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Cadence Minerals #KDNC – Sonora Lithium Investment Update – Request for treaty negotiations with Mexico
Cadence Minerals (AIM/Aquis: KDNC) advises that the Company and its subsidiary REM Mexico Limited (“REMML”) have issued a Request for Consultations and Negotiations (“Request”) to the Government of Mexico under the United Kingdom-Mexico Bilateral Investment Treaty (“BIT”).
The Request concerns the purported revocation of the mining concessions for the Sonora Lithium Project (the “Project”) by the Mexican General Directorate of Mines as announced by Cadence on 31 August 2023, and related acts and omissions by Mexico. The affected concessions include those granted to Mexilit S.A. de CV (“Mexilit”) and Minera Megalit S.A. de CV (“Megalit”), these being joint venture companies in which Cadence holds a 30% stake through REMML.
In their Request, Cadence and REMML have identified various BIT obligations that have been breached by Mexico, including Mexico’s obligation not to unlawfully expropriate the investments of UK investors such as Cadence and REMML and its obligation to treat such investments fairly and equitably.
In accordance with Article 10 of the BIT, Cadence and REMML have requested consultations and negotiations with Mexico with a view to resolving the dispute amicably. The BIT provides for disputes to be resolved by international arbitration if they cannot be resolved by consultation and negotiation.
Cadence and REMML have engaged leading international law firm Clifford Chance as counsel for the BIT process. The Clifford Chance team representing Cadence and REMML specialise in mining-related investment treaty arbitration cases.
Cadence CEO Kiran Morzaria commented: “The team at Clifford Chance have many years of experience in mining-related investment treaty arbitration, and have successfully resolved similar cases in the past. With their guidance, we are hopeful that a constructive solution can be reached through consultations and negotiations with Mexico under the BIT. “
Background to Cadence Sonora Investments
Cadence holds an interest in the Sonora Lithium Project (“Project”) via its 30% stake in each of Mexilit and Megalit.
Mexilit and Megalit form part of the Project. The Project consists of nine granted concessions. Two of the concessions (La Ventana and La Ventana 1) are owned 100% by subsidiaries of Ganfeng Lithium Group Co., Ltd (“Ganfeng”). El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions are owned by Mexilit, which is owned 70% by Ganfeng and 30% by Cadence. The Buenavista and San Gabriel concessions are owned by Megalit, which is owned 70% by Ganfeng and 30% by Cadence.
For further background to Cadence’s investments in the Sonora Lithium Project, see the Company’s RNS of 31 August 2023 (“Sonora Lithium Investment Update”) here.
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For further information contact:
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| Cadence Minerals plc | +44 (0) 20 3582 6636 |
| Andrew Suckling | |
| Kiran Morzaria | |
| WH Ireland Limited (NOMAD & Broker) | +44 (0) 20 7220 1666 |
| James Joyce | |
| Darshan Patel | |
| Fortified Securities – Joint Broker | +44 (0) 20 3411 7773 |
| Guy Wheatley | |
| Brand Communications | +44 (0) 7976 431608 |
| Public & Investor Relations | |
| Alan Green |
Cautionary and Forward-Looking Statements
Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified 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 reflect 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.
The information contained within this announcement is deemed by the company to constitute Inside Information as stipulated under the Market Abuse Regulation (E.U.) No. 596/2014, as it forms part of U.K. domestic law under the European Union (Withdrawal) Act 2018, as amended. Upon the publication of this announcement via a regulatory information service, this information is considered to be in the public domain.
Cadence Minerals #KDNC – Sonora Lithium Investment Update
Cadence holds an interest in the Sonora Lithium Project via a 30% stake in the joint venture interests in each of MexilitS.A. de CV (“Mexilit”) and Minera Megalit S.A. de CV (“Megalit”).
Mexilit and Megalit form part of the Sonora Lithium Project (the “Project”). The Sonora Lithium Project consists of nine granted concessions. Two of the concessions (La Ventana, La Ventana 1) are owned 100% by subsidiaries of Ganfeng Lithium Group Co., Ltd (“Ganfeng”). El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions are owned by Mexilit S.A. de C.V. (“Mexilit”), which is owned 70% by Ganfeng and 30% by Cadence. The Buenavista and San Gabriel concessions are owned by Megalit, which is owned 70% by Ganfeng and 30% by Cadence.
