LONDON (Alliance News) - Bacanora Lithium PLC said Thursday it has entered into a USD150 million senior debt facility with RK Mine Finance for the development of stage 1 of its Sonora Lithium project in Mexico.
The exploration company believes the "competitive terms" of the facility provides "further validation of the quality" of Sonora's battery grade lithium carbonate.
The facility is structured as two separate eurobonds to be listed in Jersey. The main bond is a USD150 million nominal amount secured notes issued at at purchase price of USD138 million with a 6-year term and bearing an interest rate of three months LIBOR 8% per annum.
The second bond is a USD65 million nominal amount zero interest-bearing secured notes issued at a purchase price of USD12 million with a 20-year term.
The facility may be drawn in three tranches of USD25 million, USD50 million and USD75 million.
The new facility follows a "favourable" feasibility study carried out at the project which assigned a pretax USD1.25 billion net present value to Sonora.
Bacanora Lithium also said it is in "advanced discussion" with an off-take partner and "other strategic investors" to complete the proposed stage 1 development funding package.
Chief Executive Officer Peter Secker said: "We believe that senior debt facilities of this size have been few and far between in the junior resource space in recent years. Furthermore, we consider that the costs and terms of the Facility are highly competitive when compared to other debt packages that have recently been reported for greenfield lithium projects in Canada and Australia. We view the debt facility with RK as a vote of confidence in Sonora's credentials by a leading specialist debt provider in the resource sector."
"We have always believed that Sonora stands out from the crowd. Not only is the Project one of the world's larger lithium deposits but, as the Feasibility Study demonstrates, it is expected to have one of the lowest quartile (Q1) LOM operating costs once production commences in 2020. In addition, we have proved our operating credentials with the Sonora pilot plant, which continues to produce battery grade (+99.5%) lithium carbonate. We believe that it is this compelling combination that has enabled us to attract blue-chip backers including the Japanese trading company Hanwa as an offtake partner and strategic investor, tier one fund managers as major shareholders, and now RK as a debt provider. We continue to talk with other important participants in the lithium space with a view to securing additional high quality strategic partners, as we focus on entering into the construction phase of what we believe will be the next significant producer of battery grade lithium carbonate."
Shares in Bacanora Lithium were up 5.8% Thursday at 92.00 pence each.