.

In addition, the Company provides the results of a recently commissioned external report into the beneficial holders of its Ordinary Shares pursuant to S116 of the UK Companies Act 2006. The following table sets out the results of the analysis of the significant beneficial holders of the Company's Ordinary Shares as at 11 September 2018.

 

09 October 2018

Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources


Bacanora Lithium plc ("Bacanora" or the "Company")

NI-43-101 lithium resource estimate at Zinnwald Project, Germany


Bacanora Lithium plc (AIM: BCN), the London listed lithium company, is pleased to announce NI 43-101 compliant Measured + Indicated resources of 124,974 tonnes of contained lithium ('Li') at its 50% owned Zinnwald lithium project ('Zinnwald' or 'the Project') in southern Saxony, Germany, representing a 30% increase from the previous PERC resource estimate of 96,200 tonnes. The total resource estimate for the Project (Measure + Indicated + Inferred) is 142,240 tonnes of contained Li. The mineral resource estimate forms part of the Feasibility Study ('FS') for a high value lithium product operation at Zinnwald that will supply the fast-growing European battery and automotive sectors. The FS remains on course to be completed in Q2 2019.


Peter Secker, CEO of Bacanora, commented, "The NI 43-101 compliant resource upgrade to 142,240 tonnes confirms Zinnwald's status as one of the most advanced lithium projects in Europe. With a strategic location in the heart of the important German battery and automotive sectors, Zinnwald is ideally situated to become a major supplier of high-value lithium products to Europe's rapidly emerging electric vehicle and energy storage industries. We are keen to realise Zinnwald's potential and, with this in mind, we are looking forward to the completion of the FS in Q2 2019.

"Meanwhile work continues at our lithium project in Sonora, Mexico where a FS confirmed the highly attractive economics and industry-leading low-cost profile of a Stage 1 17,500tpa battery grade lithium carbonate operation. Here, we are in advanced discussions with several potential partners both at the corporate and project level to secure, on attractive terms, the remaining funds that are required to commence the 18-month construction phase. With Zinnwald targeting key European markets and Sonora, the large and important Asian market, Bacanora is on track to become the international lithium production company we set out to build."

 

15 October 2018

Bacanora Lithium Plc / Index: AIM / Epic: BCN / Sector: Natural Resources



Bacanora Lithium Plc ("Bacanora" or the "Company")

Final Audited Accounts for the year ended 30 June 2018

Bacanora Lithium Plc (AIM: BCN), the London listed lithium exploration and development company, is pleased to provide its audited final results for the 12 months ended 30 June 2018.



Highlights - for the year ending 30 June 2018 and post balance sheet events


Sonora Lithium Project, Mexico ('Sonora' or 'the Sonora Lithium Project')

· Completed a Feasibility Study ("FS") which demonstrated strong economics of a 35,000 tpa lithium carbonate operation at Sonora:

o US$1.25 billion NPV based on lithium carbonate prices of US$11,000/t

o 26.1% IRR

o US$3,910/t lithium carbonate life of mine ('LOM') gross operating costs which are comparable to those of the low-cost brine producers of South America

· Post period end, US$150 million senior debt facility secured with RK Mine Finance, a leading provider of finance for resources companies, to finance the development of Sonora

· Post period end, US$65 million and US$25 million conditional equity commitments from the State General Reserve Fund of Oman ("SGRF"), and Bacanora's offtake partner, Hanwa Co., LTD ("Hanwa"), as part of the Sonora project financing package

· Unrestricted access to develop and operate Sonora for the initial LOM secured following acquisition of La Ventana and La Joya parcels of land in Sonora for US$2.9 million - final consideration settled in August 2018


Zinnwald Lithium Project, Germany ('Zinnwald')

· Ongoing work for a Feasibility Study into a high value lithium product operation at Zinnwald on track for completion in Q2 2019

· NI 43-101 compliant upgraded measured and indicated resource of 124,974 tonnes of contained lithium for Zinnwald issued in September 2018

· Exploration licence awarded covering 295 hectares of the previously mined Falkenhain lithium deposit 5km from Zinnwald in Germany - potential to increase the LOM of Zinnwald



Corporate

· Successful completion of the redomicile of the Company's jurisdiction from Canada to the UK on 23 March 2018, resulting in Bacanora Lithium Plc, which is solely quoted on AIM, becoming the Parent Company for the Bacanora Group

· The Company strengthened its Board and Senior Management Team with the addition of two new Directors, Peter Secker (CEO) and Eileen Carr (NED), and a new CFO, Janet Boyce


Peter Secker, CEO, of Bacanora Lithium, commented: "2019, the year Volvo will electrify all new models launched. 2025, the year Volkswagen is targeting 25% of vehicle sales will be electric. 2030, the year when Denmark will outlaw the sale of new petrol and diesel cars, with hybrids following in 2035. 2040, the year when all new vehicles sold in France and the UK will have to produce zero emissions. These are just a few of the many ambitious EV targets that have been set by governments and corporations around the world. With each EV battery requiring 25-50kg of lithium, new sources of lithium will need to come on stream for these targets to be met. Our own Sonora lithium project in Mexico is one of the most advanced projects currently in the pipeline but, if forecasts that demand for lithium could rise to more than 450,000 tonnes per annum by 2025 from today's 250,000 level prove to be correct, much more production will be needed.