Ganfeng has been developing the Project, consisting of an open pit mine and lithium chemical product processing facility in Sonora, Mexico. The principal planned lithium product for the Project is lithium hydroxide.
As previously announced by Cadence. In April 2022 and May 2023, the Mexican Government approved amendments to its Mining Law (the “Mining Law Reform”), which prohibited lithium concessions, declared lithium as a strategic sector and granted the exclusive right to engage in lithium mining operations to a state-owned entity. The Mining Law Reform is not supposed to apply to pre-existing concessions, including those held by the Mexilit and Megalit. Ganfeng’s and Cadence’s position is that these reforms cannot impact the Project’s concessions because they were granted prior to the enactment of the Mining Law Reform.
This is consistent with the terms of the Constitution of Mexico, which, among other principles and rights, recognizes the principles of legality and non-retroactivity of laws. Guided by the principles of good faith, cooperation, and mutual benefit, Ganfeng has been proactively engaging with the Mexican Government in general and with the Secretary of Economy in particular, regarding a potential collaboration on the Sonora Project while respecting Ganfeng and its subsidiaries rights (including those subsidiaries 30% owned by Cadence). Ganfeng continues to seek a mutually beneficial resolution. As of now, no agreement has been reached among the Company, Ganfeng and the Mexican Government concerning this potential collaboration.
As the operator of the Project, including the concessions held by Mexilit and Megalit, Ganfeng’s ability to develop the Project is based on a series of concessions granted in accordance with Mexican law and held by three controlled subsidiaries of the Ganfeng incorporated in Mexico (the “Mexican Subsidiaries”).
While Ganfeng was holding discussions with the Secretary of Economy, the General Directorate of Mines (“DGM”) initiated a review of nine of the lithium concessions held by the Mexican Subsidiaries, including the lithium concessions including the concessions owned by Mexilit and Megalit.
According to the DGM, if the Mexican Subsidiaries failed to submit sufficient evidence within the specified timeframe to prove that they had complied with minimum investment obligations for the development of lithium concessions in 2017-2021, there was a risk of cancellation of the above-mentioned lithium concessions.
As of May 2023, Mexlait and Megalit had submitted extensive evidence of their compliance with the minimum investment obligations of the above-mentioned lithium concessions in a timely manner. However, the DGM issued a formal decision notice to the Mexican Subsidiaries in August 2023, indicating that nine lithium concessions were cancelled, which include those owned by Mexilit and Megalit.
The lithium concessions’ cancellations issued by the DGM are not final and are subject to ongoing appeals. Ganfeng and Cadence believe that the Mexican Subsidiaries have complied with their minimum investment obligations, as required by Mexican law. Indeed, the mine development investment by the Mexican Subsidiaries has significantly exceeded the minimum investment obligations, and the Mexican Subsidiaries regularly submitted to the DGM annual reports for the 2017-2021 periods detailing their operations within the prescribed period annually. The Mexican Government did not raise any objections until it recently notified Mexican Subsidiaries that the minimum investment obligations were allegedly not met, and it took action to cancel the lithium concessions.
Moreover, Ganfeng and Cadence’s position is that the resolutions cancelling the concessions violate both Mexican law and international law as they are arbitrary, unsubstantiated in both fact and law and infringe upon the Company’s, Ganfeng’s and its Subsidiaries’ fundamental due process rights. Therefore, Ganfeng and the Mexican Subsidiaries have filed administrative review recourses before the Secretary of Economy against the aforementioned resolutions.
Impact on the Company
The lithium concessions’ cancellations issued by the DGM are not final. Depending on the progress of Ganfeng’s further actions and the outcome of the above-mentioned matters, whether cancellations will be revoked or maintained in place and the scope of the concessions affected are still uncertain.
Cadence’s investment into the Sonora Lithium project is circa £3.89 million. The total value of Cadence’s portfolio of assets is circa £41.15 million, including £28.01 million attributed to our 30% stake in the Amapa Iron Ore project.
