Building a World Class Lithium Project - March 2019 Corporate Presentation - Bacanora Lithium
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Building a World Class Lithium Project Corporate Presentation March 2019
DISCLAIMER IMPORTANT INFORMATION The content of information contained in this presentation (the “Presentation”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”). Reliance upon this Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. If any person is in any doubt as to the contents of this Presentation, they should seek independent advice from a person who is authorised for the purposes of FSMA and who specialises in advising in investments of this kind. The information contained in this Presentation has been prepared by Bacanora Lithium Ltd (the “Company”) as at the date of this Presentation and is subject to updating, completion, revision, further verification and amendment without notice. It has not been verified by the Company. The Company undertakes no obligation to provide any additional information or to update this Presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. This document sets out certain features of the Company and does not purport to provide a complete description of the Company or the shares in the Company. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its completeness, accuracy or fairness thereof, nor is any responsibility accepted for any errors, misstatements in, or omission from, this Presentation or any direct or consequential loss however arising from any use of, or reliance on, this Presentation or otherwise in connection with it. 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The Company’s Shares have not been, and are not expected to be, registered under the United States Securities Act 1933, as amended, (the “US Securities Act”) or under the securities laws of any other jurisdiction, and are not being offered or sold, directly or indirectly, within or into the US, Canada, Japan, Australia, the Republic of South Africa or the Republic of Ireland or to, or for the account or benefit of, any US persons or any national, citizen or resident of the US, Canada, Japan, Australia, the Republic of South Africa or the Republic of Ireland, unless such offer or sale would qualify for an exemption from registration under the US Securities Act and/or any other applicable securities laws. This Presentation or documents referred to in it may contain forward-looking statements. These statements relate to the future prospects developments and business strategies of the Company and its subsidiaries (the “Group”). Forward-looking statements are identified by the use of such terms as “believe”, “could”, “envisage”, “estimate”, “potential”, “intend”, “may”, “plan”, “will” or the negative of those, variations or comparable expressions, including references to assumptions. The forward-looking statements contained in this Presentation are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialises, or if underlying assumptions prove incorrect, the Group’s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements. These forward- looking statements speak only as at the date of this Presentation. To the extent that this Presentation contains statements regarding the past performance of the Company’s Shares it should be noted that past performance cannot be relied upon as a guide to future performance. 1 CORPORATE PRESENTATION | MARCH 2019
CORPORATE STRATEGY
Goal to become an international lithium production company with a portfolio of global projects
SONORA LITHIUM
PROJECT, MEXICO ZINNWALD LITHIUM
ASIA Market: Asia via Hanwa PROJECT, GERMANY
Market: Europe
Market Ticker Market Cap Share Price Significant Shareholders
M&G Investment Funds – 10.00% BlackRock – 4.5%
Hanwa Co., Ltd – 9.2% D&A Income Ltd – 3.5%
AIM BCN ~£25.54m 19p Igneous Capital Ltd – 7.4% Other – 54.1%
(01.03.19) (01.03.19) The Capital Group – 6.4%
Cadence Minerals – 4.9%
2 CORPORATE PRESENTATION | MARCH 2019
OVERVIEW
AIM listed company focused on building a 35,000 tpa lithium
carbonate operation at Sonora in Mexico
Large Lithium Deposit Experienced management
8.8 Mt of LCE resources at Sonora, open-pit Track record in mine development and
mining * production
Completed Feasibility Study Strategic partnerships
$1.25B NPV; 26% IRR * • Offtake agreement and equity partnership with Japanese trading
group Hanwa for initial 10 years of Stage 1 production
• Strategic Investment Agreement signed with SGRF, the sovereign
wealth fund of Oman, for conditional $65M equity investment and
10,000tpa Offtake Option, subject to final project financing
Cost Competitive • RK Finance providing $150 million debt finance facility available in
~$4,000/t operating cost * 3 tranches subject to CPs
Rapidly Growing Market
Conventional Sulphate Process Strong demand from EV and energy storage industries with
Ongoing battery grade (99.5%) lithium carbonate market growing >15% annually**
production from Pilot Plant
Approvals in Place*
MIA/EIS permits received. Land acquisition completed.
