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It's a decent read too (pinch of salt with the FUD though!): https://ejatlas.org/conflict/proyecto-sonora-lithium-en-sonora-mexico but they really shouldn't allow themselves to be confused (as some media outlets were!) by resource, reserve, LCE, ROM, Lithium estimates. It's not that difficult to understand the difference! LoL. Or is it...? ;-)
too long,
Yes thanks I noticed that @observer842,
It wasn't clear how it was situated in Fleur 1 which of course is part of the JV's and just makes me feel more positive that Ganfeng would rather we were out the way, right place right time.
Well fingers crossed we don't have to wait long to have the answers - next Fridays forecast, I'll cut my odds and say higher!
Figure 4.3.4: Project Plan. Page 25 of the DFS: https://www.bacanoralithium.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf
Soaring and surging @observer842
Just my view but with European car plants going offline for several months the manufacturers must be bringing plans forward to make the switch, for those who hadn't taken the transition seriously now is a closing window to secure supplies in already tight supply chain,
Any significance that the processing plant is shown in the image as being in Fleur 1, the tailings is Fleur, Fleur 1 and El Sauz and as we already know the planned initial 20 years La Ventana and Fleur (year 5 or 6)
https://file.ejatlas.org/img/Conflict/5586/Mapa_Sonora_Lithium.jpeg
Should in the very unlikley event Ganfeng not change their plans.
Interestingly according to "Table 22.1.4: Sensitivity Analysis – Post-Tax NPV8% ($ million)" on page 207: https://www.bacanoralithium.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf for every $1.1/kg rise in the lithium carbonate price above $11/kg the post-tax NPV8 rises from $802m by $209m. $19.5 is an $8.5/kg rise meaning the post tax NPV8 would be:
$802m + ($209m * 8.5/1.1) = $2,417m which is almost exactly 3 times higher.
For information carbonate spot is currently $19.5/kg. Hydroxide $20.5/kg, though in China they've both converged to 165,000/t = $25.5/kg :-)))
https://www.fastmarkets.com/commodities/industrial-minerals/lithium-price-spotlight
Just thinking about the impact of higher lithium prices on the Sonora NPV. Page 207 of the DFS has the sensitivity tables, and indicates likely greater than 3x post tax if today's spot of $20.5/kg were used instead of $11/kg. In terms of my previous estimates of the VERY (IMHO!) likely value to KDNC (See: 15 Sep 2021 21:06):
===[
1. Percentage of the 603kt LCE associated with the JV is 11.95% (page 138 of the feasibility study), which is 3.6% to KDNC, 21.7kt LCE. (KDNC 3.6%, BCN 48.2%, Ganfeng 48.2%). KDNC value 21.7kt * $3,000/t * 50% = $32.5m
2. Assume 50% of the 287kt of additional LCE in 1 above is from the JV area.
KDNC 21.7kt + (287kt * 50% * 30%) = 64.8kt LCE (KDNC 7.3%, BCN 46.35%, Ganfeng 46.35%) KDNC value: 64.8kt * $3,000/t * 50% = $97.2m
]===
We could be looking at greater than 3x these for today's spot. That's $300m for the likely 20ktpa start and probable 50ktpa expansion (20ktpa confirmed in the offer document). Additionally, this conservatively assumes only 50% of the additional ore comes from our area - it could be higher than this, 100% even. Depends on the to be announced updated mining plans.
If lithium prices continue to rise I can see Ganfeng offering more than $100m for our JVs, perhaps much more. :-)))
Ob.
It's quite revealing/interesting that the only mining rate I could see mentioned in the offer document is the 20ktpa I quoted earlier:
"Offer Document"
https://www.bacanoralithium.com/investor-relations/ganfeng/
===[
Bacanora is a lithium development company focused on building, in collaboration with its major shareholder and offtake partner, Ganfeng, a 20,000 tonne per annum open pit lithium carbonate operation at its flagship asset, the Sonora Lithium Project in Mexico.
