Cadence Minerals PLC Bacanora Sonora Lithium Project Update (9985S)
November 11 2019 - 7:10AM
UK Regulatory
TIDMKDNC
RNS Number : 9985S
Cadence Minerals PLC
11 November 2019
Cadence Minerals Plc
("Cadence Minerals", "Cadence" or "the Company")
Bacanora Lithium (BCN) - Sonora Lithium Project Update.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note
the update published today by Bacanora Lithium (AIM:BCN)
("Bacanora") on its activities at the Sonora Lithium Project in
Mexico ('Sonora' or the 'Project') following the recent completion
of the Strategic Investment by leading global lithium company
Ganfeng Lithium Co., Ltd. ('Ganfeng').
Cadence Minerals - Holdings in BCN, Mexalit and Megalit:
Bacanora is a lithium exploration and development company.
Cadence holds 30% of Mexalit and Megalit joint venture companies.
Mexalit is the owner of the El Sauz, El Sauz 1, El Sauz 2, Fleur
and Fleur 1 mineral concessions, which forms part of the 20-year
mine plan of the Sonora Lithium Project in Northern Mexico.
Ganfeng Review and Process Testwork
The Bacanora project team in Mexico continues to progress the
final design work for the mine site, infrastructure, concentrator
and kiln sections of the processing plant. Representative samples
have been sent to Ganfeng in China. Ganfeng's technical review of
the hydrometallurgical circuit has commenced with a view to
potentially sourcing key sections of the lithium production
equipment from their current equipment suppliers in China. This
work is expected to be completed in H1 2020. As part of this
technical review, both Bacanora and Ganfeng continue to develop
testwork programmes for the potential production of other
downstream high value lithium products in addition to the
battery-grade lithium carbonate used in the Company's feasibility
study. The results of this work will be reviewed over the next few
months.
The feasibility study indicated highly favourable economic
indicators for a battery grade lithium carbonate operation at
Sonora, including US$1.25 billion NPV, 26% IRR and operating costs
among the lowest in the industry at around US$4,000/t of lithium
carbonate (see announcement of 13 December 2017 for further
details).
Financing
Once Ganfeng completes its review, Bacanora will deliver final
engineering costs for Stage 1 of the Project, following which
Bacanora will look to finalise the funding package for the Project.
At this stage, the Company believes that the engineering costs will
remain in line with the 2018 Feasibility Study forecast of
approximately US$420 million.
The recent 29.99% equity investment by Ganfeng Lithium and their
22.5% investment at the project level, in combination with a
combined 100% off-take held by Ganfeng and Hanwa Corporation
('Hanwa') for Stage 1 production of 17,500 tonnes per annum of
lithium products at the Project demonstrates the strong support
that both these cornerstone investors have shown in Sonora.
Combined, Ganfeng and Hanwa have a see-through ownership of more
than 50% of Sonora. In the last 18 months, Bacanora has already
secured a US$150 million debt facility with RK Mine Finance and
continues to explore additional sources of project funding. The
22.5% project investment and 29.99% equity investment from Ganfeng,
in addition to ongoing support from Bacanora's other shareholders
and off-takers, ensures a very solid position for finalising the
project funding stage of the Sonora development.
Bacanora had US$40 million of cash at the end of October 2019,
which will enable it to commence the bulk earthworks on site in H1
2020 and start to upgrade the primary access road to site. Bacanora
will also be able to use part of these funds to place the initial
orders for some of the longest lead-time items in the concentrator,
pyrometallurgy and hydrometallurgy sections of the lithium
plant.
General Market Conditions
There have been a number of media reports over the past few
months highlighting the impact of an over-supply of lower grade
bulk spodumene concentrates from Australia into the Asian lithium
converter markets. Recently a number of these projects have been
delayed, closed, reported decreased production or put on care and
maintenance. With the majority of these concentrate operations
being at the higher cost level, this supports the Bacanora strategy
of developing a fully integrated lithium project that produces a
final battery grade lithium product at much lower costs rather than
an intermediate concentrate.
Bacanora CEO Peter Secker said: "Recent research reports predict
the lithium industry would need US$30 billion in investment in
upstream capacity to meet its forecast of 1 million tonnes of
supply by 2025 (a threefold increase on current levels). In order
to secure funding, any new lithium project needs to be low on the
operational cost-curve, without having to rely on by-product
credits to artificially lower that cost per tonne. A project also
needs to have reliable engineering cost estimates. A project needs
to be of sufficient scale, in a location with a favourable
environmental and political climate and deliver a high-grade end
product. The Sonora Lithium Project is one of the very few projects
globally that can deliver on all of these factors."
The full release can be found at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BCN/14301803.html
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
- Ends -
For further information: Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD
& Broker) +44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
Novum Securities Limited
(Joint Broker) +44 (0) 207 399 9400
Jon Belliss
Qualified Person
Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the
information contained in this announcement. Kiran holds a Bachelor
of Engineering (Industrial Geology) from the Camborne School of
Mines and an MBA (Finance) from CASS Business School.
Forward-Looking Statements:
Certain statements in this announcement are or may be deemed to
be forward-looking statements. Forward-looking statements are
identi ed by their use of terms and phrases such as "believe"
"could" "should" "envisage" "estimate" "intend" "may" "plan" "will"
or the negative of those variations or comparable expressions
including references to assumptions. These forward-looking
statements are not based on historical facts but rather on the
Directors' current expectations and assumptions regarding the
Company's future growth results of operations performance future
capital and other expenditures (including the amount. nature and
sources of funding thereof) competitive advantages business
prospects and opportunities. Such forward-looking statements re ect
the Directors' current beliefs and assumptions and are based on
information currently available to the Directors. Many factors
could cause actual results to differ materially from the results
discussed in the forward-looking statements including risks
associated with vulnerability to general economic and business
conditions competition environmental and other regulatory changes
actions by governmental authorities the availability of capital
markets reliance on key personnel uninsured and underinsured losses
and other factors many of which are beyond the control of the
Company. Although any forward-looking statements contained in this
announcement are based upon what the Directors believe to be
reasonable assumptions. The Company cannot assure investors that
actual results will be consistent with such forward-looking
statements.
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
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