In our view, the long-term prospects for lithium carbonate prices remain strong. However, prices rarely increase in a straight line, so occupying a position on the industry cost curve that is well below those projects that operate close to or at the marginal cost of production is key. Sonora will sit in the lowest quartile for operating cost, marking it a stand-out proposition. Blue-chip institutions of the calibre of RK, SGRF and Hanwa have recognised this and have offered us development capital on attractive terms. Advanced discussions are ongoing with other potential funders, both at the corporate and project levels. We are confident that the outstanding funds will be secured which will enable us to move into the construction phase at Sonora. With this in mind, I look forward to providing further updates on our progress, as we focus on realising Sonora's potential and in the process closing the huge disconnect that has opened up between the Company's market capitalisation and our flagship project's US$1.25 billion valuation."



Chairman's Statement

I am pleased to announce our final results for 2018 which outlines another significant year in the development of Bacanora.



Many accomplishments have been achieved this financial year that have enabled Bacanora to be poised to move into the development phase of the Sonora Lithium Project. Our objective is to construct a 35,000 tonnes per annum battery grade lithium carbonate operation at our flagship project in Sonora, Mexico, and become a leading supplier to fast-growing industries such as electric vehicles and energy storage. Central to this was the completion of a feasibility study in December 2017, which not only confirmed our long-held view that Sonora has the potential to be a significant lithium mine, but also to be among the lowest cost producers of lithium carbonate. In addition to a US$1.25 billion pre-tax NPV at 8% discount based on an US$11,000 per tonne lithium carbonate price and an IRR of 26.1%, the FS estimates LOM costs at US$3,910 per tonne, placing Sonora in the lowest quartile of the industry cost curve.



Sonora now has a large Measured plus Indicated Mineral Resource estimate of over 5 million tonnes ("Mt") of lithium carbonate equivalent ("LCE"), an additional Inferred Mineral Resource of 3.7 Mt of LCE and will benefit from being a low stripping ratio open pit mining operation but, in our view, it is the low-cost profile which is the major differentiator between Sonora and its peers. Being among the lowest cost producers is critical, not just in terms of value generation and profitability, but also because it safeguards the project against price volatility. Global commodity markets are, by their nature, volatile and the market for high value lithium products is no exception.



To combat price volatility, occupying a position on the industry cost curve well below those projects that operate close to or at the marginal cost of production is key. Being a soft rock deposit, Sonora benefits from having low operating costs similar to the brine producers in South America. At the other end of the scale, hard rock deposits are among the highest cost producers, partly due to the need for drilling, blasting, crushing and grinding. Unlike the brine deposits however, Sonora's processing route does not rely on a multi-year evaporation process. Instead a simple and proven processing route is planned at the Sonora plant which will take just five to seven days to process ore into lithium carbonate, a timescale that matches production rates of the higher cost hard rock deposits. We are confident that Sonora can match the hard rock producers' short timeframes thanks to our pilot plant at Hermosillo, which has been producing >99.5% battery grade LCE for the last three years. Sonora therefore benefits from having low costs similar to the brine deposits, and short production timelines similar to the hard rock producers. It is this unique combination which underpins our confidence that Sonora is set to become a major supplier of lithium carbonate for many years to come.



We are not the only ones who hold this view. Following the issue of the FS, we immediately embarked on an exercise to raise the US$460 million required to build and commission Stage One production of 17,500 tpa of battery grade lithium carbonate at Sonora. Post period end on 2 July 2018, we announced a US$150 million senior debt facility with RK Mine Finance, a leading specialist in the provision of senior debt capital to mining companies. Compared to other companies' debt packages secured for greenfield lithium projects in Canada and Australia this year, the terms of the RK debt facility are highly competitive; a further testament to Sonora's world class credentials.



In addition, a further vote of confidence was the conditional strategic investments totalling US$90 million from the State General Reserve Fund of Oman, the sovereign wealth fund of the Sultanate of Oman, and from our existing offtake partner and strategic investor, Hanwa Co., LTD, which we also announced in July 2018. The US$90 million is comprised of US$65 million from SGRF and US$25 million from Hanwa. In addition, SGRF has signed a conditional agreement to become an offtake partner for the Stage 2 lithium carbonate production.



The conditional strategic investments of US$90 million with the US$150 million from RK Mine Finance, mean that over half of the required funding has been secured. We had hoped to build on this further via a US$100 million placing post period end, but volatility in global commodity markets led us to elect not to proceed. This means first production at Sonora will now be delayed until late in 2020 rather than Q1 2020, subject to finalising the equity financing strategy in early 2019. We remain in discussions with several parties with regards to securing the remainder of the finance package, both at the corporate and project level.



Over the past 5 years the Company has developed a strong working relationship across all levels of the Sonora government, culminating in the official ground-breaking ceremony held with Governor Hon. Claudia Pavlovich in April 2018. Sonora has an extensive and vibrant mining industry, highly skilled workforce and excellent infrastructure. A large number of international companies, such as Ford Motor Co, Grupo Mexico, Rolls-Royce and LG are based in Sonora State as a result of strong government support and comparably low incidences of crime relative to its neighbouring states and Mexico as a whole.