Water licence permits granted.
3 CORPORATE PRESENTATION | MARCH 2019 * (* FS 43-101, **SignumBox)
SONORA: INTEGRATED MINE AND LITHIUM CARBONATE PLANT
A large lithium resource which lends itself to conventional open pit mining with planned low strip
ratio
MIA environmental approvals received
and acquisition of 100,000 hectares of
97,389 Ha licence area, located 190km NE of land over the project* and water licence
Hermosillo in northern Mexico, consisting of 10 permits granted
contiguous concessions*
Large lithium deposit with 8.8Mt LCE Conventional
resource* sulphate route
process*
Low stripping ratio, open-pit Lithium carbonate offtake
mining, no drill and blast* in place with Hanwa
Infrastructure:
7kms of strike labour, water,
road, rail, port
*LCE is the industry standard terminology for, and is equivalent to, Li2CO3.
1 ppm Li metal is equivalent to 5.32 ppm LCE / Li2CO3.
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. Source: *Feasibility Study
4 CORPORATE PRESENTATION | MARCH 2019
FEBRUARY 2019
SONORA LEASES – EXPLORATION UPSIDE
100,000 ha
Line of strike
20 years life mine
7km
50 years
5 CORPORATE PRESENTATION | MARCH 2019
OUTCROPPING LITHIUM DEPOSITS - COMBINED WIDTH OVER 40 METRES 6 CORPORATE PRESENTATION | MARCH 2019
CONVENTIONAL SULPHATE
PROCESSING ROUTE
Open-pit mining
Trommel and screen
Sulphate (Na2SO4) roast (900 degrees
and 30 mins) to produce Li2SO4
Evaporation and precipitation
Soda Ash (Na2CO3 ) addition
SX and IX purification
Li2CO3 product
7 CORPORATE PRESENTATION | MARCH 2019
PILOT PLANT: HERMOSILLO
A cost effective way of optimising design, increasing
BCN staff’s technical expertise and maintaining
customer relationships
▪ Integrated facility:
▪ Pre-concentration
▪ Roasting
▪ Leaching
▪ IX circuits
▪ Ongoing pilot plant operations and training
incorporated within the Owners Management
Team
▪ Quality of the battery grade (>99.5%) lithium
carbonate validated by HANWA offtake
▪ Enables development and refinement of
flowsheet to optimise product quality
▪ Continuous operation until 2020 to facilitate
training prior to production
8 CORPORATE PRESENTATION | MARCH 2019
COMMERCIALISING SONORA
Hanwa, SGRF and Red Kite providing long term offtake and debt support
▪ Hanwa Milestone Offtake Agreement:
▪ Strategic 10% shareholder
▪ Lithium carbonate offtake for initial 10 years of Stage 1 production
▪ FOB contract for battery grade lithium carbonate at market pricing
▪ Stated intention to conditionally invest a further $25m upon completion
of full project funding
▪ SGRF
▪ Proposed $65M equity investment subject to finalising full project
financing
▪ Option for 10,000tpa lithium offtake for Stage 2 expansion
▪ RK
▪ $150M debt financing to be drawn down in 3 tranches subject to certain
CPs over next 18 months
9 CORPORATE PRESENTATION | MARCH 2019FEASIBILITY STUDY IN NUMBERS
Stage 1 Av. Operating costs
Initial Construction
Capital Cost of 3,910 $/t Li₂CO₃
$420M ( $3,418 net of K₂SO₄ credits)
Pre-tax Post Tax
NPV8 of $1.25B NPV8 of $802M
NPV0 of $3.4B NPV0 of $2.37B
(based on $11,000/t Li₂CO₃ ) (based on $11,000/t Li₂CO₃ )
Pre-tax IRR Post-tax IRR
26% 21%
Simple Payback Stage 1 K₂SO₄ production
4 (years)
Source: See Full Feasibility Numbers in Appendix
Up to 30,000 tpa
10 CORPORATE PRESENTATION | MARCH 2019PEER ANALYSIS: ESTIMATED INDUSTRY COST CURVE POST 2025
Favourable position on cost curve
550,000 tonnes
Source:(*Canaccord April 2018, BCN 43-101).