]===
I'm wondering if this is a slip up... Cats and bags come to mind. ;-) Their shareholders are led to believe the offer is based on 17.5ktpa/35ktpa - expansion plans being purely aspirational, to date ;-) If 20ktpa is actually the case, this lends more weight to the 50ktpa expansion that has also been mooted by their CEO. This can only benefit our 30% JV - I estimated making it at least 3 times more valuable than it is for the 17.5ktpa/35ktpa plans :-)))
Ob.
Check all four charts - put your mouse pointer on January 2021
;-)
It's no surprise Ganfeng were eager, imagine the forecasting they have at their disposal, they have visibilty for many years in advance - I wasn't joking when I posted the Morgan stanley analysts must be ex Kodak!
I think the four charts give a clue:
https://www.fastmarkets.com/commodities/industrial-minerals/lithium-price-spotlight
J's
It doesn't look like we will see them go into reverse with the level of news and the progress in the battery tech now looking not only at least three years ahead but in production models now.
Would be a relief to see some real ROI after 8 years or so of feeding the gravy train. Unfortunately, I’ve zero confidence the BoD could deliver a pizza let alone life changing returns. Love to be proven wrong of course
I would imagine they will be scaling it up as quickly as possible with the current lithium market. The previously low lithium price has meant few investments were made leading to a shortfall of producers and the rapid rise in price.
Perfect timing for us, just wonder how much we can get given it’s probably worth much more than our market cap.
Page 8 is probably the latest: https://www.bacanoralithium.com/pdfs/Bacanora-Company-Presentation-September-2021.pdf
https://www.investegate.co.uk/article.aspx?id=201906281558108975D
Ganfeng:
· Additional long-term offtake at a market-based price per tonne
o 50% of Stage 1 lithium production
o Up to 75% of Stage 2 lithium production
Oh, yes 50% of stage 1 September 2021 corporate presentation slide 8
https://bacanoralithium.com/pdfs/Bacanora-Company-Presentation-September-2021.pdf
10 year Off-take agreement and equity partnership with Japanese trading group Hanwa for 50% initial 10 years
of Stage 1 production
Now, is that a max of 10,000 tonnes?
• 28.88% investment by leading producer Ganfeng Lithium
at PLC corporate level and 50% investment at Sonora
project level
• Long term 50% off-take for Stage 1 and 75% off-take for
Stage 2
Yes, I know but it could be read either way @observer842:
Milestone Off-take Agreement for up to 100% of Li2CO3 produced at Sonora:
Hanwa to purchase 70-100% of lithium carbonate produced during Stage 1
Tonnage based contract for battery grade lithium carbonate at market pricing, with final pricing to be finalised prior to commencement of production Option to increase the off-take tonnage by up to 100% at Stage 2 production
Have terms changed?
Reposting for convenience :-)))
22 Mar 2021 21:05 KDNC.PL
=====[
Ob@07 Mar 2021 10:16
===[
I wonder if it is fair to approximate the net present value of the 21.7kt LCE associated with KDNC in the current mining plan by multiplying it by a cash flow per kt of LCE and discounting by some factor. If I recall correctly we (the BoD) have previously valued our portion of the project (according to the current mining schedule) at $30m, so how does $3,000/t and 50% discount sound?
21.7kt * $3,000/t * 50% = $32.5m
In which case my (apparently conservative! ;-)) scenario of, ~10% KDNC, 45% BCN, 45% Ganfeng, where total mined in the 19 years increases from 603kt to 890kt increases our NPV to:
890kt * 10% * $3,000/t * 50% = $133.5m
Another way of looking at this is that although the expansion plans are good for BCN shareholders they are potentially 4 ($133.5m / $32.5m) times as good for KDNC holders over the current plans :-))))
But is it a fair way of looking at things? And if so what about even higher mining rates and life of mine?
