TIDMBCN
RNS Number : 2545F
Bacanora Lithium PLC
26 October 2018
Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural
Resources
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 QuĂmica 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.
**S **
For further information, please contact:
Bacanora Lithium Plc Peter Secker, CEO info@bacanoralithium.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
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St Brides Partners, +44 (0) 20 7236
Financial PR Adviser Gaby Jenner / Frank Buhagiar 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
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contact rns@lseg.com or visit www.rns.com.
END
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