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Bacanora Lithium shifts attention to construction as financing completes

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What it does

Bacanora Lithium Ltd (LON: BCN) is an AIM-listed company focused on developing the world’s next major lithium project in Mexico, with the metal a key component for batteries used in electric vehicles.

The company is rapidly commercialising the world-class Sonora project in Mexico which benefits from a large, scalable and high-grade resource indicated at over 5mln tonnes of battery grade (99.5%) lithium carbonate equivalent (LCE).

Chinese group Ganfeng invested at 25p per share for a 29.9% stake in Bacanora, but also took a 22.5% direct stake in Sonora that it subsequently increased to 50% through the exercise of an option at a cost of £21.9mln.

In Europe, Bacanora has sold its 50% stake in the Zinnwald lithium project in Germany to Erris Resources PLC (LON:ERIS) 

Under the agreement, Bacanora received 90.6mln new shares in Erris, together with a net profit royalty. Following the transaction, Bacanora will own a 44.3% stake in Erris though it expects this to be diluted down by future share issues.

Zinnwald is located approximately 35km south-east of Dresden in the eastern part of Germany and is close to the country’s electric automotive industry and renewable energy battery groups.

How it’s doing 

The first phase at Sonora will see the construction of a 17,500 tonnes per annum (tpa) Li2CO3 (lithium carbonate) operation.

in February, the junior raised US$65mln (£47mln) fundraise which, in combination with existing cash and the undrawn portions of its debt financing facility, will finance Bacanora’s 50% share of the capital cost required for Stage 1 of the project.

In March, another piece of the financing dropped in to place when Bacanora received £21.8mln from Sonora Lithium Ltd (SLL) after Ganfeng exercised a share option to take its stake to 50%.

Bacanora said the funds will be applied towards the development of the project, located in Mexico where early-stage construction work is underway.

What the boss says: Peter Secker, chief executive

“By 2030, EV demand will account for more than 75% of consumption, up from 30% in 2019.

“As a result, demand for lithium for electric vehicles would surge to 1.4 million tonnes by 2030, almost a five-fold increase from the current 300,000 tonnes of demand in 2019.”

Inflexion points

  • Ganfeng has taken up its option to acquire 50% of Sonora
  • Within six months, Ganfeng should now complete a review of the current EPC engineering design to cut the US$420mln capital cost of Sonora and accelerate construction 
  • Based on the results Ganfeng would assist with finalising an EPC engineering contract for the mine and plant construction and help with commissioning

 

 

 

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