Elsewhere in our portfolio, post year end in September 2018, an updated resource statement was issued for our 50% owned Zinnwald project in Germany which complies with NI 43-101. This comprises an increased total Measured and Indicated Resource estimate of 124,974 tonnes of contained lithium ("Li") at a cut-off grade of 2,500 ppm. The Feasibility Study to prove economic viability of the project continued throughout the year and remains on track for completion in Q2 2019. This is focused on developing a strategy to produce higher value downstream, lithium products from the Zinnwald concentrates for the European battery and automotive sectors. Lying in the heart of Germany's industrial region on a granite hosted Sn/W/Li belt that has historically produced tin, tungsten and lithium, Zinnwald has an excellent geographical location. Together with the award of an exploration licence covering 295 hectares of the previously mined Falkenhain lithium deposit 5km from Zinnwald, we have an excellent strategic position with which to target Europe's fast-growing markets for lithium.



At the corporate level, the redomicile of the Company's jurisdiction from Canada to the UK was successfully completed. The listing of shares on the Toronto Stock Exchange have been cancelled and only the listing on AIM remains. The share capital structure of Bacanora Lithium is substantially identical to that of Bacanora Minerals, as are the rights attached to the Bacanora Lithium ordinary shares compared to those of Bacanora Minerals common shares. In all other respects, as at the date of redomicile, the Group remained unchanged as a result of the redomicile, which was undertaken for the management of the Company to be closer to the majority of its shareholders, raise the Company's profile among European investors and the international mining sector, as well as to remove duplicate costs associated with maintaining a dual listing.



A number of changes were also made to the Board and management team during the year. Peter Secker, CEO of the Company, joined the Board in April 2018. Meanwhile Ms Janet Boyce was appointed as Chief Financial Officer in February 2018, replacing Derek Batorowski, who stepped down as CFO to pursue other business interests. Ms Boyce is a Certified Public Accountant who has held a number of senior executive roles in the resource sector. Derek, a founding director of Bacanora, remains a Non-Executive Director of the Company. In addition, Ms Eileen Carr, a Chartered Certified Accountant with over 25 years' experience in the resource sector, was appointed as a Non-Executive Director.



In terms of outlook, most industry observers agree that new sources of battery grade lithium products will need to come on stream if ambitious uptake and production targets for electric vehicles set by governments and corporations have any chance of being met. Not all lithium deposits/operations are created equal however. As the FS showed, thanks to highly attractive economics, with operating costs estimated to be among the lowest in the industry, and a large, high grade and scalable resource, Sonora stands out from other lithium projects currently at the development stage.



We are continuing to work hard to secure the final piece of the finance package, complete the Front End Engineering Design ("FEED") and ensure all designs, cost estimates and process guarantee scopes are in place, so that we can embark on the 18-month construction phase at the earliest opportunity.



I would like to thank Peter Secker, CEO, for his leadership and for the progress that the Company has made under his direction. Through his leadership and help of the management team, the Company has delivered on prefeasibility and feasibility studies on the Sonora project, attracted two major offtake partners and conditionally secured US$90 million in funding from them and raised US$150 million in debt financing. He has the full support of the whole board. We believe that Bacanora has the potential to become a major player in the global lithium market and that Peter is the right person to deliver our ambitious growth plans.



I would like to thank each and every employee, the management teams, the State of Sonora and our partners for their skills, hard work and dedication, and to congratulate them on what has been a landmark year for the Company.



I look forward to providing further updates on our progress, as we focus on realising Sonora's potential to become a major supplier to rapidly-growing industries such as electric vehicles and in the process generating significant value for our shareholders.


Mark Hohnen, Chairman

12 October 2018

https://m.londonstockexchange.com/exchange/mobile/news/detail/13827901.html

 

26 October

Bacanora Lithium plc ("Bacanora" or the "Company")

Quarterly Project and Corporate Update


Bacanora Lithium plc (AIM: BCN), the London quoted lithium exploration and development company, is pleased to provide an update on its activities at its two lithium projects in Sonora, Mexico ("Sonora") and at Zinnwald, Germany ("Zinnwald"). This update is in line with the Company's strategy to communicate its progress to shareholders, as it delivers on its objective to build an international lithium production company with a portfolio of projects supplying the fast-growing electric vehicle and renewable energy markets of Asia and Europe.



Sonora, Mexico

Front End Engineering Design ("FEED") for an initial 17,500 tonnes per annum ("tpa") lithium carbonate ("Li2CO3")processing facility

· Outstanding milestones recently completed as part of the ongoing FEED include:

o Engineering mass balances and designs for kiln and crystallisers components received - enabling the final quotes for EPC design and agreement to be actioned

o Preliminary site earthworks completed resulting in downward revisions to expected overall bulk earthworks costs - due to the recently acquired plant location at Las Perdices being considerably flatter than original proposed site

o New road design for site access completed - enabling construction work to commence

o Site visits by proposed energy suppliers - final energy supply proposals expected

· FEED on course to be completed by year end 2018



Financing

· Ongoing site visits by potential strategic investors, at both the corporate and project levels, to secure outstanding development capital for Sonora

· To date US$240 million or 52% of the US$460 million required for Stage 1 production of 17,500 tpa of Li2CO3 at Sonora has been conditionally committed as follows:

o US$150 million senior debt facility secured with RK Mine Finance

o US$65 million conditional equity commitment from the State General Reserve Fund of Oman ("SGRF")

o US$25 million conditional equity commitment from Bacanora's off-take partner, Hanwa Co., LTD ("Hanwa")



Subject to completion of funding discussions and FEED, the Stage 1 project commissioning target at Sonora expected to be in H2 2020.



