LONDON (Alliance News) - Bacanora Lithium PLC said Thursday it will not go ahead with its proposed placing to raise funds for the development of its Sonora lithium project in Mexico due to "current volatility in global commodities markets".
Bacanora was hoping to raise USD100 million to form part of the funding package that already includes debt funding commitments totalling USD240 million.
The debt funding commitments include USD150 million senior debt facility with RK Mine Finance and conditional strategic investments from the State General Reserve Fund of Oman and Bacanora's off-take partner, Hanwa, for a combined USD90 million.
This represents 52% of the USD460 million required for stage one production of 17,5000 tonnes per annum of lithium carbonate.
Bacanora will now focus on completing the front end engineering design and remains in discussions with "several additional parties with regards to securing the remainder of the construction funding".
Chief Executive Officer Peter Secker said: "Challenging market conditions have led us to take the decision not to proceed with the placing at this stage. From the perspective of a lithium developer such as ourselves, being a low-cost producer is key to successfully navigating price volatility. Thanks to expected life-of-mine operating costs of USD3,910 per tonne of lithium carbonate, once fully operational, Sonora will be among the lower cost producers of battery grade lithium carbonate in the world.
"Whilst recent fluctuations in lithium pricing forecasts continue, the development of the Sonora project remains our priority. Thanks to the combination of a large lithium resource, conventional processing techniques, and having all relevant approvals in place, Sonora is a highly valuable strategic asset. We continue to focus on fully realising this value for the benefit of our shareholders, and I look forward to providing further updates on our progress."
Shares in Bacanora were up 1.7% Thursday at 67.95 pence each.