Ganfeng’s interim results announcement published on 29 August 2023 discussed these developments as part of their post-balance sheet analysis. Therefore, there is still uncertainty about the impact on Cadence’s investment. Ganfeng is pursuing various remedies, including administrative review recourses to challenge the DGM’s resolutions. If necessary, Ganfeng will resort to additional remedies under Mexican or international law.
Cadence will continue to liaise with our joint venture partners on a regular basis and ensure within the limits of the join venture agreement that the matter is given the utmost attention and that regulatory requirements are fulfilled in a timely manner.
Cadence CEO Kiran Morzaria commented: “While on the face of it, this development further delays the prospect of a return from the Mexalit and Megalit concessions for Cadence shareholders, it is important to remember that any opportunity to grow value at Sonora would only start to accrue once mining commences in the concessions owned by Mexilit, which is nine years into the mine life. In the board’s opinion, substantially more value is to be had from our 30% stake in the Amapa Iron Ore Project once it is brought back into production.”
“I look forward to reporting on further progress at Amapa.”
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For further information contact:
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Cadence Minerals plc |
+44 (0) 20 3582 6636 |
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Andrew Suckling |
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Kiran Morzaria |
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WH Ireland Limited (NOMAD & Broker) |
+44 (0) 207 220 1666 |
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James Joyce |
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Darshan Patel |
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Brand Communications |
+44 (0) 7976 431608 |
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Public & Investor Relations |
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Alan Green
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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.
Cautionary and Forward-Looking Statements
Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified 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 reflect 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.
The information contained within this announcement is deemed by the Company to constitute Inside Information as stipulated under the Market Abuse Regulation (E.U.) No. 596/2014, as it forms part of U.K. domestic law under the European Union (Withdrawal) Act 2018, as amended. Upon the publication of this announcement via a regulatory information service, this information is considered to be in the public domain.
Cadence Minerals #KDNC – Corporate Update
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to provide an update on the progress of three of its investments. The latest presentation is available on our website.
Hastings Technology Metals (ASX: HAS) (“Hastings”)
On 25 January 2023, Cadence completed the sale of its 30% stake in several mineral concessions forming part of the Yangibana Rare Earths project for a consideration of 2.45 million Hastings shares, equating to approximately 1.9% Hastings issued share capital. This consideration was a premium over the Net Present Value (“NPV”) of the Cadence portion of the mineable material, based on the definitive feasibility (“DFS”) updated by Hastings on 21 February 2022.
Hastings recently published an update on the Yangibana Rare Earth Project, highlights of which are as follows:
- Significant progress during the last two months on enabling construction and ordering long lead critical items.
- A total of $146 million in contractual commitments has been made to date, demonstrating the high degree of confidence by the Hastings Board in the future of the Yangibana project.
- Ore Reserves increased 25% to 20.93Mt at 0.90% Total Rare Earth Oxide (TREO) grade, increasing mine life to 17 years.
- Senior management appointments in the last two months include Rudolph van Niekerk as COO, Robert Klug as General Counsel, and Tim Gilbert as General Manager of Operations. Recruitment is underway for Project Director and the CFO position following the recent career move by Matthew Allen.
- Cost and schedule review identified potential areas for construction contracting model restructuring, optimisation and de-risking.
- The recent engagement of Boston Consulting Group (BGC) to assist in further investigating the merits of an integrated mine-to-magnets strategy and exploration of partnership opportunities.
The full announcement concerning the Yangibana sale is available here.
Sonora Lithium Project (“Sonora”)
Cadence holds a partial interest in the Sonora Lithium Project via a 30% stake in the joint venture interests in each of Mexilit S.A. de CV (“Mexilit”) and Megalit S.A de C.V (“Megalit”). Mexilit, with its El Sauz and Fleur concessions, forms part of the Sonora Lithium Project and is a part of the reserve in the mine plan after initial mining in the La Ventana concession (100% Ganfeng). Mexalit and Megalit are each 70% indirectly owned by Ganfeng Lithium Co (“Gangfeng”) and 30% by Cadence.
A feasibility study report was published in January 2018. The report estimated a pre-tax project net present value of US$1.253 billion at an 8% discount rate, an Internal Rate of Return of 26.1% and Life of Mine operating costs of US$3,910/t of lithium carbonate. Ganfeng has stated that they expect the capacity of phase I will deliver 50,000 tons of lithium hydroxide, which is 42% above the anticipated production levels outlined in the feasibility study.
