Member Info for BorderBob

Or I could just be doing research for my dissertation on Investor Psychology. Or someone with little financial interest in this company but much larger financial interest in other lithium projects with potential and competent management. Or perhaps a screenwriter for a forthcoming BBC comedy about a club for members who have never been to Mexico but speculate about it all the time.

By “we” you mean the handful of gentlemen who exchange thoughts here about the improbable venture to which they have committed. You know everything else in the blog post also, but it doesn’t seem to have been written for you. It is directed at a wider audience that might not know that your CEO admitted lack of necessary experience nearly two years ago. That audience might not also know that the 50% option was granted to Ganfeng at the same time. More may be learned from the unreported, than from the case that is made.

Hope springs eternal, but reliance on Chinese benevolence must have its limits. Financing could not be obtained elsewhere because half of the project had been sold, followed by nearly 30% of the other half. What. Did. You. Expect!

Some omitted history:

July 2018 – BCN withdraws a planned $100 million capital raise.

June 2019 – BCN announces an investment and offtake agreement with Ganfeng.

October 2019 – Under the agreement, Ganfeng has an option to acquire 50% of the Sonora project.

October 2019 – CEO Peter Secker says a $300 million equity placing “in the early part of next year” will be more attractive as Chinese expertise, including in clay lithium deposits, such as Sonora, propels the project forward. “Everyone was saying we had a lot of strong shareholders, but we did not have any lithium operating expertise,” he said.

Does the UK have any law like the US Foreign Corrupt Practices Act? A couple years ago Walmart paid $282 million to settle criminal allegations that arose from a 2012 investigation. They involved bribes paid by the company in Mexico to obtain permits to build stores there.

As they said in Casablanca, people were shocked – shocked! – that such activities had occurred. Well, not everyone. The word “mordida” is one of the first you have to learn to succeed in Mexico. Payment of the “bite” is what allows you to proceed with what you want to do.

Far be it from me, amidst accusations of patronizing, to suggest anything like this was happening out in the middle of nowhere. I’m just wondering if Bacanora has been involved in something other than British-style “umbral verde” contacts with Mexican officials and/or cartels. Those might explain a sudden urge to leave the country.

It’s always better to learn from other people’s mistakes, than from your own. What I have learned here is that many people bought a story, rather than shares in a business. Buying a story can be profitable, if the story spreads and you are among the first to hear it and can trade it off to a greater fool. But in the end, numbers matter. Will the business ever become profitable? And if so, how much are those profits compared to those from other opportunities?

Any investment deserves such research into its assets and liabilities, but also some insights into its investors. Are they people who make ad hominem attacks on those who questions or criticize? Do they include someone who will assume, quite ignorantly, you are a rare pro-Trump, anti-Brexit troll? Will they make fun of your name while ignoring your point of view? Have they no sense of humor?

The town does not have a stable water supply for its 1,000 inhabitants -- and now another 1,200 are going to show up? Read the Bacanora annual report and the references to water seem to be mostly concerned with how management's stock options are underwater. The decent thing for the Chinese would be to contribute enough to the town's infrastructure to assure an adequate water supply for both people and mining. Assuming that can be done in a drought they can afford it, especially considering the diplomatic benefits but their British partners can't.
Mexico takes great pride in its nationalization of the petroleum industry in 1938. That legacy is preserved by the current political movement, Morena, which elected the President and whose senators are looking at the Bolivian model of nationalizing the lithium industry. Is it less likely that they will do that if the new colonial power is China? Questions like that are what contribute to greater risk.

Some information from a March 2021 article (in Spanish) online at a Mexico news website about the small town of Bacadehuachi, Sonora, the nearest pueblo to the mine.

The town is classified as in “extreme drought” by the national meteorological service. It is a ranching area, with livestock in danger of insufficient feed or water. A proposed dam for a nearby stream has been talked about for decades, but not built.

"We do not have enough water to tell us that we are going to solve the problem of drought like the one that is being presented to us right now," the town’s mayor Manuel Madrid concluded, "I took on the task of rescuing a project for a dam that had been being forgotten for water rights problems; a water reservoir here, then yes it would change the lives of the inhabitants of Bacadéhuachi, coupled with the mine project ”.

Drinking water service relies on a 100-foot-deep well that has existed for more than 30 years. The pump feeds about 500 houses distributed in five different neighborhoods. Jesús Pedro Montoya has been in charge of the pumping equipment for 21 years and he is the one who attends to problems that may arise in the service.

“Right now we are busy with the water and the ranchers carrying water in the tanks to give the animals too, struggling,” he said, “the water is scarce and we have to start shaking valves to find for each neighborhood, to give them two or three water hours to each neighborhood ”.

Montoya is concerned that more people will arrive in town and that the pump will not withstand the load. It wouldn't be the first time the system had burned out and they could be without supply for weeks.

“We have run out of water for up to 15 days when the engine burns out, they have to go to Hermosillo and send to Monterrey to buy it; Until now, more or less, the water is doing well, but already for May and June: to shake valves and everything, control the water, and if all those people come then they will thunder at us here ”.

