TIDMBCN
RNS Number : 4797Z
Bacanora Lithium PLC
20 May 2019
Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural
Resources
20 May 2019
Bacanora Lithium plc ("Bacanora" or the "Company")
Proposed Strategic Investment by Ganfeng Lithium
Highlights
-- Proposed cornerstone strategic investment by top tier global
lithium producer Ganfeng Lithium Co., Ltd. ("Ganfeng" or "GFL") at
both the corporate and Sonora Lithium Project level
-- Includes subscription for a 29.99% interest in Bacanora, in
addition to an initial 22.5% direct interest in the Sonora Lithium
Project with an option to increase up to 50% of the Project
-- Additional long-term offtake for both Stage 1 and Stage 2 lithium production
-- GFL would assist Bacanora in the finalisation of the EPC
engineering design and the subsequent construction and
commissioning of Sonora Lithium Project
-- Strategy would be in place to ensure project timetable of first production in 2021
Bacanora Lithium plc (AIM: BCN), the London traded lithium
company, is pleased to announce the signing of a non-binding Heads
of Terms for a strategic investment in both Bacanora and its
flagship Sonora Lithium Project ("Sonora" or "Sonora Project") in
Mexico ("the Strategic Investment") by Ganfeng, the world's largest
lithium metals producer in terms of production capacity and the
world's third largest lithium compounds producer. Completion of the
Strategic Investment would form a major part of the Company's
finance package for the construction of an initial 17,500 tonnes
per annum ("tpa") lithium carbonate ("Li(2) CO(3) ") operation at
the large scale, high grade Sonora Project. The Company will be
hosting a shareholder conference call on Tuesday 21 May 2019 at
11am (GMT) to discuss the proposed Strategic Investment. Details of
the call can be found below.
As part of the Strategic Investment, GFL would subscribe for a
29.99% equity interest in Bacanora for a cash consideration of
GBP14,400,091, being 57,600,364 new ordinary shares in the Company
(the "Private Placement"), at a price of 25 pence per share,
representing the volume weighted average price ("VWAP") on AIM of
the Company's shares over the previous 20 trading days at the time
of negotiation. Subject to the completion of the Private Placement,
GFL would have the right to nominate one director to the main board
of Bacanora. GFL would also be granted pre-emption rights in
relation to new share issues proportionate to its interest in
Bacanora.
In addition, as part of the Strategic Investment GFL would be
granted the right to acquire an initial 22.5% interest in a
subsidiary of Bacanora which holds the Sonora Project ("Project
Level Company"), for a cash payment of GBP7,563,649, equivalent to
a price of 25 pence per share on the same basis as the Private
Placement (the "Project Level Investment"). Subject to the
completion of the Project Level Investment, GFL would have the
right to nominate one director to the board of the Project Level
Company. GFL would also be granted an option to increase its
interest in the Project Level Company to up to 50% from 22.5%,
within 24 months of the completion of the Project Level Investment.
The valuation of any additional investment in the Project Level
Company by GFL would be based on the share price of Bacanora at the
time of the additional purchase.
The GBP14,400,091 capital raised via the Private Placement and
the GBP7,563,649 via the Project Level Investment would be used for
the continued development and commercialisation of the Sonora
Project. Under the proposed terms of the Strategic Investment, GFL
would play an active role in this process. Within 6 months of the
Strategic Investment, GFL would complete a review of the current
EPC engineering design focusing on reducing the capital cost of the
Sonora Project from the current figure of approximately US$420
million and accelerating the construction timetable from that
envisioned in the Feasibility Study. Based on the results of this
review, GFL would assist with finalising an EPC engineering
contract for the mine and plant construction and would work with
Bacanora during the construction, commissioning and early
operations phases of the Sonora Project. GFL would also provide a
plant and process commissioning team to assist Bacanora in
commissioning the Sonora Project.
Conditional on the completion of the Strategic Investment, GFL
will be granted exclusive offtake rights to purchase 50% of all
lithium products produced at Sonora for the life of the mine during
Stage 1 planned production of Li(2) CO(3) ("Offtake Agreement").
GFL would also have the option to increase its off-take to 75% of
all lithium products during Stage 2 of production. GFL would pay
market-based price for every tonne of Li(2) CO(3) sold under the
Offtake Agreement.
The Strategic Investment is conditional on, amongst other
matters, completion of due diligence, definitive documentation and
regulatory approvals. Further announcements will be made in due
course.
The Strategic Investment follows the completion of a Feasibility
Study which confirmed the attractive economics and low operating
costs of a 35,000 tpa battery grade (+99.5%) Li(2) CO(3) operation
at Sonora: US$1.253 billion pre-tax project Net Present Value
("NPV"), 26.2% Internal Rate of Return ("IRR"), and Life of Mine
("LOM") operating costs of c.US$4,000/t of Li(2) CO(3) (see
announcement dated 13 December 2017).
Peter Secker, CEO, of Bacanora Lithium, commented: "The proposed
Strategic Investment from Ganfeng, a top three lithium producer,
will be a major milestone in the development of the Sonora Project.