In 2021, a decree was passed by the Mexican government to reform the domestic energy sector (“Decree”). The Decree stated that lithium would be included among the minerals considered strategic for an energy transition. As a result, no new concessions for lithium exploitation by private companies would be granted. Earlier this month, the Mexican government passed a presidential decree confirming that within a 900 square-mile lithium mining zone in northern Sonora state, existing concessions would “remain safe”. This aligns with the general opinion that the Decree passed by the Senate only impacts licenses, concessions, or contracts to be granted, not already those granted, as is the case for the Sonora Lithium Project.
Amapá Iron Ore Project (“Amapá”)
Earlier this year, Cadence published an economically robust Pre-Feasibility Study (” PFS”) for the Amapa Iron Ore Project. Along with the PFS and subsequent consultations with the key contractors, we have identified three areas of possible improvement to Amapá.
The first will be to review the historical drilling and geological data north of the Amapá mineral concessions. The data has been acquired and is currently being processed to identify further iron ore resources, which, if present, would further increase the mine life. The second area of potential improvement is a change in the layout of the port at Santana by moving the railway loop further from the shore. A scoping study regarding this option has already been completed and identified capital savings. The last area of potential improvement is to investigate and review the flowsheet to improve the final product quality over and above the current 65% iron ore concentrate.
During 2022, the impact of the Ukraine war and the legacy of Covid on supply chains resulted in higher shipping costs and lower iron ore pricing. As a result, only one iron ore shipment was made during the year. The net proceeds of this shipment, along with approximately half of the net proceeds from the shipments in 2021, have been used to pay the secured bank creditors as per the settlement agreement announced in December 2021 here. Given these unprecedented macro-economic conditions, DEV Mineração S.A. (“DEV”) was unable to meet the 2022 payment schedule as per the settlement deed and although the bank creditors have reserved their rights, the settlement deed remains in full effect with all parties in discussions with a view to agree a new timetable in order to rephase payments so these can be met in light of market conditions.
With improving iron ore prices and stability returning to shipping costs, the sale of the 58% iron ore concentrate stockpile is now economically viable. We expect shipping to recommence in the next six months, with the net revenues being used to pay the bank creditors, as per the settlement agreement.
Cadence CEO Kiran Morzaria, commented: “As is the nature of any investment company, our value is driven by the sum of our parts. With the recent reduction in Hastings share price our portfolio valuation has also reduced. However, we see no fundamental reason for this price volatility given the substantial progress. Hastings is making in the construction of the Yangibana rare earth project and we look forward to them advancing to project towards production in 2024.”
“Cadence’s current public and private investments have continued to perform delivering an unrealised return of approximately 172% and our listed investments have delivered a total return (realised and unrealised) of 328%.”
“Our confidence in Amapa continues to grow thanks to a potential further increase in the overall iron ore resource, improvements to the port and prospects for restarting iron ore shipments in the coming months. I look forward to providing further updates.”
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| Cadence Minerals plc | +44 (0) 20 3582 6636 |
| Andrew Suckling | |
| Kiran Morzaria | |
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WH Ireland Limited (NOMAD & Broker) |
+44 (0) 207 220 1666 |
| James Joyce | |
| Darshan Patel
Enzo Aliaj |
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.
Cautionary and Forward-Looking Statements
Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified 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 reflect 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.
The information contained within this announcement is deemed by the company to constitute Inside Information as stipulated under the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK domestic law under the European Union (Withdrawal) Act 2018, as amended. Upon the publication of this announcement via a regulatory information service, this information is considered to be in the public domain.
Cadence Minerals #KDNC – Bacanora Lithium (AIM: BCN) – Commencement of early site works at Sonora Lithium Project.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note that Bacanora Lithium (AIM: BCN) (the “Company” or “Bacanora”) has commenced initial site activities at the Sonora Lithium Project (the “Project”), located in Mexico. This milestone follows the Company’s successful US$65 million fundraise last week, 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.