11 CORPORATE PRESENTATION | MARCH 2019LITHIUM DEMAND & PRICING
Q3, 2018 contract pricing >15,000/t*
Battery Grade Lithium Carbonate Contract Price Canaccord Supply and Demand to 2030***
Historic and Forecast (US$/tonne**)
16,000 2000
1800
14,000
2017 average 1600
1400
12,000 global pricing
1200
10,000
around $12,000/t* 1000
LCE (Kt)
800
8,000 600
400
6,000
200
4,000 0
2018e supply 2018-2025 reqd. 2025 demand 2025-2030 reqd 2030 demand
supply supply
2,000
0
Lithium Carbonate Contract Price “at 14% CAGR the incremental growth to 2025represents 25 new
mines of average size 25ktpa whilst extending that growth
rate to 2030 37 new mines of average size”
12 CORPORATE PRESENTATION | MARCH 2019 (* SQM Quarterly Q3, 2018) (*** Canaccord Nov 2018) (**SignumBOX base case)LITHIUM SUPPLY & Demand
Battery/Energy Storage annual growth rates >15% yoy*
US Others
5%
2% 3%
8% China
14% Australia
2017 average 30%
global pricing
around $12,000/t*
25% Argentina
14%
62%
Chile
37%
Batteries Ceramics & Glass Metallurgy&Aluminum Others
Lithium Demand by Application* Lithium Supply by Origin 2017*
13 CORPORATE PRESENTATION | MARCH 2019 (*SignumBOX base case)ELECTRIC VEHICLES TO GRID STORAGE
Its all about Batteries
CELL PHONE
Batteries make up a third of the cost of an electric vehicle. As battery
3g
costs continue to fall, demand for EVs will rise.
LAPTOP Cost for lithium-ion battery packs Yearly demand for EV battery power
30g
Hybrid
7kg
EV
25-50kg
GRID
500kg/MWh Source: Data compiled by Bloomberg New Energy Finance
14 CORPORATE PRESENTATION | MARCH 2019APPENDIX 15 CORPORATE PRESENTATION | FEBRUARY 2019
KEY DATA 140
120
100
Market 80
Share Price £GBP
60
AIM 40
20
Ticker: BCN 0
MARKET CAP:
~£25.54m
(01.03.19) M&G Investment Funds (10.00%) Hanwa Co., LTD (9.2%)
Igneous Capital Limited (7.4%) The Capital Group (6.4%)
NOMAD Cairn Financial
Cadence Minerals (4.9%) BlackRock (4.5%)
Advisers LLP
D&A Income Limited (3.5%) Other (54.1%)
Broker Citigroup/
Canaccord Note: Shareholding Percentages are as of 1 March 2019
Genuity
16 CORPORATE PRESENTATION | MARCH 2019BOARD
Mark Hohnen – Executive Chairman Peter Secker – Chief Executive Officer
▪ Extensive international business experience in wide range of industries ▪ Mining Engineer with over 35 years experience in the resources industry
including mining and exploration, property, investment, software and ▪ Has built and operated mining and processing facilities in Australia,
agriculture Africa, China, Canada and Fiji
▪ Founding Chairman of Cape Mentelle and Cloudy Bay wines ▪ Experience working in a number of extractive industries including
▪ Director of Kalahari Minerals and Extract Resources lithium, titanium, gold, copper, iron ore and coal
Jamie Strauss – Lead Independent Eileen Carr – Non-Executive Director Junichi Tomono – Non-Executive
Director Director
▪ Has been a key member of teams behind the
▪ 30 years’ experience within the stockbroking and development of a number of successful mining ▪ Representative of Hanwa under the terms of the
mining finance sector operations across the world agreement
▪ Has raised in excess of $1bn for projects in both ▪ Holds several executive directorships in the ▪ Over 22 years’ experience with Hanwa; worked in
energy and mineral world on behalf of leading resource sector, including CFO at both AIM traded the Metals, Chemicals, Alloys, Scrap metals and
institutions in UK, Europe, North America and Monterrico Metals plc and Alexander Mining plc Mining divisions
