Bacanora Minerals : US$150M Debt Funding Secured for Lithium Project

RNS Number : 6297T Bacanora Lithium PLC 05 July 2018

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Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources

05 July 2018

Bacanora Lithium Plc ("Bacanora" or the "Company")

US$150 Million Debt Funding Secured as Part of Sonora Lithium Project Funding Package

Bacanora Lithium plc,the London listed lithium company, is pleased to announce it has entered into a US$150 million senior debt facility (the "Facility") with RK Mine Finance ("RK"), a leading specialist in the provision of senior debt capital to mining companies, for the development of Stage 1 of the Sonora Lithium Project in Mexico ("Sonora" or the "Project"), an ini4al 17,500tpa lithium carbonate ("Li2CO3") opera4on. The Company believes the compe44ve terms of the RK Facility provide further valida4on of the quality of Sonora's ba

Highlights

• · US$150 million senior debt facility secured with leading specialist finance provider at competitive rates

• · Follows favourable Feasibility Study which assigned a pre-tax US$1.253 billion NPV8 to the Sonora Lithium Project

• · Advanced discussions with off-take partner and other strategic investors to complete the proposed Stage 1 development funding package

Bacanora CEO Peter Secker said:"We believe that senior debt facili4es of this size have been few and far between in the junior resource space in recent years. Furthermore, we consider that the costs and terms of the Facility are highly compe44ve when compared to other debt packages that have recently been reported for greenfield lithium projects in Canada and Australia. We view the debt facility with RK as a vote of confidence in Sonora's creden4als by a leading specialist debt provider in the resource sector.

"We have always believed that Sonora stands out from the crowd. Not only is the Project one of the world's larger lithium deposits but, as the Feasibility Study demonstrates, it is expected to have one of the lowest quar4le (Q1)

LOM opera4ng costs once produc4on commences in 2020. In addi4on, we have proved our opera4ng creden4als with the Sonora pilot plant, which con4nues to produce ba

Terms of US$150 million RK Facility

The Facility is structured as two separate Eurobonds to be listed in Jersey:

· Main bond: US$150m nominal amount secured notes issued at a purchase price of US$138m with a 6-year term and bearing an interest rate of three months LIBOR +8% per annum based on a nominal amount of US$150m but payable only on drawn down principal. Interest will be capitalised every three months for the first 24 months and thereafter interest will be paid every three months in cash; · Second bond: US$56m nominal amount zero interest-bearing secured notes issued at a purchase price ofUS$12m with a 20-year term. The nominal amount is repayable by reference to monthly produc4on of lithium at a rate of US$160 per tonne of lithium produced, with any remaining amount repayable at the end of the 20-year term; and

·

Grant of 6 million warrants exercisable over five years at a 20% premium to the 20-day VWAP, subject to normal an4-dilu4on provisions, cash se

The Facility may be drawn in three tranches of US$25m, US$50m and US$75m, subject to certain condi4ons precedent, with the first tranche available for immediate drawdown. The condi4ons precedent to second drawdown include various ma

The Facility forms part of the Company's funding package for Sonora and follows the comple4on of a Feasibility Study ('FS') (see announcement of 13 December 2017). This confirms the a

Endeavour Financial is acting as financial adviser to the Company in respect of the RK Facility.

About RK Mine Finance

RK Mine Finance provides bespoke financing solu4ons to metals focused mining companies. Solu4ons include bridge finance, construc4on finance, expansion funding, working capital and acquisi4on facili4es. The fund has a strong track record of suppor4ng mining companies with their financing needs and since its incep4on has commi

Further information on RK Mine Finance can be found atwww.rkminefinance.com.

This announcement contains inside informa on as s pulated under the market abuse regula on (eu no. 596/2014). upon the publica on of this announcement via regulatory informa on service this inside informa on is now considered to be in the public domain.

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For further information please visitwww.bacanoralithium.com or contact:

Notes to Editors

Bacanora Lithium is a London listed lithium explora4on and development company (AIM: BCN). The Company's primary focus is on the Sonora Lithium Project. The Company's opera4ons are based in Hermosillo in northern Mexico. The Company is led by a team with lithium exper4se and a track record in mine development and production.

The Sonora Lithium Project 1 consists of ten mining concession areas covering approximately 100 thousand hectares in the northeast of Sonora State. The Company, through drilling and explora4on work to date, has established aMeasured plus Indicated Mineral Resource es4mate of over 5 Mt (comprising 1.9 Mt of Measured Resources and 3.1

Mt of Indicated Resources) of LCE and an addi4onal Inferred Mineral Resource of 3.7 Mt of LCE. The Company's

2

Feasibility Study (which was announced 12 December 2017) has established Proven Mineral Reserves (in accordance with Na4onal Instrument 43-101 Standards of Disclosure for Mineral Projects) 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 addi4on to the Sonora Lithium Project, the Company also has a 50% interest in the Zinnwald Lithium Project and the Falkenhain Licence in southern Saxony, Germany. Each of the Zinnwald Lithium Project and the Falkenhain Licence are located in a granite hosted Sn/W/Li belt that has been mined historically for 4n and tungsten at different 4mes over the past 300 years. The strategic loca4on of the Zinnwald Lithium Project and the Falkenhain Licence provides close geographical proximity to the German automo4ve and downstream lithium chemical industries.

1 The Sonora Lithium Project is comprised of the following lithium proper4es: 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 mul4plying 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 informa on" within the meaning of applicable securi es law. Forward-looking informa on is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "an cipate", "es mate" and other similar words, or statements that certain events or condi ons "may" or "will" occur. Although we believe that the expecta ons reflected in the forward-looking informa on are reasonable, there can be no assurance that such expecta ons 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 informa on is based on the opinions and es mates of management at the date the statements are made, and are subject to a variety of risks and uncertain es and other factors that could cause actual events or results to differ materially from those an cipated in the forward-looking informa on. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking informa on include, but are not limited to: commodity price vola lity; general economic condi ons in Canada, the United States, Mexico and globally; industry condi ons, governmental regula on, including environmental regula on; unan cipated opera ng 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 authori es; stock market vola lity; compe on 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.

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