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
– US$150 million senior debt facility with RK Mine Finance, a leading provider of finance for resources companies
– US$65 million conditional equity commitment from the State General Reserve Fund of Oman (“SGRF”)
– 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 Joya parcels 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.
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