TIDMBCN
RNS Number : 0239C
Bacanora Minerals Ltd
10 April 2017
TSX-V/AIM Symbol: BCN April 10, 2017
NEWS RELEASE
BACANORA Establishes Strategic Long-Term Partnership with
Hanwa
Initial 10% Equity Investment and Lithium Carbonate Off-take for
Up To 100% of Production
BACANORA MINERALS LTD. ("Bacanora" or the "Company") (TSX-V: BCN
and AIM: BCN), the Canadian and London listed lithium exploration
and development company focused on building an international
lithium group, is delighted to announce that it has entered into a
strategic partnership (the "Agreement") with Hanwa Co., LTD.
("Hanwa"), a leading Japan-based global trading company and one of
the larger traders of battery chemicals in the Asian region, with
reported net sales of more than Yen1,500 billion in 2016.
The Agreement is comprised of both an initial 10% equity
investment in Bacanora and an Off-take Agreement for up to 100% of
the battery grade lithium carbonate ("Li(2) CO(3) ") produced at
the Sonora Lithium Project ("Sonora" or the "Project"). The Company
is targeting to produce 17,500 tonnes of Li(2) CO(3) per annum
("Stage 1"), commencing in 2019. After two years of producing at
this level, the Company plans to lift production to 35,000 tonnes
per annum ("Stage 2")[1].
Overview
-- Milestone Off-take Agreement for up to 100% of Li(2) CO(3) produced at Sonora:
o Hanwa to purchase 70-100% of lithium carbonate produced during
Stage 1
o Tonnage based contract for battery grade lithium carbonate at
market pricing, with final pricing to be finalised prior to
commencement of production
o Option to increase the off-take tonnage by up to 100% at Stage
2 production
-- Company-level investment demonstrates Hanwa's commitment to
Bacanora and represents the entry of a new long term, supportive
investor to the register:
o Hanwa to acquire an initial 10% interest in Bacanora, raising
approximately GBP10,175,000 (approximately C$16,896,000) in
proceeds to the Company via the placement of 12,333,261 shares at a
price of 82.5 pence (approximately C$1.37) per share (the
"Placing")
o Hanwa is entitled to present a nominee for election to the
board of directors of Bacanora and has a pre-emptive right to
maintain its 10% equity interest
o Hanwa shall have an option to increase its equity interest in
Bacanora to 19.9%.
-- The Agreement provides a funding platform for the Project -
Hanwa represents a cornerstone investor and will aid in the
procurement of long term project debt funding
-- Validates the quality of the battery grade (+99.5%) lithium
carbonate product and Bacanora's production process
o Hanwa has received numerous samples of the Company's battery
grade product and has distributed samples to a number of their
customers
Bacanora Chairman Mark Hohnen stated, "This partnership with one
of Japan's leading battery chemical traders is transformational for
Bacanora: it significantly reduces the overall risk profile of the
Project; validates our production process; and provides us with an
excellent platform with which to fund the future development of
Sonora, our advanced lithium project in Mexico. Importantly, a
long-term, supportive relationship has been established between
ourselves and Hanwa, who will take a 10% interest in our Company
and also purchase between 70-100% of the total lithium carbonate
production from our unique asset, highlighting their confidence in
our processing methods and our ability to execute on the exciting
opportunity that Sonora presents. This will be priced at market
prior to production.
"Crucially, this relationship provides Bacanora with a further
aligned cornerstone investor ahead of project financing and
establishes a mantel from which we hope to leverage towards project
debt financing out of Japan to contribute towards the construction
of a significant lithium carbonate operation in Mexico. We are
delighted to have delivered on our stated objective to secure a
partner within the buoyant Asian lithium carbonate market and look
forward to continuing this theme in the coming months, as we work
towards the completion of our Feasibility Study."
Further Information
The Agreement
Hanwa has established a long-term strategic relationship with
Bacanora in relation to its Sonora Lithium Project in Mexico. The
ongoing Feasibility Study at Sonora is focused on delivering an
operation capable of initially delivering 17,500 tonnes pa of Li(2)
CO(3) for the first two years of operations, followed by 35,000
tonnes Li(2) CO(3) pa thereafter. Under the terms of the Agreement,
Hanwa will initially acquire 10% of the issued share capital of
Bacanora and acquire between 80 - 100% of the Li(2) CO(3) produced
at Sonora. In terms of the off-take agreement, pricing will be
finalised in line with global Li(2) CO(3) prices prior to Sonora
being brought into production.
