TIDMBCN
RNS Number : 7685U
Bacanora Lithium PLC
16 July 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA, SINGAPORE OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON
STOCK EXCHANGE, NOR IS IT INTED THAT IT WILL BE SO APPROVED.
Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural
Resources
Bacanora Lithium Plc ("Bacanora" or the "Company")
Investments by State General Reserve Fund of Oman ("SGRF") and
Hanwa
Bacanora Lithium plc, the London listed lithium company, is
pleased to announce it has agreed conditional strategic investments
from the State General Reserve Fund of Oman, the sovereign wealth
fund of the Sultanate of Oman and from Bacanora's off-take partner,
Hanwa Co., LTD ("Hanwa"), for a combined total of US$90m ('the
Investments').
The Investments comprise US$65m from SGRF and US$25m from Hanwa
and are part of the proposed funding package for the development of
an initial 17,500 tpa lithium carbonate ("Li2CO3") operation at the
Sonora Lithium Project in Mexico ("Sonora" or the "Project") and
are conditional on the full US$460m construction funding required
for the Project ("Construction Funding") being in place. These
investments follow on from the US$150m senior debt facility
previously secured with RK Mine Finance, one of the leading
specialist mining lenders.
Concurrently to this announcement, the Company has launched a
placing for US$100m (the "Placing"), the gross proceeds of which
will be used to commence the construction phase of the Project.
Highlights
-- SGRF's commitment to conditionally invest US$65m upon
completion will further validate Sonora's potential to become a
leading supplier of high value lithium products to fast-growing
industries, such as electric vehicles and energy storage, and once
completed will significantly strengthen Bacanora's funding platform
for the construction of a 17,500tpa Li2CO3 operation
-- Hanwa's stated intention to conditionally invest US$25m upon
completion will further validate the quality of battery grade
(+99.5%) Li2CO3 produced at Sonora and upon completion will secure
access to the Japanese market
-- The Investments follow the US$150m senior debt facility
secured with RK Mine Finance, one of the leading specialist mining
lenders - see announcement of 4 July 2018
-- Upon completion the Investments will bring the combined
equity and debt funding commitments secured to date to US$240m -
52% of the US$460m required for Stage 1 production of 17,500 tpa of
Li2CO3 at Sonora, comprising US$420m capital costs and US$40m for
working capital
-- SGRF's commitment is alongside an off-take agreement which,
upon completion of the investment will provide SGRF with the option
to buy 10,000 tpa of Li2CO3 once capacity at Sonora is expanded to
35,000 tpa of Li2CO3 as part of Stage 2 of the Project
-- The Conditional Strategic Investments follow the favourable
Feasibility Study which assigned a pre-tax US$1.253 billion NPV8 to
a 35,000 tpa battery grade Li2CO3 operation at Sonora; a pre-tax
Internal Rate of Return of 26.2%; and Life of Mine operating costs
of US$3,910/t of Li2CO3
Bacanora CEO Peter Secker said: "The proposed US$90 million
investments from blue chip investors of the calibre of SGRF and our
existing strategic partner, global trading company Hanwa, is a
clear endorsement of Sonora's credentials to become a low-cost
producer of high value lithium carbonate. The US$150m debt facility
already secured from RK along with the proceeds of the Placing will
provide us with an excellent platform with which to complete the
funding package by early 2019. Importantly, by launching our
Placing today we are aiming to be in a position to embark on the
construction phase at Sonora in Q3 2018, targeting first production
in Q1 2020. Bacanora remains on track to become a significant major
supplier of battery grade lithium carbonate and I look forward to
providing further updates on our progress."
SGRF strategic investment
SGRF has entered into a Strategic Investment Agreement ("SIA")
with the Company whereby it has agreed to make a US$65m equity
investment at the time of, and conditional on the Company securing
the Construction Funding. The agreement is also conditional,
amongst other things, on the parties agreeing the subscription
price, no material adverse change to the Bacanora group, and
renewed shareholder authorities if required for the issue of the
subscription shares. At the time of its investment, SGRF would be
granted certain shareholder rights, including the right to appoint
a non-executive director to the Board (subject to the approval of
the Company's Nominated Adviser), and certain committees, the right
to veto candidates for certain executive positions (subject to the
opinion of its Nominated Adviser) and a pre-emptive right in
relation to further fundraisings. SGRF has also agreed not to sell
any of the shares issued to it on completion in the following year.
In addition, the Company has agreed that in the event at any time
prior to completion of SGRF's investment there is a takeover of the
Company, they will reimburse SGRF all third party costs, charges
and expenses incurred in connection with the preparation for and
implementation of the arrangements connected to its proposed
investment, up to a maximum amount of US$2 million, less any costs
previously paid.
In addition to the SIA, Bacanora and SGRF have also entered into
an Off-take Agreement subject to the same conditionality as the
SIA. The key terms would be an off-take option to purchase up to
10,000 tpa of lithium carbonate produced (with a reasonable
endeavours obligation to increase this by a further 3,000tpa) at
the Sonora Project predominantly during Stage 2 for a period of 10
years from the date on which Stage 2 is achieved.