Bacanora is building the Project together with its partner, Ganfeng Lithium Co., Ltd. (“Ganfeng”), the world’s largest lithium metals producer. Both parties are working towards a development timetable for Sonora, with scheduled production of battery grade lithium products in 2023.
Initial site works
The Company has engaged a local specialist ecological services company based in Sonora to begin initial site works. These activities will involve the rescue and removal of surface vegetation and topsoil in the area required for the construction of the lithium processing plant. These activities are being performed in compliance with its obligations pursuant to its environmental approvals. The excavated material will be stockpiled at a location adjacent to the plant site and will be stored in an approved manner in order that it can be incorporated into the future project rehabilitation schedule. A team of 15 personnel has been deployed to site, including two ecologists, a biologist, and a forestry engineer. The majority of these personnel reside in the local area. In addition, the Bacanora construction team has commenced the preparatory work required to upgrade the main access road to the site in preparation for providing access for heavy equipment to commence the bulk site earthworks later in the year. The tender process for this work has commenced and is focusing on using local construction and engineering groups from the surrounding Sonora region. Work is also currently underway to commence the tender process for the site accommodation and ancillary facilities, scheduled to be commissioned by the end of Q2, 2021.
Engineering works
Transmission of engineering drawings and documentation from Ganfeng and its equipment suppliers in China has commenced and the final engineering packages will be delivered to Bacanora in Q2, 2021. In addition, Bacanora is working with its principal equipment suppliers to finalise a schedule for the delivery of the larger items of processing equipment for delivery in 2022. As part of this schedule, orders for the larger items of process equipment that have delivery schedules of over 12 months will be placed during Q3, 2021 for delivery to site in late 2022.
Community Engagement
Bacanora continues to work with the Sonora Government and the local municipalities in the region of the mine site. With the critical step of project funding now completed, the Company will continue to develop its community engagement strategy on education, training and development of local workforce as the Project transitions through the development stage into operations in 2023.
The Company’s latest presentation is also available for download here: https://www.bacanoralithium.com/investor-relations/restricted-company-presentations/
Link here for the full BCN announcement: https://www.londonstockexchange.com/news-article/BCN/commencement-of-early-site-works-at-sonora/14859200
Peter Secker, CEO of Bacanora said: “I am delighted to announce Bacanora has commenced initial site works at the Sonora Lithium Project, located in Mexico. This milestone cements Bacanora’s transition into a mine-development company as it looks to fulfil its ambition of becoming a lithium producer in 2023. I look forward to updating the market with further positive progress reports as we build the Sonora Lithium Project in conjunction with our strategic investor and project partner, Ganfeng.”
Cadence CEO Kiran Morzaria added: “Today’s announcement not only marks a significant step towards Bacanora’s ambition to become a lithium producer in 2023, but also reflects positively on our ambitions for the Mexalit and Megalit joint ventures with Bacanora, which are part of the Sonora 20-year mine plan. We look forward to further news on the mine development.”
Cadence Minerals – Holdings in 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 form part of the 20-year mine plan of the Sonora Lithium Project in Northern Mexico.
This news release is not for distribution to United States Services or for Dissemination in the United States.
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For further information:
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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 identified 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 Cadence’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 reflect 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 Cadence. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. Cadence cannot assure investors that actual results will be consistent with such forward-looking statements.
Cadence Minerals #KDNC – Bacanora Lithium #BCN Sonora Lithium Project, Lithium Market & Covid-19 Update
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the update published today by Bacanora Lithium (AIM:BCN) (“Bacanora”), both on the Lithium market, and on its activities at the Sonora Lithium Project in Mexico (‘Sonora’ or the ‘Project’) in light of the ongoing Covid-19 pandemic.
Cadence Minerals – Holdings in 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 form part of the 20-year mine plan of the Sonora Lithium Project in Northern Mexico.
Sonora Operations
The Pilot Plant has completed the bulk sampling required for the Sonora plant and engineering designs. These samples have been sent to the Company’s relevant partners in the USA and China for optimisation of the final designs.