Not only will it provide industry validation of Sonora's clear
potential to become a key supplier of battery grade lithium but,
subject to Ganfeng exercising its option to increase its interest
in the Sonora Project to 50%, our share of the capital costs
required to construct an initial 17,500 tpa Li(2) CO(3) operation
at Sonora would be halved. With a senior debt facility with leading
resource finance provider RK Mine Finance secured and the proposed
strategic investment from Ganfeng, we have made significant
progress towards the completion of the construction funding of the
Sonora Project.
"It is not just Sonora's finance package that would be
substantially de-risked, we would also gain access to Ganfeng's
proven expertise in developing lithium projects, thereby
significantly de-risking the construction phase at Sonora. In
return, Ganfeng gains exposure to a large and scalable lithium
project which, with estimated LOM operating costs of c.US$4,000/t
of Li(2) CO(3) , has the potential to become one of the lowest cost
suppliers of battery grade lithium to fast-growing industries, such
as electric vehicles and energy storage, for many years to come.
Our priority is to work with Ganfeng to proceed with and complete
the Strategic Investment as well as finalise the EPC engineering
design contract and, where possible, secure material capital cost
savings. We now have a clear line of sight towards commencing
construction at the US$1.25 billion Sonora Project and I look
forward to providing further updates on our progress."
Mr Wang Xiaoshen, the Deputy Chairman of GFL, commented: "Our
proposed investment in Bacanora Lithium and the Sonora Lithium
Project would form a cornerstone in Ganfeng's growth strategy to
become the world's largest lithium producer. Specifically, the
Sonora deposit is large and scalable, with low operating costs. We
look forward to working closely with the Bacanora team to realise
Sonora's potential and bring into production the world's first
lithium clay project."
Both Ganfeng and Bacanora intend to complete their final due
diligence and documentation by 28 June 2019 and, subject to
successful completion, thereafter sign binding agreements for the
transaction. Further announcements will be made in due course.
Shareholder Call
Bacanora Lithium will be hosting a shareholder conference call
on Tuesday 21 May 2019 at 11am (GMT). The call will be hosted by
CEO Peter Secker who will be discussing the proposed Strategic
Investment by Ganfeng Lithium.
Conference Call Details
To participate in the conference call, please dial 0808 109
0701, or +44 (0) 20 3003 2701 if you are calling from outside of
the UK and quote the pin 0166458# when prompted to do so. Please
note that all lines will be muted except for the host's line.
Additionally, to view the presentation which will be related to
throughout the call, please use the link below and log in as a
participant; the password is: Event1.
https://sbmf.webex.com/sbmf/onstage/g.php?MTID=ecc0bfbaa7934bc877786c4362d9df7cf
The function will only be made live once the call has commenced.
The Company plans to make available a recording of the call on its
website shortly after.
About GFL
GFL is the world's third largest and China's largest lithium
compounds producer and the world's largest lithium metals producer
in terms of production capacity as of 31 December 2017, according
to CRU International Limited. GFL's operations are vertically
integrated, encompassing all critical stages of the value chain,
including upstream lithium extraction, midstream lithium compounds
and metals processing as well as downstream lithium battery
production and recycling. GFL has one of the most comprehensive
product offerings split into five major categories of more than 40
lithium compounds and metals products.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
**S**
For further information, please contact:
Bacanora Lithium plc Peter Secker, CEO info@bacanoralithium.com
Janet Boyce, CFO
Cairn Financial Advisers Sandy Jamieson / Liam +44 (0) 20 7213
LLP, Nomad Murray 0880
-------------------------- -------------------------
Citigroup Global Markets, Tom Reid / Patrick Evans +44 (0) 20 7986
Broker / Matthew Kenney 4000
-------------------------- -------------------------
+44 (0) 20 7523
Canaccord Genuity, Broker James Asensio 8000
-------------------------- -------------------------
St Brides Partners, Frank Buhagiar / Gaby +44 (0) 20 7236
Financial PR Adviser Jenner 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 Feasibility Study announced 12
December 2017. The Company, through drilling and exploration work
to date, has established a Measured plus Indicated Mineral Resource
estimate of over 5 Mt (comprising 1.9Mt of Measured Resources and
3.1Mt of Indicated Resources) of LCE(2) and an additional Inferred
Mineral Resource of 3.7 Mt of LCE. The Company's 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 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 tin, tungsten and lithium
at different times over the past 300 years. The strategic location
of the Zinnwald Lithium Project and the Falkenhain Licence 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 (Li(2) CO(3) ) equivalent; determined
by multiplying Li value in percent by 5.323 to get an equivalent
Li(2) CO(3) 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 Canada,
the United States, Mexico 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.
IMPORTANT NOTICE
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCEALSNFANNEFF
(END) Dow Jones Newswires
May 20, 2019 02:00 ET (06:00 GMT)
Bacanora Lithium (LSE:BCN)
Historical Stock Chart
From Apr 2024 to May 2024
Bacanora Lithium (LSE:BCN)
Historical Stock Chart
From May 2023 to May 2024