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Full steam ahead at Bacanora’s Sonora lithium project, as new Chinese investors start to make an impact

It is expected that the development costs at Sonora will remain in line with the US$420mln projection of the feasibility study

Bacanora Lithium Ltd -
Chief executive Peter Secker says market fears of oversupply are unlikely to be realised

Bacanora Lithium PLC (LON:BCN) is continuing with work on the final design for the mine, infrastructure and plant at the Sonora project in Mexico.

Leading global lithium company Ganfeng, which recently invested in Bacanora, has begun a technical review of the hydrometallurgical circuit, with a view to potentially sourcing key sections of the lithium production equipment from equipment suppliers in China.

The work is expected to be completed in the first half of next year. As part of this technical review, both Bacanora and Ganfeng continue to develop test-work programmes for the potential production of other downstream high-value lithium products in addition to the battery-grade lithium carbonate used in the feasibility study.

Once Ganfeng completes its review, the company will deliver final engineering costs for Stage 1 of the project, following which it will look to finalise the funding package. At this stage, Bacanora believes that the engineering costs will remain in line with the 2018 feasibility study forecast of approximately US$420mln. 

Bacanora has already secured a US$150mln debt facility with RK Mine Finance and continues to explore additional sources of project funding. The 22.5% project investment and 29.99% equity investment from Ganfeng, in addition to ongoing support from Bacanora's other shareholders and off-takers, ensures a very solid position for finalising the project funding stage of the Sonora development.

The company had US$40mln of cash at the end of October 2019.

"Recent research reports predict the lithium industry would need US$30 bn in investment in upstream capacity to meet its forecast of one million tonnes of supply by 2025, a threefold increase on current levels,” said Bacanora chief executive Peter Secker. 

“In order to secure funding, any new lithium project needs to be low on the operational cost-curve, without having to rely on by-product credits to artificially lower that cost per tonne. A project also needs to have reliable engineering cost estimates.  A project needs to be of sufficient scale, in a location with a favourable environmental and political climate and deliver a high-grade end product.  The Sonora lithium project is one of the very few projects globally that can deliver on all of these factors," he added.

 

Quick facts: Bacanora Lithium Ltd

Price: 31.5 GBX

AIM:BCN
Market: AIM
Market Cap: £70.24 m
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