Bacanora Lithium makes solid progress at Sonora project

Bacanora Lithium updated the market on activities at its flagship Sonora Lithium Project in Mexico on Friday, in line with its objective to commence the construction of a 35,000 tonnes-per-annum lithium carbonate operation at Sonora in the first half of 2018, targeting first production in the first quarter of 2020.

The AIM-traded firm said a recently-completed feasibility study demonstrated Sonora's potential to become a “leading supplier” of high value lithium products to fast-growing industries, such as electric vehicles and energy storage.

It said the study demonstrated strong economics of $1.25bn net present value, a 26.1% internal rate of return, and life-of-mine gross operating costs of $3,910 per tonne Li2CO3, which the board said were comparable to those of the low cost brine producers of South America.

Design of both the roaster/kiln FEED and the crystalliser/evaporation/IX FEED had commenced following the delivery of bulk lithium samples from Sonora to selected vendors, the board said.

Those two equipment packages were expected to comprise approximately 75% of the total capital cost of the processing plant.

Bacanora added it was in detailed contract discussions with EPC/EPCM engineering groups for all other parts of the processing plant in order to finalise the project cost and to complete budget and timetables in conjunction with completion of the FEED engineering packages.

The current FEED schedule was to have designs, cost estimates and process guarantee scopes completed in the second quarter of 2018, with orders for long lead items being placed at the end of the FEED process.

Bacanora said the current timetable was based on commissioning and lithium carbonate production commencing in the first quarter of 2020, and would be updated at the end of the FEED process.

Water licence permits covering the Sonora Lithium Project had been granted by the Comisión Nacional Del Agua (CONAGUA), the board said.

That followed the granting of the 'Manifestacion de Impacto Ambiental' environmental permits and the completion of the land acquisition agreements for the purchase of the surface land over the Sonora project area in the fourth quarter of 2017.

It added that it currently envisaged that LNG gas supplies would be initially utilised at Sonora during the early stages of commissioning whilst gas consumption was low.

Once energy consumption reached steady state, pipeline supply to the project would be initiated.

The company said it was in detailed discussions with a number of potential build, own and operate (BOO) energy partners for the gas pipeline development to the project along with the finalisation of the proposed natural gas pipeline routes.

Detailed quotes for the supply of LNG were also currently being evaluated.

As it had previously announced, the company entered into a binding placing letter with NextView New Energy Bull Hong Kong in December 2017, and as announced on 28 February, although the company had fulfilled all of its obligations in respect of the placing as of that time, NextView failed to forward the placing proceeds to Bacanora, leaving it in default under the terms of the placing letter.

“In spite of repeated efforts on the part of the company requesting that NextView remedy its continuing default, NextView has continued to fail to complete the placing as contemplated under the placing letter,” the board said in its statement.

“Accordingly, the company has terminated the placing letter and has reserved its rights to pursue any available legal remedies against NextView.”

The feasibility study estimated the capital cost for the stage one production of 17,500tpa of lithium carbonate at Sonora at $420M.

The company said it was continuing to finalise its debt and equity financing strategy with Canaccord and its other financial advisors.

“The feasibility study in December 2017 confirmed Sonora's credentials to become a world class, low cost producer of battery grade lithium carbonate, and we are focused on realising this potential at the earliest opportunity,” said CEO Peter Secker.

“With this in mind, work streams covering FEED, infrastructure, permitting and financing are all progressing concurrently and on schedule so that we remain on course to embark on the construction phase at Sonora in the first half of 2018.

“Allowing for an 18 month build out period, this is expected to enable the production of high value lithium products to commence in the first quarter of 2020, which we believe positions Sonora as the next world class lithium mine supplying fast growing markets, such as electric vehicles and energy storage.”