]===
Ob@07 Mar 2021 17:30
===[
Here are the workings for the more ambitious schedules - still only for 19 years, which is obviously conservative given the size of the resource, but makes comparison and discounting easier.
1. 603kt LCE (17.5ktpa 4 years, 35ktpa 15 years)
2. 890kt LCE (20ktpa 2 years, 50ktpa 17 years)
3. 1,590kt LCE (20ktpa 2 years, 50ktpa 3 years, 100 ktpa 14 years)
4. 2,390kt LCE (20ktpa 2 years, 50ktpa 3 years, 100 ktpa 6 years, 200ktpa 8 years)
One simple method for estimating an NPV value is to pick a realised cash flow per kt of LCE and discount it for the mining plan schedule. I used $3,000/t (consider it after all costs and taxes if it seems too low!) and 50% previously, but other values are available. ;-)
1. Percentage of the 603kt LCE associated with the JV is 11.95% (page 138 of the feasibility study), which is 3.6% to KDNC, 21.7kt LCE. (KDNC 3.6%, BCN 48.2%, Ganfeng 48.2%). KDNC value 21.7kt * $3,000/t * 50% = $32.5m
2. Assume 50% of the 287kt of additional LCE in 1 above is from the JV area.
KDNC 21.7kt + (287kt * 50% * 30%) = 64.8kt LCE (KDNC 7.3%, BCN 46.35%, Ganfeng 46.35%) KDNC value: 64.8kt * $3,000/t * 50% = $97.2m
3. Assume 70% of the 700kt of additional LCE in 2 above is from the JV area.
KDNC 64.8kt + (700kt * 70% * 30%) = 211.8kt LCE (KDNC 13.3%, BCN 43.35%, Ganfeng 43.35%) KDNC value: 211.8kt * $3,000/t * 50% = $317.7m
4. Assume 90% of the 800kt of additional LCE in 3 above is from the JV area.
KDNC 211.8kt + (800kt * 90% * 30%) = 427.8kt LCE (KDNC 17.9%, BCN 41.05%, Ganfeng 41.05%) KDNC value: 427.8kt * $3,000/t * 50% = $641.7m
]===
Short term I believe our value will move from 1 to 2 as the plans are written down, but potentially as high as 3 medium term, or even 4 longer term.
Ob.
]=====
Before seeing it written in the Ganfeng offer document all we had was words:
"Bacanora Lithium | China Mining Club | EN" (21 Oct 2020)
https://youtu.be/FNjRt-HKa2s?t=928
===[
We can scale it up, we've looked at production profiles from 17,500 to 35,000 to 50,000 tonnes a year of lithium [carbonate] equivalent, and each construction phase is about 18 months. So we could go from, starting work to being a 50,000 tonne a year lithium producer within 4 years. And that is the plan. I mean obviously we're looking at the markets and how quickly they're growing, but, yes, Ganfeng has invested in us because they see us being one of the largest producers in the world within the next 5 years supplying a high grade product that will go straight to the Asian market.
]===
"China Mining Club - Bacanora Lithium" (19 Feb 2021)
https://www.youtube.com/watch?v=QnuOIfuEmOQ&t=930
===[
So we are going to start at a 20ktpa equivalent basis but we could easily expand to 50, or larger thousand tonnes a year.
]===
LoL @jimb. I take that as their rounding of the official production (at the time) of 17.5ktpa to 18ktpa, not how much they are expecting to receive.
@observer842
Hanwa say they will be taking 18,000 tonnes from 2023, that doesn't seem fair 20,000 - 18,000 -- only leaves 2 for Ganfeng!
Page 10 - MTP
https://www.hanwa.co.jp/ms/data/pdf/ir/20210115en_3669.pdf
It's in writing. It's official! :-))) "Bacanora is a lithium development company focused on building, in collaboration with its major
shareholder and offtake partner, Ganfeng, a 20,000 tonne per annum open pit lithium carbonate operation at its flagship asset, the Sonora Lithium Project in Mexico."