London-listed Bacanora Lithium on Monday announced significant progress in the raising of the construction capital needed to build Stage 1 of its Sonara lithium project, in Mexico, announcing a conditional $90-million investment from blue chip investors and a $100-million placing of ordinary shares.
Existing shareholder Hanwa has entered into a conditional agreement with a new strategic investor for $25-million and the State General Reserve Fund of Oman (SGRF) for another $65-million investment. These investments are conditional on the full $460-million in construction funding required for Stage 1, which will produce 17 500 t/y of lithium carbonate.
Bacanora has also launched a placing for $100-million, which will be used to start construction of the project. The placing is being offered by way of a bookbuild, with the number of placing shares and allocations at the discretion of the bookrunner, Canaccord Genuity. WH Ireland, Ashanti Capital and Steubing are acting as placing agents in the transaction.
Banora said that the placing would allow the company to order long lead items and to begin the required civil works as it worked towards its stated intention of commissioning the project in the first quarter of 2020.
A February 2018 feasibility study estimated the capital cost for 17 500 t/y of lithium carbonate production, or Stage 1 of the project, at $420-million. In addition to the capital cost, the company estimates that $40-million of additional funding will be required for working capital purposes. Therefore, the total construction funding required for Stage 1 of the project is estimated to be $460-million.
All required approvals are in place, subject to raising the financing, for Bacanora to begin construction of the project.
Bacanora has previously secured a $150-million senior debt facility from Red Kite Mine Finance.
The combined total of the placing, the proposed SGRF and Hanwa investments and the previously announced RK Facility is $340-million. Accordingly, the company intends to raise a further $120-million of funding prior to the end of the first quarter of 2019.
“The proposed $90-million investments from blue chip investors of the calibre of SGRF and our existing strategic partner, global trading company Hanwa, is a clear endorsement of Sonora's credentials to become a low-cost producer of high value lithium carbonate. The $150m debt facility already secured from RK along with the proceeds of the placing will provide us with an excellent platform with which to complete the funding package by early 2019. Importantly, by launching our placing today we are aiming to be in a position to embark on the construction phase at Sonora in the third quarter of 2018, targeting first production in first quarter of 2020,” said CEO Peter Secker.
Bacanora’s share price fell 8.16% on Monday in London.