Member Info for observer842

Out of interest do we have even an indicative indication (LoL) of what the resource might be if all of the Sonora licences were included (including Megalit)?. From recall I believe we only have back of the envelope estimates. e.g. a few drill holes multiplied by likely length, width, height of strikes. Did Megalit ever get approved? Might be trickier in the current political situation if not...

LoL @MBW. The SP doesn't interest me at the moment as I don't intend to derisk until after 20% news. Although let me know if it drops and I might be tempted to buy more... ;-)

Absolutely @tomcat. Don't for one moment think I'm trying to downplay the global significance of Sonora! ;-) The brines can typically get away with claiming a total resource from indicative measurements across it as much less sampling is required to define it as the resource is usually fairly mixed and can therefore be considered mostly uniform to a good approximation. Mines on the other hand, less so! LoL.

@MBW I'd prefer to only communicate on here if I can, but for various (some historical) reasons not everyone does! It's a shame the noise to signal can be, shall we say a little overwhelming at times. LoL. :-)

Thanks @tomcat & @jimb, though as I've just explained I'm looking for clarification on whether the brines are expressed in Li or LCE units.

Hello @news. I hope you can see that I'm trying to help with your (our!) understanding. I can say with 100% certainty that the Sonora resources of 8.82Mt are expressed in Lithium Carbonate Equivalent (LCE) meaning that the weight of the contained Lithium is (rounded!) 1.66Mt and it is this which should be used to compare against resources that are expressed in Li. What I'm slightly less certain on (only 99% certain) is whether the units for the the lithium brines I quoted are LCE or Li. I believe they are Lithium, as does the U.S. Geological Survey and bnamericas, but I thought I'd ask others to comment/check. I presume you know where the 5.323 comes from? LCE is Li2CO3. Add up the atomic masses and you'll see. Here's a video https://www.youtube.com/watch?v=TBdBtgKyc8g (73.89 / 13.88 = 5.323)

As to Amapa valuations, as I've said everyone has their own. I'm not saying what they "should" be I'm saying what I'M using. If people want to use the conservative valuation of $600m (which should be $660m as @Kiran keeps making this mistake) used by @Kiran (he states it's conservative) they can do. I'd encourage them to read the Anglo accounts to understand what this is though. From what I can tell it's a written down asset valuation + monies owed - monies owed + others. Why did Anglo do this? Well you'll have to ask them but I'll bet my bottom dollar it was to optimise in year taxes. For me, and others are free to disagree, their previous year valuation of $1.2B is more appropriate, which is more likely to be a DCF/NPV, and even this could be an underestimate of the value of the mine today given the updated mineral resource, iron ore prices and exchange rates. We'll have to wait until the scoping study to see, and this is partly why I say that we might not see my price targets for 20% straightaway.

I hope that helps explain where I am coming form. Again, I'm only trying to help. It would be much easier for me to stay quiet and say nothing. ;-)

Ob.

Anyone able to sanity check my 21:00 & 23:55 posts on KDNC.PL? I'm reasonably certain I know my apples from my pears, but it would be useful to have another pair of eyes check it over. Lithium vs LCE can be a bit of a quagmire! LoL. I doubt the USGS has got it wrong, but stranger things have happened...

Hello @news. I'm as confident as I can be that the official USGS figures are correct. I've seen many articles over the years get confused when talking about Lithium and Lithium Carbonate Equivalent. Mexico (including Sonora) DEFINED resources are much less than Chili's, and very much less than Bolivia's. I've also seen many commentators getting confused over the largest mines in the world. Mines are not brines. Brines are contained in Salars and typically their resources are significant larger - but they often don't feature in top 10's of lithium MINE's, because, well, they aren't mines. LoL. The largest in the world is the Salar de Uyuni in Bolivia which has over 10 times the defined resources as Sonora. I urge you not to fall in to the same trap as other of comparing apples with pears. Multiply/divide by 5.323 if you must. LoL. ;-) Once you are confident you know what unit the resource is reported in of course.

"Spotlight: Latin America’s biggest lithium deposits" (October 13, 2020)
https://www.bnamericas.com/en/features/spotlight-latin-americas-biggest-lithium-deposits
===[
1. Salar de Uyuni, Bolivia
Lithium equivalent resource: 21.1Mt
Type: Brine

2. Salar de Atacama, Chile
Lithium reserves: 8.3Mt
Type: Brine

3. Cauchari-Olaroz, Argentina
Lithium reserves and resources: 5.30Mt
Type: Brine

4. Sonora project, Mexico
Lithium resources: 1.66Mt
Type: Polylithionite
Mexico’s Sonora project hosts total resources of 8.82Mt lithium carbonate equivalent (LCE), or 1.66Mt lithium metal, according Bacanora Lithium.

