23 March 2020
Bacanora Lithium plc
("Bacanora" or the "Company")
Sonora Lithium Project and Covid-19 Update
Bacanora Lithium plc (AIM: BCN), a lithium exploration and development company, provides an update on activities at its Sonora Lithium Project in Mexico ("Sonora" or the "Project") following the outbreak of Covid-19. Bacanora's first priority is the health and well-being of its staff, partners and its local communities and has taken all appropriate measures to protect them in accordance with the relevant governmental and regional requirements. Whilst Covid-19 has affected Bacanora and its partners, the Company continues to progress all its workstreams, in particular the completion of the Project engineering work. The timetable for this engineering work has however been impacted by delays in Asia and North America due to the ongoing government restrictions. Completion is now scheduled for Q3, 2020. Nonetheless, Bacanora has a strong cash position of US$47 million and is well positioned to withstand the continued effects of Covid-19.
Ganfeng Review and Process Testwork
Ganfeng Lithium ("Ganfeng"), like all Chinese companies, was severely impacted by the travel restrictions imposed by the Chinese Government to slow the spread of Covid-19 during February and early March. Although these restrictions are now being lifted, the return to work has been slow. Ganfeng's main lithium processing plant at Xinyu is resuming operations and lithium production is building up. As a result of this return to work, the Ganfeng test plant and project team have also resumed work on the Sonora flow sheet optimisation and process engineering. Whilst some weeks of engineering have been lost, completion of engineering and equipment selection is now scheduled for Q3, 2020. Subsequently, Ganfeng will provide Bacanora with an Engineering, Procurement and Construction ("EPC") style engineering proposal for the production of downstream battery grade lithium products from the Sonora lithium plant. This schedule remains under regular review in relation to the ongoing Covid-19 situation and shareholders will be updated regularly as the engineering process develops.
Impact of Covid-19 on Bacanora
The first Covid-19 case in Sonora, Mexico was confirmed last week and in response, the local Sonora government has put in place measures to combat the spread of Covid-19 which includes closing of schools and all non-essential business operations as well as cancelling events of more than 10 people. Accordingly, Bacanora's administrative staff, based in Hermosillo, are now working remotely. The pilot plant will continue to operate on day shift until the next batch of kiln and lithium samples are shipped to the USA and China, or until the Company is required to temporarily close its operations following a government directive. In the UK head office and Zinnwald project in Germany, all staff are now working remotely.
EPC Project Engineer
In order to expedite the completion of the Front End Engineering Design ("FEED") process, Bacanora has appointed GR Engineering Services ("GRES") to provide engineering services for Sonora. GRES is a leading process engineering consulting and contracting company that specialises in providing high quality engineering design and construction services to the mining and mineral processing industries. GRES have current projects in Mexico and the recently acquired Hanlon Engineering which is based, nearby to Hermosillo, in Tucson Arizona. GRES has a proven track record of delivering integrated project solutions having provided services in over 20 countries for a range of minerals. This role will involve GRES completing EPC services across the lithium processing facility, providing a fully integrated facility design with the assurance of the GRES contracting capability and experience.
Sonora Project Timetable
In conjunction with GRES and Ganfeng, Bacanora is updating its engineering and contracts schedules, with a goal of being able to complete financing for the Project and commence construction before the end of 2020.
Mark Hohnen (Chairman) and Peter Secker, CEO of Bacanora, commented:
"Bacanora and its partners have, like all companies, been affected by the Covid-19 outbreak and the resultant knock-on impact on businesses and the wider stock market. The health and safety of our employees, partners and local communities is without doubt our top priority during these uncertain times. We will however, continue to work as best we can within the current restrictions to deliver the final design work and construction contracts that should allow us to finalise project financing and commence site works before the end of this year. The Company remains well capitalised with more than US$47 million cash in the bank and, together with its supportive shareholders and partners, it is well positioned to withstand the continued effects of Covid-19."
** ENDS **
For further information please visit www.bacanoralithium.com or contact:
Bacanora Lithium plc
Peter Secker, CEO
Janet Blas, CFO
Cairn Financial Advisers LLP, Nomad
Sandy Jamieson / Liam Murray
+44 (0) 20 7213 0880
Citigroup Global Markets, Joint Broker
Tom Reid / Patrick Evans / Matthew Kenney
+44 (0) 20 7986 4000
Canaccord Genuity, Joint Broker
James Asensio / Edward Montgomery
+44 (0) 20 7523 8000
Tavistock, Financial PR Adviser
Jos Simson / Emily Moss / Oliver Lamb
+44 (0) 20 7920 3150
+44 (0) 77 8855 4035
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014
Notes to editors
Bacanora Lithium Plc is an AIM-listed (ticker 'BCN') lithium development and exploration company. The Company owns assets in Mexico and Germany. It is focused on building, in collaboration with its major shareholder and offtake partner, Ganfeng Lithium (the world's largest lithium metals producer), a 35,000 tonne per annum open pit lithium carbonate operation at its flagship asset, the Sonora Lithium Project in Mexico. The Sonora Lithium Project has 8.8 million tonnes of lithium carbonate (Li2CO3) equivalent resources, with an approximate 250 year resource life, as detailed in its December 2017 Feasibility Study.
Sonora Lithium Ltd ("SLL") is the operational holding company for the Sonora Lithium Project and owns 100% of the La Ventana concession. The La Ventana concession accounts for 88% of the mined ore feed in the Sonora Feasibility Study which covers the initial 19 years of the project mine life. SLL is owned 77.5% by Bacanora and 22.5% by Ganfeng Lithium Ltd. SLL also owns 70% of the El Sauz and Fleur concessions.
In addition, the Company has a 50% interest in the Zinnwald Lithium Project and the Falkenhain and Altenberg Licences in southern Saxony, Germany.
Cautionary Statement Regarding Forward-Looking Information
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. 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 the UK, the United States, Mexico, Germany 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.
The contents of this announcement have been prepared by and are the sole responsibility of Bacanora.
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