About SGRF
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.
Hanwa
In accordance with its existing shareholding, Hanwa has stated
its intent to make an investment in new ordinary shares in the
Company for a total consideration of US$25m at the time of, and
conditional on the Company securing the Construction Funding.
Hanwa is an existing cornerstone investor in Bacanora and has a
long-term take or pay lithium off-take agreement with the Company
for the Stage 1 lithium carbonate production from Sonora. In
addition, Hanwa has agreed to extend the 17,500 tonne Stage 1 take
or pay off-take for a further 5 years, to a total term of 10
years.
This announcement contains inside information as stipulated
under the market abuse regulation (eu no. 596/2014). upon the
publication of this announcement via regulatory information service
this inside information is now considered to be in the public
domain.
**S**
For further information please visit www.bacanoralithium.com or
contact:
Bacanora Lithium plc Peter Secker, CEO info@bacanoraminerals.com
Cairn Financial Advisers Sandy Jamieson / Liam +44 (0) 20 7213
LLP, Nomad Murray 0880
------------------------ --------------------------
Canaccord Genuity Martin Davison / James +44 (0) 20 7523
Broker Asensio 8000
------------------------ --------------------------
St Brides Partners Frank Buhagiar / Megan +44 (0) 20 7236
Financial PR Adviser Dennison 1177
------------------------ --------------------------
Notes to Editors
Bacanora Lithium is a London listed lithium exploration and
development company (AIM: BCN). The Company's a primary focus on
the Sonora Lithium Project. The Company's operations are based in
Hermosillo in northern Mexico. The Company is led by a team with
lithium expertise and a track record in mine development and
production.
The Sonora Lithium Project[1], which consists of ten mining
concession areas covering approximately 100 thousand hectares in
the northeast of Sonora State. The Company, through drilling and
exploration work to date, has established a Measured plus Indicated
Mineral Resource estimate of over 5 Mt (comprising 1.9 Mt of
Measured Resources and 3.1Mt of Indicated Resources) of LCE2 and an
additional Inferred Mineral Resource of 3.7 Mt of LCE. The
Company's Feasibility Study (which was announced 12 December 2017)
has established Proven Mineral Reserves (in accordance with NI
43-101) of 1.67 Mt and Probable Mineral Reserves of 2.85 Mt LCE and
confirmed the economics associated with becoming a 35,000 tpa
lithium carbonate and 30,000 tpa SOP producer in Mexico.
[1] The Sonora Lithium Project is comprised of the following
lithium properties: La Ventana lithium concession, which is 100
percent owned by Bacanora and El Sauz and Fleur concessions, which
are held by Mexilit S.A. de C.V. ('Mexilit') which is owned 70
percent by Bacanora and 30 percent by Cadence Minerals Plc. The
Project also includes three other lithium concessions, Buenavista,
San Gabriel and Megalit, which do not form part of the Feasibility
Study, and are held by Megalit S.A. de C.V, which is owned 70
percent by Bacanora and 30 percent by Cadence Minerals Plc.
2 LCE = lithium carbonate (Li2CO3) equivalent; determined by
multiplying Li value in percent by 5.324 to get an equivalent
Li2CO3 value in per cent. Use of LCE is to provide data comparable
with industry reports and assumes complete conversion of lithium in
clays with no recovery or process losses.
FORWARD LOOKING STATEMENTS:
Except for statements of historical fact, this news release
contains certain "forward-looking information" within the meaning
of applicable securities law. Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. In particular, forward-looking information
in this press release includes, but is not limited to the holding
of an annual and special meeting, the delivery of materials to
shareholders in respect of such meeting, the completion of the
Transaction and the delisting of the Company's common shares from
the TSX Venture Exchange. Although we believe that the expectations
reflected in the forward-looking information are reasonable, there
can be no assurance that such expectations will prove to be
correct. We cannot guarantee future results, performance or
achievements. Consequently, there is no representation that the
actual results achieved will be the same, in whole or in part, as
those set out in the forward-looking information.
Forward-looking information is based on the opinions and
estimates of management at the date the statements are made, and
are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ
materially from those anticipated in the forward-looking
information. Some of the risks and other factors that could cause
the results to differ materially from those expressed in the
forward-looking information include, but are not limited to:
commodity price volatility; general economic conditions in Canada,
the United States, Mexico and globally; industry conditions,
governmental regulation, including environmental regulation;
unanticipated operating events or performance; failure to obtain
industry partner and other third party consents and approvals, if
and when required; the availability of capital on acceptable terms;
the need to obtain required approvals from regulatory authorities;
stock market volatility; competition for, among other things,
capital, skilled personnel and supplies; changes in tax laws; and
the other risk factors. Readers are cautioned that this list of
risk factors should not be construed as exhaustive.
This announcement is not for publication or distribution,
directly or indirectly, in or into the United States of America.
This announcement is not an offer of securities for sale into the
United States. The securities referred to herein have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration. No
public offering of securities is being made in the United
States.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFQLFFVDFEBBE
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