Lithium isn’t the first commodity to be mined nearby. “Teresa Romero had boom years when a salt mine operated in the same municipality. She had a three-shift canteen to feed engineers, suppliers, and workers, but when the mine closed about two years ago, her tables were left empty.”

https://bit.ly/3uLgRcZ

How big a ship can you get into a small harbor with a 12-meter channel, 6-meter anchorage and no cranes? But it probably doesn’t matter if the planned production is only 35,000 tpa. The problem at Guaymas, other than its high homicide rate, is that the port is already near capacity.

Pots calling kettle black.

The integrated plant has been designed to initially process 1.1 Mt of ore per year, during Stage 1 of the Sonora Project, subsequently increasing to some 2.2 Mt per year at Stage 2. So maybe that can be shipped to Europe -- from the West Coast of Mexico, isn't that even farther than China? Or maybe it go on one of those surplus BA 747s.
I have nothing against Scotland, and I expect to see it back in the EU next decade. My own Scottish ancestor left the place nearly 200 years ago, for which I am grateful. But I have more lithium money invested in the Canadian company with a CEO whose advanced degree is from the University of Aberdeen. They're getting US government money, though, for a US project. We can afford it because a private foundation pays for redecorating the White House.

@treblejohn67, who asks "Bob, what facility will there be at sanora?"

I have no idea what you mean by that question. Is it about Sonora? And in some Spanish-speaking countries, "facility" is the polite word for WC (long story about an American comic's monologue on how that means Wayside Chapel). But I was just doing some more research about what kind of lithium extraction was intended at Bacanora, the joint venture with the Chinese who already own 50% and a contract to buy all production.
Someone please correct me if I am wrong. The most expensive method to produce lithium is to break up rocks that contain it. That's what they plan for Bacanora. The less expensive method is to find it in brine, let that evaporate, then process the residue. And lately, there are stories about an even cheaper method to produce it with a sulfuric-acid process.
So is this like a coal mine on a windy shore? New technology may obsolete the old.
Add to that, the Chinese have to use smaller ships to move the semi-refined ore 400 miles southeast before turning around the Baja peninsula and heading a lot farther northwest. Granted, not as far away as Chile and Argentina, but Australia is a lot closer if those two countries don't go to war.
I should probably look at the archive of messages here and see what people were saying a few months ago when the company agreed to sell the Ganfeng Gang millions of shares for 45p each. You could have taken the same deal, too, and a 50% profit is not bad even if it takes a year.
In Sonora, what chickens lay and you eat for breakfast are not called eggs. The word "huevos" refers to a part of the male anatomy. So the polite term for locals is "blanquitos" -- little white ones. The more I look at this deal, the more I think the British have the Chinese by the huevos. Remote location, outdated technology, but already lots of yuan dumped into the project. The inscrutable way to save face is to control the accounting so no one knows how much is being lost?
I own shares in a dozen lithium small caps. I expect to lose money on most of them. I just want to be involved with the two or three that succeed.

I have issues with our former president's border policies. He and his followers consider the UK a socialist state, but then most of what they know about socialism they have been taught by Rupert Murdoch. We are still not welcoming as many refugees as our economy needs and our morality should support, but the significance of that here is that decent people don't want to live in a failed state where there is no effective government and you have to bribe not only those who control the military but those who don't.
The Chinese are good at doing so. That's why investment in Bacanora was safe -- you became a business partner with the Beijing regime. Apparently many commenters here were paying a higher price for the shares than what I did recently. What did they expect? Qui cum canibus concumbunt cum pulicibus surgent.
The Phoenix AZ newspaper this morning has a lengthy article about three EV manufacturers in the urban area, about 400 miles from Bacanora. Oddly, there is no mention of where they are going to buy their batteries, or lithium for them. One of them is assembling parts from China. Ganfeng had no plans to market its product in the US; they were going to ship it from Mexico to China for final processing and use. Then send it back to near where it was mined? Interesting situation.

They're calling it a "rare earth"? Lanthanum and cerium are rare earths. Lithium is about as rare as silicon oxide at the beach, in many places around the world.

Yes, this is my first post here, because BCN is the first British company that I paid an extra $50 commission to invest a very small amount in, just to follow it along with other and better lithium shares. And I was amused that the same people who are tearing the United Kingdom away from Europe, and then tearing the United Kingdom apart, are the "savvy" investors who have no idea what doing business in Mexico means. I suppose many of them are hedging their bets with cobalt mines in Congo.

Not here to gain anyone's respect. Happy for the ad hominem attacks. It means there is no disagreement with the point I made (see "Subject") -- Mexico is a failed state, and a foolish place to invest (although I am ahead so far on this lark).

I am fortunate enough to live about 100 miles north of the border, while this lithium project is 200 miles south of it. My advice: Let the Chinese have it, they are better at dealing with the crime and corruption that are facts of life in that part of the world. Even mad dogs and Englishmen should stay away from that remote region, infested by drug smugglers and human traffickers. Lithium is not rare -- there are several projects already, within a couple hundred miles north of the border. A couple of them are owned by an Australian company. Bacanora used to be known as the name of a Mexican tequila, made from the agave cactus plant. They've started to grow agave in Australia now, too. They can't call it tequila, but they can still make a better product -- just as they can do with the white light metal.