Zinnwald, Germany

Ongoing Feasibility Study ('FS') for the production of higher value downstream, lithium products for the European battery and automotive sectors

· Initial lithium fluoride ('LiF') samples produced from Zinnwald concentrates as part of FS provides

o proof of concept of strategy to produce high value lithium products at Zinnwald

o Initial sample quality in excess of 99% purity - indicative of its potential to be battery grade

o Samples to be distributed to potential end users for evaluation test work

· Completion of resource upgrade at Zinnwald to 142,240 tonnes of contained Li (NI43 101, Measured + Indicated + Inferred)

· Completing reserve estimate, detailed mine design and production scheduling

· Flow sheet engineering, mass balance and preliminary process design work underway

· Negotiations for selection of LiF plant site location are ongoing

· EIA approved in 2018

· FS remains on track for completion in Q2 2019


Bacanora CEO Peter Secker said: "The production of initial lithium fluoride samples from concentrates at Zinnwald represents another key milestone and closely follows the recent resource upgrade at the project to 142,240 tonnes of contained Li in the Measured, Indicated and Inferred categories. Located in the heart of Germany's industrial region on a granite hosted belt that has historically produced lithium, Zinnwald's potential to play a strategically important role in Europe's rapidly emerging battery technology sector has always been clear to us. We are therefore highly encouraged that the results of various workstreams of the ongoing FS are only serving to strengthen our conviction and with this in mind, we are looking forward to the completion of the study in Q2 2019.

"The progress being made at Zinnwald, together with the US$1.25 billion valuation assigned by the December 2017 FS to our Sonora project in Mexico, highlight the huge disconnect that has opened up between Bacanora's current US$55million market capitalisation and the underlying fundamental value of our lithium assets. The valuation anomaly is arguably far wider than the figures suggest when full account is taken of Bacanora's status as one of the few pure play and publicly traded developers of what is a critical battery technology metal. With advanced discussions ongoing with potential funders, both at the corporate and project level, for the outstanding finance required to commence the construction phase of an initial 17,500 lithium carbonate operation at Sonora, and excellent progress being made at Zinnwald, we are confident this valuation anomaly will soon begin to close."



Lithium Market Update

In September 2018, Sociedad Química y Minera de Chile ('SQM') reported average lithium carbonate equivalent contract prices in Q2 2018 were "slightly higher" than the Q1 figure of US$16,400/MT (https://seekingalpha.com/article/4207908-lithium-miners-news-month-september-2018).


US$16,400/ MT compares favourably to the US$11,000/t lithium carbonate pricing assumed in the Feasibility Study for Sonora which assigned a pre-tax NPV8 of US$1.25 billion, an IRR of 26.1%, and estimated LOM costs at US$3,910/t. With low first quartile operating costs estimated, the Project can remain a profitable producer of Li2CO3 in a wide range of market conditions.



Finance

The cash balance as at the end of 30 September 2018 amounted to US$24.7 million.



Corporate

In relation to the resolution of the ongoing dispute over the validity of the 3% gross over-riding royalty purportedly held by the Estate of Colin Orr-Ewing (the "Estate") over certain of the Company's lithium assets in Sonora, Mexico, the Company continues to work towards a resolution by mediation, rather than a protracted court process. The parties are in discussion in relation to agreeing a timeline and process to mediate in early 2019. As part of that process, the Company will continue with its requests for additional documentation to substantiate the Estate's defence and counterclaims, on the basis that the Estate has not yet met all requirements for disclosure. The Company continues to reserve its rights to pursue claims against the Estate and its advisers. The Company will continue to provide further updates on the progress of the dispute to the market as and when it is appropriate to do so, and in accordance with regulatory requirements.

 

RNS

https://www.investegate.co.uk/bacan...citigroup-global-markets/201811270700255524I/

 

27 November 2018

Bacanora Lithium plc ("Bacanora" or the "Company")

Appointment of Citigroup Global Markets


Bacanora Lithium plc (AIM: BCN), the London traded lithium exploration and development company, is pleased to announce the appointment of Citigroup Global Markets Limited ("Citi") to lead the equity financing of the Sonora project alongside Canaccord Genuity, both of whom shall also act as joint corporate brokers.


Bacanora's assets include a project located in Sonora State, Mexico ('Sonora' or the 'Project') where the Company is focused on developing a potential 35,000 tpa battery-grade lithium (Li2CO3) mine and processing plant. In December 2017, Bacanora announced a Feasibility Study ("FS") which confirmed the positive economics and favourable operating costs of the Project. The FS estimated a pre-tax project Net Present Value of US$1.253 Billion, an Internal Rate of Return of 26.2%, and Life Of Mine operating costs of US$3,910/t Li2CO3, which places Sonora among the lowest cost producers of battery-grade lithium. The Company's Board of Directors believes that Sonora is ideally placed to become a major supplier of battery-grade Li2CO3 to fast-growing industries such as electric vehicles and energy storage.