Australia ▪ Special focus on the battery chemicals sector
Dr Andres Antonius – Non-Executive Director
▪ A Mexican national who has held positions in the Government of Mexico
Derek Batorowski– Non-Executive Director
and in the private sector and academia
▪ Previously Undersecretary for Energy Policy and a staff member at the ▪ Over 20 years’ of experience in the oil and gas & mineral exploration
Agriculture Secretariat industries
▪ Currently CEO of Plan B, a provider of strategic advice to a range of ▪ Experienced in accounting, finance, corporate planning, treasury and
clients taxation with both public and private, large and small oil & gas producers
▪ BA, MA and PhD degree in Economics from Harvard University and small cap mineral exploration companies
17 CORPORATE PRESENTATION | MARCH 2019MANAGEMENT
Janet Boyce
Ms. Boyce is a certified public accountant who has held a number of senior financial roles, with over 15 years experience in the resources
CFO
sector, including Group Chief Financial Officer and Executive Director of Gemfields plc.
Mr. Carter has over 22 years of lithium carbonate production expertise with FMC in North America, with extensive experience of lithium
Eric Carter
hydroxide and lithium metal process operations. He has designed, built and operated plants producing spodumene, lithium carbonate and
Project Director
lithium metal in North and Central America
Mr. Mendez has 20 years experience in the mining industry, with a successful track record in the development and operation of several
Gaspar Mendez
gold projects in Mexico. He is a certified Project Management Professional and has a Master’s degree in Business Administration and a
Project Manager
Bachelor’s degree in Chemical Engineering.
Mr. Torres has over 30 years of engineering and construction experience in the pharmaceutical, chemical, energy and nuclear sectors. He
Edil Torres
is a recognised expert in EPC/EPCM Project Delivery Method having devoted the majority of his career to Mexico and Latin America as
EPC Manager
Construction Director for a multi-national engineering firm.
Mr. Chefai has had over 20 years of experience in metallurgy, mill design and operation, with a Master’s degree in Mineral Processing and
Samir Chefai
a Bachelor’s degree in Chemical Engineering. He has worked on several large projects in North and South America, Africa and Asia
Pilot Plant Manager
including, lithium, aluminium, copper, gold and zinc.
18 CORPORATE PRESENTATION | MARCH 2019SIGNIFICANT RESOURCES AND RESERVES
One of the world’s larger lithium resources – high grade and scalable
Measured and Indicated Resources*
Category Cut–off (Li ppm) Tonnes (000t) Li (ppm) K (%) LCE (000t) LCE attributable to BCN (000t)
Measured 1,000 103,000 3,480 1.5 1,910 1,776
Indicated 1,000 188,000 3,120 1.3 3,130 2,345
Total 1,000 291,000 3,250 1.4 5,038 4,119
Inferred Mineral Resources*
Category Cut–off (Li ppm) Tonnes (000t) Li (ppm) K (%) LCE (000t) LCE attributable to BCN (000t)
Inferred 1,000 268,000 2,650 1.2 3,779 3,220
Mineral Reserves: (Cut-off grade of 1,500 ppm Li)*
Category Tonnes Ore (000t) Li (ppm) K (%) LCE (000t) LCE attributable to BCN (000t)
Proven 80,146 3,905 1.64 1,666 1,550
Probable 163,662 3,271 1.36 2,849 2,126
Total 243,808 3,480 1.45 4,515 3,676
Notes:
(i) Mineral Resources that are not Mineral Reserves and do not have demonstrated economic viability.
(ii) Tonnes rounded to the nearest thousand.
(iii) The conversion factor from % Li to LCE is 5.323.