Hanwa's investment to acquire 10% of Bacanora's outstanding
shares is anticipated to be undertaken by the end of April 2017.
Hanwa also has an option to increase its equity investment by up to
an additional 9.9% of new shares to be issued at market prices at
the time of exercise. Further details regarding the completion of
the equity investment will be provided in due course.
Importantly, Hanwa has committed to utilising its strong
relationships in Asia in order to assist Bacanora in securing the
debt financing component of the funding package required to enable
development to commence following completion of the Feasibility
Study. Preliminary introductions made to date by Hanwa have been
positive first steps towards securing such additional future
financing requirements.
About Hanwa
Hanwa is a Japanese trading company which supplies a broad
spectrum of products, including steel, non-ferrous metals, food,
fuel, chemicals, lumber, machinery and many other items, to an
equally diverse range of customers. The company has solid positions
in all of these businesses. As a trading company that performs many
important roles, Hanwa will continue to enter more business fields
in response to changes in the operating environment in order to
meet the needs of customers.
For further information, please contact:
Bacanora Minerals Peter Secker, CEO info@bacanoraminerals.com
Ltd.
--------------------- --------------------- --------------------------
Cairn Financial
Advisers LLP, Sandy Jamieson/Liam +44 (0) 20
Nomad Murray 7213 0880
--------------------- --------------------- --------------------------
Numis Securities
Ltd, John Prior/James +44 (0) 20
Broker Black/Paul Gillam 7260 1000
--------------------- --------------------- --------------------------
St Brides Partners,
Financial PR Elisabeth Cowell/ +44 (0) 20
Adviser Frank Buhagiar 7236 1177
--------------------- --------------------- --------------------------
ABOUT BACANORA:
Bacanora is a Canadian and London listed lithium exploration and
development company (TSX-V: BCN and AIM: BCN). The Company is
exploring for, and developing a pipeline of international lithium
projects, with a primary focus on the Sonora Lithium Project. The
Company's operations are based in Hermosillo in northern Mexico.
The Company is led by a team with lithium expertise and proven mine
development, construction and operations experience.
The Sonora Lithium Project, which consists of ten mining
concession areas covering approximately 100 thousand hectares in
the northeast of Sonora State. The Company, through drilling and
exploration work to date, has established an Indicated Mineral
Resource (in accordance with National Instrument 43-101 - Standards
of Disclosure for Mineral Projects ("NI 43-101")) of 4.5 million
tonnes (LCE[2]) and 2.7 million tonnes Inferred.[3] A
Pre-Feasibility Study completed in Q1 2016[4] established Probable
Mineral Reserve (in accordance with NI 43-101) of 2.1 million
tonnes LCE and demonstrated the economics associated with becoming
a 35,000 tpa lithium carbonate and 50,000 tpa SOP producer in
Mexico.
In addition to the Sonora Lithium Project, the Company also has
a 50% interest in the Zinnwald Lithium Project in southern Saxony,
Germany. The Zinnwald Lithium Project is 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 allows
immediate access to the German automotive and downstream lithium
chemical industries.
Reader Advisory
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. In particular, forward-looking information
in this press release includes, but is not limited to future
production targets, completion of a Feasibility Study, various
terms under the Agreement, completion of the Placing and
procurement of future debt financing. 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.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
([1]) See Technical Report on the Pre-Feasibility Study for the
Sonora Lithium Project, Mexico, 15 April 2016. The authors of the
PFS are Ausenco Limited, SRK and Independent Mining Consultants
Inc. A copy of this report is available under Bacanora's corporate
profile at www.sedar.com.
([2]) LCE = lithium carbonate (Li(2) CO(3) ) equivalent;
determined by multiplying Li value in percent by 5.324 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.
([3]) See Amended Mineral Resource Estimate for the Sonora
Lithium Project, Mexico, April 2016. The lead author of the amended
report is Mr. Martin Pittuck (MSc., C.Eng., FGS, MIMMM) of SRK
Consulting (UK) Limited ('SRK'). A copy of this report is available
under Bacanora's corporate profile at www.sedar.com.
([4]) See Technical Report on the Pre-Feasibility Study for the
Sonora Lithium Project, Mexico, 15 April 2016. The authors of the
PFS are Ausenco Limited, SRK and Independent Mining Consultants
Inc. A copy of this report is available under Bacanora's corporate
profile at www.sedar.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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