Engineering
All engineering work is now being undertaken off-site. GR Engineering (“GRES”) has completed its concentrator design work and will integrate this into the overall project scope. Importantly, the Company’s joint venture partner, Ganfeng Lithium (“Ganfeng”), has also completed its flow sheet design testwork for the production of battery grade lithium from the samples provided by the Pilot Plant; Ganfeng is now integrating these results into a larger scale design, and remains on schedule to deliver its final engineering packages at the end of Q4 2020. Lastly, Ganfeng is working with its equipment suppliers to determine equipment delivery times and process guarantees.
Bacanora therefore remains on schedule to commence initial site works at Sonora in H1 2021, subject to completion of financing, which would enable commencement of production at the plant in 2023. This timeframe coincides well with the anticipated increase in lithium demand from European, Asian and US electric vehicle manufacturers expected that year*.
Covid-19 and the Mining Industry in Sonora
The number of new Covid-19 cases continues to fall in the Sonora district of Mexico and lockdown restrictions are slowly being lifted. The Company continues to monitor the situation closely, with the health and safety of its employees and communities remaining its top priority.
New health and safety protocols and social distancing will remain in place at the Pilot Plant for the foreseeable future but will not impact the Company’s ability to continue to work on site. Most of the larger scale mining operations within the Sonora district, are now back in production and Bacanora will have employees back in the field in October to survey site access roads in preparation for site access works in Q2 2021.
Recently, the federal government implemented austerity measures as a result of COVID-19, one of which is the restructuring of several undersecretary positions in various sectors, including that for mining. The functions, staff, and responsibilities of the areas that reported to the undersecretary for mining remain intact, and will continue to function as normal, under the responsibility of the Secretariat of the Economy. President Andrés Manuel López Obrador (“AMLO”) and the Secretariat of the Economy have consistently supported investment in the mining sector and specifically projects with downstream applications, such as Bacanora’s Sonora Lithium Project. This government wide austerity measure does not represent a change in those policies.
Lithium Market
Recent forecasts from Chile, the world’s largest producer of downstream battery grade lithium products, indicate that, as electric vehicles sales in Europe and China continue to rebound post the Covid-19 downturn, the electric car industry is forecast to dominate demand for lithium over the next ten years. 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***.
* https://www.iea.org/reports/global-ev-outlook-2020
*** http://coinnews.tv/lithium-outlook-2019-a-transition-year-ahead/
The full Bacanora release can be found at: https://www.londonstockexchange.com/news-article/BCN/sonora-operational-update/14680960
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
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| For further information: Cadence Minerals plc +44 (0) 7879 584153 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 identified 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 reflect 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.
Cadence Minerals #KDNC – Bacanora Lithium #BCN – Sonora Lithium Project, Lithium Market & Covid-19 Update.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) notes the update published today by Bacanora Lithium (AIM:BCN) (“Bacanora”), both on the Lithium market, and on its activities at the Sonora Lithium Project in Mexico (‘Sonora’ or the ‘Project’) in light of the ongoing Covid-19 pandemic.
Cadence Minerals – Holdings in 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 form part of the 20-year mine plan of the Sonora Lithium Project in Northern Mexico.
Lithium Market and Project Development
Whilst demand for internal combustion vehicles has been significantly impacted by the spread of Covid-19 and a general economic slowdown, electric vehicle (“EV”) demand in Europe increased over 50% during first quarter 2020*. In addition, automotive companies have recently outlined plans to spend more than US$140** billion on EV production. This is an industry shift that will require producers of specialist materials and metals for lithium batteries to dramatically lift output. As a result, lithium demand is anticipated to grow 800% by 2030. Bacanora continues to prioritise its development schedule for Sonora despite Covid-19 limitations, with a goal of being able to complete financing for the Project and initiate site works in H1 2021. This timetable will enable Bacanora to commence lithium deliveries to its offtake partners, Ganfeng Lithium (“Ganfeng”) and Hanwa Corporation, in 2023. Ganfeng remains fully committed to the advancement of Sonora’s development and continues to progress its investment schedule at the Sonora project level.
Sonora Operations
In Mexico, the Sonora government continues to maintain measures to prevent the spread of Covid-19 which includes, amongst other measures, the closing of schools and all non-essential business operations as well as cancelling events of more than 10 people. Accordingly, Bacanora’s Hermosillo pilot plant (“pilot plant”) was placed in care and maintenance in late March 2020 after shipping samples to its engineering partners in the USA and China in order to maintain the Front End Engineering Design (“FEED”) schedule. The pilot plant will remain closed until conditions are considered safe and the Government lifts its restrictions. It is currently anticipated that the pilot plant will re-open in June 2020.
