Completion of Strategic Investment by Ganfeng
Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources
14 October 2019
Bacanora Lithium plc ("Bacanora" or the "Company")
Completion of Strategic Investment by Ganfeng Lithium and Board Changes
Bacanora Lithium plc (AIM: BCN), the London traded lithium company, is pleased to provide an update on the Strategic Investment by leading global lithium company Ganfeng Lithium Co., Ltd. ("Ganfeng" or "GFL"). As announced on 28 June 2019, the signed Investment Agreement and Offtake Agreement, which together make up the Strategic Investment, were submitted to the relevant authorities in China for approval. Completion of the last of the relevant approvals has now been obtained and Bacanora has now received the £21,963,740 of funds from Ganfeng in exchange for a 29.99% equity interest in Bacanora Lithium PLC and a 22.5% JV investment directly in the Sonora Lithium Project ('Sonora'). It is expected that the 57,600,364 shares in Bacanora will be admitted to trading on or around 18 October 2019.
Ganfeng to advance Sonora in H2 2019
Ganfeng has recently announced its intention to proactively advance the development of Bacanora's Sonora lithium clay project during the second half of 2019. This is in addition to work being undertaken by Ganfeng in China, Australia and Argentina as part of a series of planned manufacturing capacity expansions to capitalise on the growing demand for lithium and solidify its leading position in the lithium products industry. In China, work continues to increase the capacity of Ganfeng's battery-grade lithium carbonate production line in Ningdu County, Jiangxi Province which has reached its 17,500 tonnes per annum designed capacity and achieved its 2019 production targets. In addition, Ganfeng intends to build a battery grade lithium hydroxide production line with a 50,000 tonnes per annum capacity at Basic Lithium Plant in Xinyu with commissioning targeted in 2020. These initiatives will support Ganfeng's target of 200,000 tonnes per annum lithium carbonate equivalent production capacity by 2025, although final capacity expansion will be based on changes in, and assessment of, future market demand for lithium products.
Update on current activities at Sonora
The Bacanora project team in Mexico continues to progress the final design work for the mine, concentrator and kiln sections of the processing plant. The Ganfeng technical team has initiated work on the hydrometallurgical circuit and is reviewing sourcing key sections of the lithium production equipment from current equipment suppliers in China.
Battery grade lithium demand continues to be driven by electric vehicle (EV) growth. In Australia, recent lithium concentrate market conditions have driven numerous concentrate producers to reassess production plans. This strongly supports Bacanora's strategy for the development of the Sonora lithium project as a fully integrated mine and downstream processing facility to produce final lithium products in the lowest operating cost quartile.
Changes to Board of Directors
Mr. Wang Xiaoshen, the Vice President of Ganfeng and the vice-chairman of its board of directors, is today appointed a director of Bacanora Lithium plc. Mr. Wang is primarily responsible for the marketing, investment and overseas business of Ganfeng and has over 25 years of experience in sales and marketing of lithium products. He is a director of GFL International, Mariana Lithium, RIM and Lithium Americas. Mr. Wang obtained a bachelor's degree in industrial engineering management from North China University of Technology in the PRC in 1990 and an EMBA from the China Europe International Business School in the PRC in 2002.
The following information is disclosed in respect of Mr. Wang Xiaoshen (age 50) pursuant to Schedule 2(g) of the AIM Rules for Companies:
Directorships and partnerships held in the past five years
Ganfeng Lithium Co., Ltd
International Lithium Corp.
GFL International Co., Ltd
Lithium Americas Corp.
Mariana Lithium Co., Ltd
Reed Industrial Minerals Pty Ltd
On 10 February 2015, the Shenzhen Stock Exchange issued a public reprimand on Ganfeng, Mr. Li Liangbin as Chairman, Mr. Wang Xiaoshen as Vice Chairman, and the then secretary of the board of Ganfeng, and recorded such incidence in Ganfeng's integrity files. The reprimand was in relation to a public announcement that was made by Ganfeng on an abnormal fluctuation of its share price made on 3 March 2014, stating that Ganfeng was not in the process of planning an acquisition at the time, and which was inconsistent with the facts. A public announcement was made on the above non-compliance incident by Ganfeng.
