1st Mar 2016 10:27
LONDON (Alliance News) - Bacanora Minerals Ltd Tuesday said 2016 is a "pivotal year" for the company as it aims to complete a definitive feasibility study for the Sonora lithium project, as it reported a significantly wider loss in the first half of its current financial year.
The miner, which is developing the Sonora lithium project in northern Mexico and doesn't currently generate any notable revenue, reported a net loss of CAD4.0 million in the six months to the end of 2015, widening from the CAD1.3 million a year ago.
The wider loss was caused by administrative costs rising to CAD1.4 million from CAD1.0 million, a rise in share based compensation to CAD1.4 million from only CAD55,000, and a considerably higher foreign exchange loss of CAD1.1 million compared to a CAD142,807 loss a year earlier.
"During the period under review we commenced a pre-feasibility study to establish the commerciality of a plant at Sonora with the potential to deliver up to 35,000 tonnes per annum of lithium carbonate, in a two phase process," said Peter Secker, chief executive of the company.
"We are highly encouraged by the progress made to date and we expect to be in a position to announce the results of the pre-feasibility study in the first quarter of 2016," he added.
Once the pre-feasibility study is completed, Bacanora will move onto the definitive feasibility study. Importantly, that definitive study is fully funded by the proceeds raised by Bacanora's private placement of 11.5 million new shares at a price of CAD1.56 per share, or 77.0 pence each, which raised a total of CAD17.8 million, roughly GBP8.8 million.
Those proceeds will not only fund the study, but also allowed Bacanora to expand and upgrade the company's lithium pilot plant in Hermosillo, Mexico, which will allow Bacanora to produce battery grade lithium carbonate marketing samples for distribution to potential off-take partners in Europe and Asia later this year.
The pilot plant at Hermosillo will treat bulk lithium samples mined from Sonora.
Bacanora entered into a consultancy deal last week focused on identifying potential purchasers of its lithium products. The consultancy deal was signed with a company controlled by Mark Hohnen, who has been proposed as a nominee to the Bacanora board.
Back in September, Bacanora mobilised a second drill to Sonora to speed up the drilling programme being conducted after signing a major deal with US-based Tesla Motors to sell lithium hydroxide to feed the manufacturing of batteries at Tesla's planned "Gigafactory" in Nevada in the US, which will produce energy storage products and electric vehicles.
Timing is important as the Sonora project must race to meet Tesla's schedule over the next few years in order to retain the deal. The quality of the product from the project must also meet certain requirements.
"2016 is shaping up to be a pivotal year in the transformation of Bacanora into a supplier to the rapidly growing lithium market and I look forward to providing further updates on our progress," said Secker.
The placing conducted in November saw fellow AIM-listed Rare Earth Minerals maintain its stake in the company at 17.1%. Rare Earth is also Bacanora's partner on the Sonora project, with Rare Earth holding a direct interest in two of the five concessions that make up the project.
Rare Earth remains the largest individual shareholder of Bacanora.
"We are targeting production [from Sonora] in 2018, although of course there are a range of milestones to complete ahead of this. However we are hopeful that, given the support for our project from key players in the industry, the government and our shareholders, we will meet this deadline in a timely manner," said Bacanora Chairman Colin Orr-Ewing.
Bacanora shares were up 1.4% to 73.0 pence per share on Tuesday morning whilst Rare Earth shares were trading flat at 0.580 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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Related Shares:
BCN.LRare Earth Metals