LONDON (Alliance News) - Bacanora Lithium PLC on Wednesday said a feasibility study has confirmed that the German lithium project has the potential to "generate significant value for shareholders."
Shares in Bacanora were 9.0% higher at 27.52 pence on Wednesday.
The study was completed at the Zinnwald Lithium project in Germany which confirmed the "positive economics" for the production of 5,112 tonnes per year of battery grade lithium fluoride.
Bacanora holds a 50% stake in Deutsche Lithium GmbH, which wholly-owns Zinnwald. Bacanora also has the option to acquire the remaining 50% stake that it does not already own which has been extended to 2020.
With a project life of 30 years, the study estimated that the pretax net present value stands at EUR428 million. This would represent an internal rate of return of 27% and "favourable" life-of-mine operating costs.
The study forecasts that the average life-of-mine annual earnings before interest, taxes, depreciation and amortisation is estimated at EUR58.5 million per year.
Bacanora Chief Executive Officer Peter Secker explained that the study confirmed that Zinnwald had the "potential to generate significant value for shareholders."
"The EUR58.5 million in annual earnings that the EUR159 million capital investment is forecast to generate in each of the 30 years of mine life, the strong position on the global industry cost curve, the conventional processing route, and the exposure to fast-growing end markets such as electric vehicles, all add to the compelling investment case that Zinnwald represents," Secker added.
"With numbers such as these, we are keen to realise the project's potential to become a leading supplier to the fast-growing European battery and automotive sectors at the earliest opportunity," Secker continued. "We are already working hard to secure strategic partners to develop the project and we are actively considering a public listing for Deutsche Lithium, our 50%-owned subsidiary that holds Zinnwald, to help achieve our aim."
Cadence Minerals PLC, which owns 1.7% stake in Bacanora, noted the positive Zinnwald study results. Shares in Cadence were trading 0.1% lower at 0.14 pence each on Wednesday afternoon.
Cadence Mineral (KDNC)