Mr. Wang does not hold any shares nor options over ordinary shares in the Company.
There is no further information which is required to be disclosed under Schedule Two, paragraph (g) of the AIM Rules for Companies in respect of Mr. Wang.
Issue of Equity & Total Voting Rights
Application has been made for the 57,600,364 new ordinary shares to be admitted to trading on AIM. Admission is expected to occur on or around 18 October 2019. These new ordinary shares will rank pari passu with the existing ordinary shares in issue. Following admission of the new ordinary shares, there will be 192,065,236 ordinary shares in issue. This number may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information please visit www.bacanoralithium.com or contact:
Bacanora Lithium plc
Peter Secker, CEO
Janet Blas, CFO
Cairn Financial Advisers LLP, Nomad
Sandy Jamieson / Liam Murray
+44 (0) 20 7213 0880
Citigroup Global Markets, Broker
Tom Reid / Patrick Evans / Matthew Kenney
+44 (0) 20 7986 4000
Canaccord Genuity, Broker
+44 (0) 20 7523 8000
St Brides Partners, Financial PR Adviser
Frank Buhagiar / Megan Dennison
+44 (0) 20 7236 1177
ABOUT BACANORA LITHIUM:
Bacanora owns ten mining concession areas covering approximately 100 thousand hectares in the northeast of Sonora State in Mexico. Seven of these ten mining concessions (the 'Sonora Lithium Project'1) were included in the Sonora Feasibility Study announced 12 December 2017. The Sonora Lithium Project has a Measured plus Indicated Mineral Resource estimate of over 5 Mt (comprising 1.9Mt of Measured Resources and 3.1Mt of Indicated Resources) of LCE2 and an additional Inferred Mineral Resource of 3.7 Mt of LCE. The Sonora Feasibility Study 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.
In addition to the Sonora Lithium Project, the Company also has a 50% interest in the Zinnwald Lithium Project and the Falkenhain and Altenberg Licences in southern Saxony, Germany. The Zinnwald Feasibility Study has established Total Mineral Reserves (Proven and Probable in accordance with NI 43-101) of 94kt of contained lithium and confirmed the economics associated with becoming a 5,112 tpa lithium fluoride producer in Germany. Each of the Zinnwald Lithium Project, and the Falkenhain and Altenberg Licences are located in a granite hosted Sn/W/Li belt that has been mined historically for tin, tungsten and lithium at different times over the past 300 years. The strategic location of the Zinnwald Lithium Project and the Falkenhain and Altenberg Licences provides close geographical proximity to the German automotive and downstream lithium chemical industries.
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.
2. LCE = lithium carbonate (Li2CO3) equivalent; determined by multiplying Li value in percent by 5.323 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.
Cautionary Statement Regarding Forward-Looking Information
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. 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 the UK, the United States, Mexico, Germany 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 disclosed under our profile on SEDAR at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
The contents of this announcement have been prepared by and are the sole responsibility of Bacanora.
The contents of this announcement have been approved solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 by Citigroup Global Markets Limited, whose registered office is at Citigroup Centre, Canada Square, Canary Wharf, London, E14 5LB. Citigroup Global Markets Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, and Canaccord Genuity Limited, which is authorised and regulated by the Financial Conduct Authority, are each acting exclusively for Bacanora and no one else in connection with the Project, and will not regard any other person as their client in relation to the Project and will not be responsible to anyone other than Bacanora for providing the protections afforded to their respective clients, nor for providing advice in relation to the Project or the contents of this announcement or any transaction, arrangement or other matter referred to herein.
None of Citigroup Global Markets Limited, Canaccord Genuity Limited nor any of their respective subsidiary undertakings, affiliates or any of their respective partners, directors, officers, employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions in this announcement (or whether any information has been omitted from the announcement) or any other information relating to Bacanora, or any of their subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection with it. Each of Citigroup Global Markets and Canaccord Genuity, Broker (together, the "Banks") is acting exclusively for Bacanora and no one else in connection with any matter referred to in this announcement and will not be responsible to anyone other than Bacanora for providing the protections afforded to their respective clients nor for providing advice in relation to any matter referred to in this announcement. Neither the Banks nor any of their respective subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of the Banks in connection with this announcement, any statements contained herein or otherwise.
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