To date, the Company has announced equity and debt funding commitments totalling US$240m, which represents 52% of the US$460m required for Stage 1 production of 17,500 tpa of Li2CO3 at Sonora (the "Construction Funding"). These include a US$150m senior debt facility with RK Mine Finance, one of the leading specialist mining lenders, and conditional strategic investments from the State General Reserve Fund of Oman("SGRF"), the sovereign wealth fund of the Sultanate of Oman, and from Bacanora's off-take partner, Hanwa, for a combined total of US$90m.


Bacanora intends to complete the Construction Funding in the first quarter of 2019. Following a successful financing of the Sonora project, Bacanora will consider seeking a Premium Listing on the Main Market of the London Stock Exchange.


Bacanora CEO Peter Secker said: "To have corporate brokers of the calibre of Citigroup Global Markets and Canaccord Genuity is testament to the quality of our project at Sonora. We have long believed that Sonora has the credentials to become a major low-cost supplier of battery grade lithium to rapidly emerging industries such as electric vehicles for many years to come. With this in mind, we look forward to working with both Citi and Canaccord to secure the outstanding funds that are required to commence construction of the plant, either at the Project or the Company level, and in the process seek to increase value for shareholders."

 

Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources

11 December 2018

Bacanora Lithium plc ("Bacanora" or the "Company")

Response to Speculation


Bacanora Lithium plc (AIM: BCN), the London traded lithium company, notes speculation arising from a Webinar held by Cadence Minerals PLC, a significant shareholder in Bacanora, on 10 December 2018. The Company would like to reiterate that Cadence Minerals PLC is not an insider to Bacanora and neither it nor any other shareholder is in possession of any inside information regarding a potential equity raise or any other funding matters.

 

RNS X 2

https://www.investegate.co.uk/bacan...ns/holding-s--in-company/201812130700053167K/

https://www.investegate.co.uk/bacanora-lithium-plc--bcn-/rns/agm-statement/201812130700043605K/

 

13 December 2018

Bacanora Lithium plc ("Bacanora" or the "Company")

AGM Statement


Bacanora Lithium plc (AIM: BCN), the London traded lithium company, is holding its Annual General Meeting ('AGM') later today. At the meeting, Mark Hohnen, Chairman of Bacanora, will make the following statement:


"2018 has been a transformational year for our Company, with a number of milestone achievements being met, including the completion of the Feasibility Study ('FS') for our Sonora lithium project in Mexico ('Sonora'); finalisation of the debt financing for Sonora; significant equity investment commitments from SGRF, the sovereign wealth fund of the Sultanate of Oman, and Hanwa, our offtake partner; the appointment of Citigroup as our financial advisor and broker; and ongoing progress with the FS for the Zinnwald Project in Germany ('Zinnwald').


"As well as running through the economics of a 35,000 tpa lithium carbonate ('Li2CO3') operation at Sonora - US$1.25 billionpre-tax Net Present Value ("NPV"), 26.1% Internal rate of return ("IRR"), and Life of Mine ("LOM") costs of ~US$4,000 per tonne of Li2CO3 - our final results on 15 October 2018 referred to forecasts that demand for lithium could rise to more than 450,000 tpa by 2025 from today's 250,000 level. Less than two months later, those forecasts are now on the conservative side. Thanks to growing industries, such as electric vehicles and energy storage, both key consumers of the critical technology metal, forecasts are now more than twice that number. Currently, for instance, UBS is forecasting demand will hit 900,000 tpa by end of 2025, whilst Seeking Alpha believe demand could be more like 1.3mtpa by 2025*. It is numbers like these, particularly when one considers approximately 250,000t of lithium are expected to be produced in 2018***, that lie behind our firm belief that Bacanora is in the right commodity at the right time.


"Leading Chilean producer Sociedad Quimica y Minera de Chile ('SQM') reported average LCE contract prices in Q2 2018 were higher than Q1's US$16,400/MT**. If substantial new sources of supply fail to come on stream, further strengthening in LCE contract prices can be expected. This is particularly important as demonstrated by Albemarle Corp's recent postponement, due to regulatory scrutiny, of its expansion plans in Chile, bringing new supplies of lithium to the market is not without its obstacles.


"There has been a recent flurry of corporate activity in the industry. China's Tianqi Lithium Corp has acquired a 23.77% interest in SQM for US$4.066 billion. Albemarle Corp is paying US$1.15 billion in cash for a 50% stake in the Wodgina lithium development project in Western Australia's Pilbara region. Chinese lithium producer Ganfeng successfully listed in Hong Kongraising over US$420million in the process after securing industry heavyweights as cornerstone investors.


"We continue to be in discussions with a number of industry and finance parties with regards to completing Sonora's finance package at the asset level. Bearing in mind our offtake partner Hanwa, SGRF, the sovereign wealth fund of the Sultanate of Oman, and RK Mine Finance all carried out due diligence ahead of agreeing to provide funds for the construction phase at Sonora, we remain confident the outstanding funds will be secured in due course. We recently announced the appointment of Citigroup Global Markets Limited ("Citi") to lead the equity financing of the Sonora project alongside Canaccord Genuity, both of whom shall also act as joint corporate brokers.


