Name of the Project
Sonora lithium project.

Location
Sonora state, Mexico.

Project Owner/s
Bacanora Minerals.

Project Description
A feasibility study on the project has confirmed the positive economics and favourable operating costs of 35 000 t/y of battery-grade lithium carbonate.

The project has measured and indicated mineral resources estimated at five-million tonnes comprising 1.9-million tonnes of measured resources and 3.1-million tonnes of indicated resources of lithium carbonate equivalent (LCE) and an additional inferred mineral resource of 3.7-million tonnes of LCE.

The feasibility study envisages an openpit operation using continuous miners to mine the ore zones and a truck-and-shovel fleet to remove the waste material. An estimated 37.1-million tonnes of ore will be mined over the planned 19-year mine life, with a lithium grade of 4 151 parts per million and an average stripping ratio of about 3.4:1 over the life-of-mine.

The process plant has been designed to initially process 1.1-million tonnes a year of ore during Stage 1 of the project, subsequently increasing to an estimated 2.2-million tonnes a year at Stage 2, producing 17 500 t/y and 35 000 t/y of lithium carbonate respectively.

The plant design also includes a circuit to produce up to 30 000 t/y of potassium sulphate and/or sulphate of potash product through a series of evaporation and precipitation stages.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The feasibility study estimates a pretax net present value, at an 8% discount rate, of $1.25-billion and an internal rate of return of 26.1%, with a simple payback Stage 1 of four years.

Capital Expenditure
Stage 1 of the project is expected to cost about $419.62-million and Stage 2 $380.26-million.

Planned Start/End Date
Production is targeted for the first quarter of 2020.

Latest Developments
Bacanora Lithium has signed a nonbinding heads of terms with Chinese lithium producer Ganfeng for a strategic investment in the company and its flagship Sonora lithium project.

Completion of the strategic investment will form a major part of Bacanora’s finance package for the construction of an initial 17 500 t/y lithium carbonate operation at Sonora.

As part of the strategic investment, Ganfeng would subscribe for a 29.99% equity interest in Bacanora for a cash consideration of £14.4-million, equivalent to 57.6-million new ordinary shares in the company, at 25p a share.

Subject to the completion of the private placement, Ganfeng would have the right to nominate one director to the main board of Bacanora and would also be granted pre-emption rights in relation to new share issues proportionate to its interest in Bacanora. 

Bacanora CEO Peter Secker has said that the proposed strategic investment from Ganfeng will be a major milestone in the development of the Sonora project and will not only provide industry validation of Sonora's potential to be a key supplier of battery grade lithium but also – subject to Ganfeng exercising its option to increase its interest to 50% – halve the capital cost required to build the initial operation.

Moving forward, under the proposed terms of the strategic investment, Ganfeng will complete a review of the current engineering, procurement and construction (EPC) design focusing on reducing the capital cost of the Sonora project from the current figure of about $420-million and accelerating the construction timetable from that envisioned in the feasibility study.

Based on the results of this review, Ganfeng will assist in finalising an EPC contract for the mine and plant construction, and will work with Bacanora during the construction, commissioning and early operations phases of the Sonora project. Ganfeng will also provide a plant and process commissioning team to assist with the commissioning of the project. 

Conditional on the completion of the strategic investment, Ganfeng will be granted exclusive offtake rights to buy 50% of all lithium products produced at Sonora for the life of the mine during Stage 1 of planned production of lithium carbonate.

Ganfeng will also have the option to increase its offtake to 75% of all lithium products during Stage 2 of production and will pay market-based price for every tonne of lithium carbonate sold under the offtake agreement.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Bacanora Minerals, tel +1 403 237 6122, fax +1 403 237 6144 or email info@bacanoraminerals.com.