19 CORPORATE PRESENTATION | MARCH 2019SULPHATE ROUTE PROCESS 20 CORPORATE PRESENTATION | MARCH 2019
FEASIBILITY STUDY: POSITIVE ECONOMICS
Feasibility Study Key Indicators Construction Capital Costs (rounded to nearest US$’000)
Feasibility Study Key Indicators Value Category FS Estimate Stage 1 FS Estimate Stage 2
Pre-tax Net Present Value ($ 000) 1,253,027 (US$000) (US$000)
Pre-tax IRR (%) 26.1%
Mining 17,611 17,614
Simple Payback Stage 1 4
Initial Construction Capital Cost Stage 1 ($ 000) 419,616
Beneficiation plant 18,483 18,483
Construction Capital Cost Stage 2 ($ 000) 380,262 Lithium processing plant 158,288 158,285
Estimated payback
Av. LOM operating costs ($/t Li CO ) 3,910
2 3 Plant Services 55,334 55,334
Av. operating costso($/t
f LiaCOpnet
2 3
p rof oK SO
x icredits)
2
mately
4 3,418
Infrastructure 58,841 23,581
f i($v000)
Post-tax NPV (at 8% discount) e years 802,464
Post-tax IRR (%) 21.2% EPCM/Owner cost/Indirect 72,912 72,393
Av. annual EBITDA with co-products ($ 000) 229,362 Contingency 38,147 34,569
Av. Annual Li2CO3 production capacity Stage 1 17,500 t
Total 419,616 380,262
Av. Annual Li2CO3 production capacity Stage 2 35,000 t
Av. Annual K2SO4 production Stage 2 35,000 t
Sensitivity Analysis Project Operating Costs
FS 43-101 Table 21.2.2
Discount Rate Base Case Pre Tax Base Case Post Tax Category Stage 1 Stage 2 Average LOM
NPV (US$ million) NPV (US$ million) (US$/t Li2CO3) (US$/t Li2CO3) (US$/t Li2CO3)
0% 3,425.1 2,371.4 Mining 325 511 490
2% 2,644.3 1,808.0
Processing 3,418 3,169 3,198
4% 2,054.0 1,381.7
G&A 296 212 222
6% 1,602.4 1,055.2
8% 1,253.0 802.5 Total 4,039 3,893 3,910
21 CORPORATE PRESENTATION | MARCH 2019INVESTMENT CASE
Transitioning from lithium explorer to lithium developer
Conventional sulphate Company-making asset
Large lithium deposit processing route with US$1.25Bn NPV
Fast-Growing End Japanese trading house
Markets as strategic partner
Quick transition to
construction phase Experienced
subject to financing management team
22 CORPORATE PRESENTATION | MARCH 2019ZINNWALD LITHIUM PROJECT
Strategic asset located in close proximity to a thriving
market for lithium and energy products
▪ 50% interest in and joint operational control of
Zinnwald
▪ 35km from Dresden on the Czech Republic border in an
historic granite hosted Sn/W/Li belt
▪ Historically mined for tin, tungsten and lithium over the
past 300 years
▪ FS underway focused on development of higher value
downstream lithium products expected to take 18-24
months
▪ Option to acquire outstanding 50% on completion of
Feasibility Study Resource Tonnes Li Grade Contained
Category (000) (ppm) Li (tonnes)
▪ Indicated and Inferred PERC resource of 36.4Mt at grade
of 3,600ppm Li
Measured 18,510 3,630 67,191
▪ Additional drilling completed and NI-43-101 resource Indicated 17,000 3,399 57,783
modelling underway Inferred 4,865 3,519 17,266
Total 40,375 3,523 142,240
▪ Testing for Sn and K2SO4 by-products planned
23 CORPORATE PRESENTATION | MARCH 2019CONTACT Bacanora Lithium plc Peter Secker E: info@bacanoralithium.com www.bacanoralithium.com St Brides Partners Ltd Financial PR Frank Buhagiar/Gaby Jenner T: +44 (0) 20 7236 1177 www.stbridespartners.co.uk 24 CORPORATE PRESENTATION | MARCH 2019
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