"Our confidence also stems from Sonora's competitive position as a soft rock deposit which allows it to benefit from having the same low cost profile as the brine deposits of South America on the one hand, and the short production timelines similar to the high cost hard rock producers on the other. At ~US$4,000 per tonne, Sonora's LOM operating costs lie well below current contract selling pricing levels and occupy a position at the lower end of the industry cost curve. This compares very favourably to hard rock deposits which, due to the need for drilling, blasting, crushing and grinding, are among the highest cost producers. Unlike brine deposits however, Sonora's processing route does not require a multi-year evaporation process. Instead a simple and proven processing route that has been used over the last three years in our pilot plant to produce >99.5% battery grade LCE is planned at the Sonora plant. This is expected to take just five to seven days to process ore into lithium carbonate, which matches the production rates of the higher cost hard rock deposits.


"With LOM operating costs of ~$4,000/t lying well below current contract selling prices around $16,400/t, Sonora is ideally placed to capitalise on the expected strong growth in lithium demand, especially when compared to the higher cost producers such as the new mines being brought on stream in Australia. It is this fundamental competitive advantage that lies behind our confidence that we will secure the remaining funds on favourable terms, at either the asset or corporate level. To ensure we are able to commence construction at the earliest opportunity, we are pressing ahead with engineering and site preparation work. Front End Engineering Design ("FEED") design work is being completed and this will confirm the final Engineering, Procurement and Construction ("EPC") terms and quotes ahead of finalising contracts.


"Whilst we seek to realise the value from Sonora, we are also looking to realise the underlying value of our Zinnwald Project in Germany. We are in discussions with financial advisors with regards to listing Deutsche Lithium GMBh, our subsidiary which holds Zinnwald, on at least one public market in 2019. This will follow the completion of the FS at Zinnwald in Q2 2019,which is evaluating the production of higher value downstream lithium products for the European battery and automotive sectors. Having already produced lithium fluoride ('LiF') samples with over 99% purity from concentrates at Zinnwald and having recently announced a resource upgrade to 142,240 tonnes of contained Li (NI43 101, Measured + Indicated + Inferred), we are confident the FS will confirm Zinnwald's status as a valuable, strategic asset. In addition, the Company holds the Falkenheim exploration licences with an additional 40,000 tonnes LCE located very close to Zinnwald. Located in Europe'sindustrial heartland, these two assets represent a compelling investment proposition in their own right.


"We have made good progress over the last twelve months and expect a number of significant milestones over the next twelve months-such as the commencement of construction at Sonora, completion of the FS at Zinnwald in Q2 2019 and a public listing for our German subsidiary, which will begin to realise the value in our business. We are focused on ensuring that the considerable value of our asset base is fully realised for the benefit of our shareholders."


(*Seeking Alpha in November 2018)

(**SQM Quarterly Q2, 2018)

(***SignumBox 2018)

 

Sonora - Aiming for commissioning / production Q4 2020.
http://www.bacanoralithium.com/cms/...The-BCN-Presentation-February-2019-4.2.19.pdf

 

13 February 2019


Bacanora Lithium Plc ("Bacanora" or the "Company")

Interim Results

Bacanora Lithium Plc (AIM: BCN), the London listed lithium exploration and development company, is pleased to provide its audited results for the six months ended 31 December 2018.


Highlights - for the half year ending 31 December 2018
Sonora Lithium Project, Mexico ('Sonora' or 'the Sonora Lithium Project')

· US$240 million secured as part of the Sonora Lithium Project financing package to construct an initial 17,500tpa lithium carbonate operation

o US$150 million senior debt facility with RK Mine Finance, a leading provider of finance for resources companies

o US$65 million conditional equity commitment from the State General Reserve Fund of Oman ("SGRF")

o US$25 million conditional equity commitment from Bacanora's offtake partner, Hanwa Co., LTD ("Hanwa")

· Ongoing discussions with industry and strategic financial parties with regards to completing Sonora's finance package

· Engineering and design work with the EPC, kiln and crystalliser contractors for detailed design and cost to complete estimate has continued

· Unrestricted access to develop and operate the Sonora mine secured following acquisition of La Ventana and La Joyaparcels of land in Sonora for US$2.9 million with the final consideration settled in August 2018

· The processing plant sites change of land use permission was approved and augments the Manifestación de Impacto Ambiental (MIA -Environmental impact assessment permissions) for the project and the MIA for permanent road construction previously approved in 2018. These developments enable the project to commence construction, immediately after the project financing package is completed



Zinnwald Lithium Project, Germany ('Zinnwald')

· Ongoing work towards a Feasibility Study ('FS') into a battery grade lithium product operation at Zinnwald on track for completion in Q2 2019

· NI 43-101 compliant upgraded measured and indicated resource of 124,974 tonnes of contained lithium for Zinnwald issued in September 2018. This is a 30% increase from the previous measured and indicated PERC resource estimate of 96,200 tonnes

· First production of lithium fluoride ('LiF') samples with over 99% purity from concentrates at Zinnwald - provides proof of concept that battery grade lithium products can be produced


Corporate

· Appointment of Citigroup Global Markets Limited ('Citi') to lead the equity financing of the Sonora Lithium Project alongside Canaccord Genuity ('Canaccord'), both of whom also act as joint corporate brokers

· Lithium pricing came under significant pressure in the calendar year 2018 with concerns about a cooling Chinese market and new suppliers coming online. Lithium equities and lithium markets continued to soften throughout the second half of the calendar year 2018. Battery grade lithium carbonate spot prices, Cost Insurance and Freight (CIF) China, declined steadily, reaching around US$16,000 per tonne in June 2018 and subsequently steadying in the US$13,000 - 15,000 per tonne range by the end of December 2018. Contract prices have remained strong in Q4 2018, maintaining a premium to spot



Peter Secker, CEO, of Bacanora Lithium, commented: "The common thread linking Hanwa, the Japanese battery metals trader; SGRF, the sovereign wealth fund of the Sultanate of Oman; RK Mine Finance, the debt provider; Citigroup and Canaccord, the global investment banks, is that they have all joined with Bacanora to assist in securing the funding package for a 35,000tpa lithium carbonate operation at our Sonora project.