Bacanora CEO Peter Secker commented: “The entire team at Bacanora and our partners continue to work as best as we can during this pandemic. We remain fully focussed on progressing the final parts of the detailed design work for our flagship Sonora Lithium Project, located in Mexico. Bacanora also boasts a strong cash position and benefits from the support of its cornerstone shareholders, who are globally significant players in the electric vehicle industry. The Company’s strategy remains the same and with the goal to deliver first product to its off-take partners in early 2023, importantly coinciding with the expected significant growth in EV demand.”
Cadence CEO Kiran Morzaria commented: “Our thoughts are with the Bacanora team as they work through the Covid-19 pandemic. We note Bacanora’s update on the Sonora development timetable, and in particular the Lithium market in general, detailing the forecast increase in demand to meet the ramp-up in EV production.”
(* www.euractiv.com/section/electric-cars/news/electric-car-sales-in-europe-jumped-57-in-q1-2020/
The full Bacanora release can be found at: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BCN/14555542.html
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
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For further information:
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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 identified 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 reflect 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.
Cadence Minerals (KDNC) 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.
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For further information:
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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 identified 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 reflect 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.
Cadence Minerals #KDNC – Bacanora Lithium #BCN Update on Strategic Investment by Ganfeng Lithium
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the update published today by Bacanora Lithium (AIM:BCN) (“Bacanora”) on its Investment Agreement and Offtake Agreement (‘the Strategic Investment’ or ‘the Agreements’) with leading global lithium company Ganfeng Lithium Co., Ltd. (“Ganfeng” or “GFL”). As announced on 28 June 2019, the Agreements have been submitted to the relevant authorities in China for approval and completion.
The first of the approvals from the PRC Ministry of Commerce (MOFCOM) was received by Ganfeng at the end of July 2019, and Bacanora has now been informed that the second approval has been processed by NDRC (National Development and Reform Commission) and received by Ganfeng. It is anticipated that the final approval from SAFE (State Administration of Foreign Exchange) will be received following a Ganfeng board meeting to be held in the coming weeks. Bacanora will provide further updates once final approval is received.
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 and approximately 0.5% of Bacanora’s equity. 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.
Summary of Key Terms of the Ganfeng Strategic Investment:
- GFL to acquire 29.99% of Bacanora
- GFL to acquire 22.5% of Sonora Lithium Ltd (“SLL”), the holding company for the Sonora Lithium Project
- Additional long-term offtake at a market-based price per tonne
- 50% of Stage 1 lithium production
- Up to 75% of Stage 2 lithium production
The full release can be found at: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BCN/14194708.html
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
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For further information:
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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 identified 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 reflect 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.
Cadence Minerals #KDNC – Bacanora Lithium #BCN Signing of Investment and Offtake Agreement with Ganfeng Lithium.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the announcement today by Bacanora Lithium (AIM:BCN) (“Bacanora”) that it has signed its Investment Agreement and Offtake Agreement (‘the Strategic Investment’) with Ganfeng Lithium Co., Ltd. (“Ganfeng” or “GFL”), the world’s largest lithium metals producer in terms of production capacity and the world’s third largest lithium compounds producer. Both agreements, which are on substantially the same terms as outlined in the Company’s announcement on 20 May 2019, have now been submitted to the relevant authorities in China for approval and completion. Completion of the Strategic Investment is anticipated by the end of July 2019 and would form a major part of the Company’s finance package for an initial 17,500 tonnes per annum lithium carbonate operation at the large scale, high grade Sonora Project in Mexico.
Bacanora is a lithium exploration and development company. Cadence holds approximately 1.5% of Bacanora’s equity and 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.
Announcement Highlights:
- Cornerstone strategic investment of 29.99% in Bacanora for £14,400,091
- GFL has been granted pre-emption rights proportionate to its shareholding in Bacanora.
- GFL shall appoint one Director to the Board of Bacanora.
