Bacanora Minerals : Update on Financing Package for Sonora Project

RNS Number : 0937V Bacanora Lithium PLC 19 July 2018

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

19 July 2018

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

Update on Financing Package for Sonora Lithium Project

Bacanora Lithium plc (AIM: BCN), the London listed lithium explora(on and development company, announces that, due to current vola(lity in global commodi(es markets, the Company has elected not to proceed with its proposed placing to raise gross proceeds of US$100m (the "Placing"). As announced on 16 July 2018, the Placing was intended to form part of a funding package for the development of an ini(al 17,500 tonnes per annum ("tpa") lithium carbonate ("Li2CO3") operation at the Sonora Lithium Project in Mexico ("Sonora" or the "Project").

To date, the Company has announced equity and debt funding commitments totalling US$240m, which represents 52% of the US$460m required for Stage 1 produc(on of 17,500 tpa of Li2CO3 at Sonora (the "Construc(on Funding"). These include a US$150m senior debt facility with RK Mine Finance, one of the leading specialist mining lenders, and condi(onal strategic investments from the State General Reserve Fund of Oman (SGRF), the sovereign wealth fund of the Sultanate of Oman, and from Bacanora's off-take partner, Hanwa, for a combined total of US$90m. The Company will now focus on comple(ng the Front End Engineering Design and remains in discussions with several addi(onal par(es with regards to securing the remainder of the Construc(on Funding, so that it can be in a posi(on to begin construction of the Project once financing is secured.

As announced on 13 December 2017, a Feasibility Study ("FS") confirmed the posi(ve economics and favourable opera(ng costs of a 35,000 tpa baGery grade Li2CO3 opera(on at Sonora. Using revenues based on a flat US$11,000/t for baGery grade Li2CO3 over Life of Mine ("LOM"), which is significantly below the current Li2CO3 price range of US$16,000 - 20,000/t*, the FS es(mated a pre-tax project Net Present Value of US$1.253 Billion, an Internal Rate of Return of 26.2%, and LOM opera(ng costs of US$3,910/t Li2CO3. At US$3,910/t, Sonora would rank among the lowest cost producers of Li2CO3 in the world. The Bacanora Board of Directors believe Sonora is ideally placed to become a major supplier of baGery grade Li2CO3 to fast growing industries, such as electric vehicles and energy storage. In line with this, detailed engineering design work is underway at the Project and further updates will be provided to the market in due course.

Bacanora CEO Peter Secker said:"Challenging market condi(ons have led us to take the decision not to proceed with the Placing at this stage. From the perspec(ve of a lithium developer such as ourselves, being a low-cost producer is key to successfully naviga(ng price vola(lity. Thanks to expected LOM opera(ng costs of US$3,910/t of Li2CO3, once fully opera(onal, Sonora will be among the lower cost producers of baGery grade lithium carbonate in the world.

Whilst recent fluctua(ons in lithium pricing forecasts con(nue, the development of the Sonora project remains our priority. Thanks to the combina(on of a large lithium resource, conven(onal processing techniques, and having all relevant approvals in place, Sonora is a highly valuable strategic asset. We con(nue to focus on fully realising this value for the benefit of our shareholders and I look forward to providing further updates on our progress."

This Announcement contains inside informa(on as defined in Ar(cle 7 of the Market Abuse Regula(on No. 596/2014 ("MAR"). Upon the publica(on of this Announcement, this inside informa(on is now considered to be in the public domain.

(*seekingalpha.com/article/4183758-lithium-miners-news-month-june-2018)

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