"For a junior resource company to have such a blue-chip roster of backers is a measure of the quality of the project, the favourable long-term fundamentals for the lithium market and the proven track record of the Bacanora team in terms of developing and delivering high quality lithium projects. The world needs lithium to power the electric vehicles we may one day all be driving and also to help store energy generated from renewable sources. The Sonora Lithium Project hosts a large, open-pit, scalable resource, with a US$1.25billion project NPV and operating costs among the lowest in the industry and we believe that Sonora is ideally placed to become a major supplier of battery grade lithium for many years to come and in the process generate substantial returns for investors.

"The second half of this year will not just see us look to finalise the funding package for Sonora, but also complete the Feasibility Study for Zinnwald, our second lithium project. Over the course of the last six months, we have announced a resource upgrade and the successful production of battery-grade samples of lithium fluoride from Zinnwald concentrates. In tandem with the Feasibility Study, we are evaluating the possibility of listing our German subsidiary later this year as part of our efforts to fund the development of a lithium fluoride operation at Zinnwald. This is an exciting period for the Company, as we look to advance our portfolio of projects and in the process take a major step towards transforming Bacanora into a producer of high value lithium products."

To view the full announcement with illustrative diagrams, please use the following link: http://www.rns-pdf.londonstockexchange.com/rns/8280P_1-2019-2-12.pdf.


Chairman's Statement
With battery grade lithium projects being advanced concurrently in Mexico and Germany, Bacanora is one of the few pure-play lithium development companies publicly quoted in London. Our objective is to advance the development of Sonora and Zinnwald and transform Bacanora into the pre-eminent pure-play lithium production company publicly quoted in London and, in the process, generate substantial value for all our shareholders. During the half year under review, I am pleased to report that considerable progress was made towards achieving our goal of becoming a major supplier of battery grade lithium products.


Our focus on lithium is strategic - based not just on our team's track record of delivering lithium projects around the world, but also on what we believe to be a highly favourable long-term demand profile for what is a critical component of the battery technologies that are powering rapidly-growing sectors, such as electric vehicles and energy storage. With this in mind, we are focused on bringing our two projects into production at the earliest opportunity to capitalise on what, in our view, is a growth story in the resources sector that will run for many years.


You do not have to look far to see just how ubiquitous and important lithium has become to our everyday lives. You are possibly reading this on a smartphone or laptop which both contain lithium. A Tesla Model S with a 70kWh battery, uses 63kg of Lithium Carbonate Equivalent ('LCE')[1]. In 2018 Tesla constructed a 129mWh (129,000kWh) renewable energy storage battery, which we estimate would require a quantity of lithium measured in tonnes. Apply the above numbers to current market forecasts, particularly for these last two sectors, and the thinking and assumptions behind the expected strong growth in demand for lithium from ~265,000 tonnes in 2018 to the 1.15 million tonnes per annum level predicted by UBS by end of 2025 becomes clear.[2]


According to Bloomberg New Energy Finance's report in November 2018, the global energy storage market is expected to grow to 942GW/2,857GWh by 2040, in the process attracting US$620 billion in investment.[3] JP Morgan forecasts that, by 2025, electric vehicles (EVs) and hybrid electric vehicles (HEVs) will account for approximately 30% of global auto sales compared to 1% as recently as 2016.[4] China is leading the way but is not alone globally in establishing ambitious targets for EV production. JP Morgan forecasts the compound annual growth rate (CAGR) of China's new electric vehicle (NEV) market (EVs and PHEVs) could reach 46% by 2020, with 2.5 million units produced that year, well above the government's target of 2 million. Energy storage and electric vehicles are entering the mainstream with household names such as Premier Inn and Arsenal Football Club switching to stored power, and traditional automakers such as Porsche, Mercedes Benz and VW committing to greater numbers of electric vehicles in their fleets.


For the projected lithium demand targets to have any chance of being met, significantly higher volumes of battery grade lithium than those currently being produced will be required, particularly when global lithium production is estimated to have been around only 265,000 tonnes in 2018. Not all projects currently in production produce high value battery grade lithium. Much of the new volume reaching the market, whether Chinese brine production from the Qinghai region or spodumene concentrates from Braziland Australia, require significant high cost beneficiation to upgrade to battery grade quality, for which there continues to be significant demand. As we have successfully demonstrated, both our Sonora and Zinnwald projects are capable of producing battery grade lithium without additional beneficiation.