- Project level investment of 22.5% in Sonora Lithium Ltd (“SLL”), the holding company for the Sonora Lithium Project, for £7,563,649.
- GFL has an option to increase its interest in SLL to up to 50% within 24 months at a valuation based on the share price of Bacanora at the time of subsequent investment.
- GFL shall appoint one Director to the Board of SLL.
- Additional long-term offtake at a market-based price per tonne.
- 50% of Stage 1 lithium production.
- Up to 75% of Stage 2 lithium production.
- GFL will complete a review within six months of the EPC engineering design and capital costs of Sonora Lithium Project with a view to reducing costs and accelerating the timetable.
The full release can be found at: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BCN/14129811.html
Cadence Minerals CEO Kiran Morzaria commented:“On behalf of Cadence Minerals, we are delighted to see Bacanora sign this milestone agreement with Ganfeng to develop the Sonora Lithium project. As Bacanora CEO Peter Secker says, Ganfeng’s operational expertise and industrial credibility is a strong endorsement of the Sonora Project’s potential.”
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
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For further information:
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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 identified 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 reflect 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.
Cadence Minerals #KDNC – Bacanora Lithium #BCN Feasibility Study Estimates €428m NPV and 27.4% IRR for Zinnwald Lithium Project
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the announcement today by Bacanora Lithium (AIM:BCN) (“Bacanora”) regarding the results of the NI 43-101 Feasibility Study (‘FS’) for the Zinnwald Lithium Project in Germany (‘Zinnwald’ or ‘the Project’) which confirm the positive economics and favourable operating costs for the production of 5,112 tonnes per annum (‘tpa’) (~7,285 tpa LCE) of battery grade Lithium Fluoride (‘LiF’), a high value, downstream product used in the manufacture of lithium battery electrolytes for the European electric vehicle industry. With a long life of project of 30 years, the FS estimates a pre-tax project Net Present Value (‘NPV’) of €428 million (8% discount rate); an Internal Rate of Return (‘IRR’) of 27.4%; favourable Life of Mine (‘LOM’) operating costs and a 46% EBITDA operating profit margin.
Bacanora is a lithium exploration and development company. Cadence holds approximately 1.7% of Bacanora’s equity and 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.
Announcement Highlights:
Confirmed strong economic potential
- Estimated Project pre-tax IRR of 27.4%; NPV of €428 million (8% discount rate)
- Estimated Project post-tax IRR of 21.5%, NPV of €270 million with a project payback of 6.1 years
- Average LOM annual earnings before interest, taxes, depreciation and amortisation (‘EBITDA’) estimated at €58.5 million per annum
- Long life project with the 30 year FS mine plan equating to less than 50% of the current identified mineral resources
- Base case 30 years revenue and EBITDA estimated at €3.86 billion and €1.75 billion respectively
Zinnwald: a significant lithium deposit, strategically positioned in Germany’s industrial heartland
- Total Mineral Reserve (Proven and Probable) estimate of 31.20 million tonnes (‘Mt’) of ore at a grade of 3,004 ppm containing 94 thousand tonnes (‘kt’) of contained lithium (‘Li’)
- Demonstrated Mineral Resource (Measured and Indicated) estimate of 35.51 Mt of ore at a lithium grade of 3,519 ppm, containing 125 kt of Li
- Deutsche Lithium also owns the exploration licences for the lithium deposits of the claims “Falkenhain” and “Altenberg DL” which have the potential to significantly increase Zinnwald’s resource base and Project life
- Conventional flow sheet uses established sulphate route processing technology
- Integrated plant designed to process approximately 570,000 tpa of ore (LOM average)
- Capital cost estimate of €159 million includes mining, processing plant, infrastructure, tailings management, general administration costs as well as the requisite contingencies
- FS includes sale of 32,000 tpa of by-product potassium sulphate (‘SOP’, ‘K2SO4’) to the European fertiliser industry
Next Steps: advance Zinnwald towards production to satisfy expected continued growth in demand for lithium driven by growing sectors such as electric vehicles and energy storage
- Subject to Board approvals and other key milestone events, project detailed design is expected to commence in H1 2020
The full release can be found at: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BCN/14098768.html
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
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For further information:
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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 identified 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 reflect 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.