At Sonora, our pilot plant has been producing samples of battery grade lithium carbonate for the last four years. These have been extensively tested and analysed by third parties, including potential end users. This has resulted in us signing a 10 year offtake agreement with Hanwa Ltd, a leading Japanese-based technology metals trader, in 2017, and more recently in July 2018 formalising a conditional off-take option with SGRF, the sovereign wealth fund of the Sultanate of Oman for Stage 2 of the project. During the period, initial LiF samples in excess of 99% purity have been successfully produced from concentrates at Zinnwald. This was carried out as part of an ongoing Feasibility Study and provides proof of concept of our strategy to produce high value downstream lithium products for the European battery and automotive sectors. As with Sonora, samples from Zinnwald are being tested and evaluated by potential end users.


Sonora

Producing battery grade lithium products is only half the story. Being able to produce at low cost is critical. As the Feasibility Study published in January 2018 highlighted, at an estimated cost of approximately US$4,000 per tonne, a 35,000 tonnes per annum lithium carbonate operation at Sonora will be one of the lowest-cost producers in the industry, occupying a similar position on the cost curve to the brine deposits of South America. Unlike such brine deposits, which deploy a multi-year evaporation process, Sonora will be able to produce lithium carbonate in just 5-7 days. This matches the rate of hard rock producers, which are generally higher-cost deposits due to the need to incorporate drilling, blasting, crushing and grinding into their processes. Sonora is a soft rock deposit, which provides the benefits of both: the low costs of the brine producers and the short timelines of the hard rock producers. Sonora also benefits from a large, high grade and scalable deposit containing resources that can be measured in centuries rather than years, an NPV8 of US$1.25 billion and an IRR of 26.1%.


To date, over half of the funding required to build a stage 1 17,500 tonnes per annum lithium carbonate operation at Sonora has been conditionally agreed. During the period, we signed a US$150 million debt facility with RK Mine Finance, a finance company specialising in the resources sector. In addition, we secured conditional investments totalling US$90 million from SGRF and Hanwa. The Company seeks to complete the construction funding in H1 2019. To this end, Citi were appointed in November 2018 to lead the equity financing of the Sonora project alongside Canaccord. To have Citi and Canaccord on-board is testament to the quality of Sonora. Furthermore, a number of blue-chip institutions, both trade and financial, are currently carrying out due diligence on Sonora with a view to potentially making strategic investments in the project. We are encouraged by the level of engagement we are seeing, and we look forward to updating the market as soon as it is appropriate to do so.


In tandem with our ongoing work to finalise the finance package for the project, we have been pushing ahead with Front End Engineering Design ('FEED') work, which is nearing completion. Our aim is to be in a position to commence the construction phase at Sonora at the earliest opportunity and the results of our FEED work will inform the final Engineering, Procurement and Construction ('EPC') terms and quotes ahead of finalising contracts.


Zinnwald

The FS for Zinnwald remains on track to be completed in Q2 2019. Discussions are ongoing with potential strategic partners, to potentially list Deutsche Lithium GmbH, our 50% owned investment that holds Zinnwald, on at least one public market in 2019. This is being considered, to assist in the funding of the construction of an operation capable of becoming a supplier to the fast-growing European battery and automotive sectors.


During the half-year period under review, a resource upgrade for Zinnwald to 124,974 tonnes of contained Li (NI 43 101, Measured + Indicated) was completed. We are confident we can build on this further in the future as the Company also holds the nearby Falkenheim exploration licences which contain an additional 40,000 tonnes LCE. We believe these two assets represent a compelling investment proposition.


Outlook

Based on sound market fundamentals, long-term forecasts for lithium demand are highly positive. Short term shocks, however, can be expected as the lithium market matures. In line with this, 2018 saw challenging market conditions and bearish sentiment driven by twin concerns of cooling demand in China and the ramping up of output by spodumene producers in Australia (Altura, Alliance AMG, Galaxy, Mineral Resources, Pilbara, Talison), both of which exerted pressure on the lithium price. In H1 2018, the average price of battery grade lithium carbonate on the spot market in China peaked at US$24,750 per tonne. Since then, this declined steadily to around US$13,000 -15,000 per tonne spot prices CIF China, Japan & Korea.[5] Consequently, share prices in lithium stocks have been volatile over the past 12 months and there have been significant falls in equity values as lithium spot prices in China have declined and new lower value lithium concentrate production from Australia has increased.


As far as Bacanora is concerned, the combination of our high quality projects, with end markets that are underpinned by rapidly growing sectors, such as electric vehicles and renewable energy, and qualified personnel at all levels of the Company, reinforces the Board's confidence that we remain on track to become a major supplier of high value battery grade lithium products. We are working hard to achieve this. The half-year period under review has seen us advance FEED design work at Sonora, secure conditional US$240 million financing towards the cost of constructing an initial 17,500 tonnes per annum lithium carbonate operation at Sonora and progress the FS at Zinnwald, including a resource upgrade.


For a junior resources company to be able to successfully run multiple work streams concurrently is testament to the quality and depth of Bacanora's management and operational teams on the ground. I would like to take this opportunity to thank them all for their hard work and continued support during the period. I would also like to thank Ray Hodgkinson, who retired from the Board at the AGM held on 13 December 2018, for his contribution to the development of the Company.


I look forward to reporting further progress in the second half of the financial year and beyond.



Mark Hohnen, Chairman

12 February 2019

 

VSA

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