5. Olaroz, Argentina
Lithium resource: 1.20Mt
]===

As to the valuations for Amapa by some. The 67p, £1, £1.20 valuations are based on taking 20%-27% of the company. And they are personal valuations - NO ONE can know what will actually transpire. I'm in the 67p-£1 range for 20%, and hopefully over £1 on 27% - but not necessarily straight away, but possibly due to iron ore prices and sentiment driven. My valuation for when shipping started was over 30p. We went over 30p subsequent to this being RNS'd... :-)))) We've fallen back, because well, AIM is AIM, no doubt we'll do the same for the other targets if we hit them... But AIM is AIM and we might just breeze past them on expectations of taking 49%. Who knows? I certainly don't. ;-)

Ob.

Hello @news. Sorry I can't spend more time to discuss, but before you go too deeply down a rabbit hole with the wrong end of the stick regarding relative reserves (e.g. Sonora vs Chile) I thought it might be helpful for me to point you to my post on 27 Mar 2021 15:11 on here. To go from Lithium to LCE you need to multiply by 5.323, meaning Chile's 9.6Mt of lithium is actually 51Mt LCE.

https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-lithium.pdf

Sonora is the 1.7Mt of Lithium.

By the way, I'm more than happy for OTHERS to talk about any of our assets - I'm personally just wanting to focus on Amapa until it completes - I think the market doesn't fully appreciate its potential and the more that can elucidate this the better. :-))))

Ob

Hello @news. My understanding is that unless BCN and Ganfeng want to inject additional funds into the project then the intention is to organically grow it from 20ktpa (was 17.5ktpa) to whatever size the market can support and at a speed which will be dependent on profits from sales, e.g. to 100tkpa LCE and beyond.

They have raised the funds for the first stage, which according to the latest corporate presentation has a CapEx of $420m and a payback time of 4 years @$11,000/t LCE

https://www.bacanoralithium.com/pdfs/Bacanora-Company-Presentation-March-2021.pdf

The next stage has a CapEx of $380m, and we have been led to believe this will be the CapEx of subsequent stages of equal production rate (was 17.5ktpa, now very likely 20ktpa) due to the modular design.

If Sonora is expanded to 100ktpa under the above model this would require a CapEx of approximately $400m * 5 = $2B. I'd expect most of this to be funded from profits (organic growth), but it's possible that it might be desirable to accelerate the growth in which case additional funds will be required - debt/off-take/equity/JV partners?

According to my understanding of the mining plan (see my post on here 22 Mar 2021 21:05) it is likely that plans beyond 50ktpa will result in our JV being mined earlier and in greater volumes than is currently planned as outlined in the Feasibility Study. Therefore it's pretty much a certainty if they are targeting 100ktpa over the next decade, which according to the local Mexican papers seems to be the case, our JV will be mined much earlier and in greater volume than envisaged in the current 19 year mining plan, assuming we are interpreting this correctly. :-)))))

I think we've speculated previously that it's possible that it might be more (speed/cost) efficient to start a stage at the bottom of the mining plan (in our JV region) and work upwards joining in the middle, rather than try to accelerate downwards into our JV with all the mining equipment getting in the way of each other, and having more earth to shift in the middle region IIRC (poorer stripping ratios). You might remember in the PFS there were two pits (North pit in the LV and South pit in the JV) which were combined into a single pit in the FS. Perhaps once Amapa completes and we finally land on our feet we'll be able to help fund this aspect, alongside Ganfeng? It's a nice thought, but I'd personally rather see us acquiring 20% of Amapa before putting too much effort into speculating about such possibilities! Though I'm sure there are many who would prefer I did now. LoL. Just a question of time and priorities. ;-)

Ob

By the way, as you know, there are many knowledgeable posters on the main forum where the audience is larger and where new comers look first. I'd personally prefer to post in a single place (as I've mentioned previously) where what we discuss will have a larger reach. I only look in on this site when I remember, which could be days, weeks or months!. Similarly for the REM one. LoL. ;-)

Hello @news. I'm incredibly busy at the moment. If someone has verbally said Sonora may get $2B investment over a decade then that equates to (roughly!) CapEx of 100ktpa facilities which is unsurprising given their (verbal) expansion plans which I quoted yesterday.

"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.
]===

Might have slipped to Tuesday

I should point out that is just Amapa. There are other projects we are expecting news from, just that Amapa seems to be the most imminent at the moment and likely to be the most impactful. Here is a post from the EMH board which summarises nicely various catalysts which could improve their price, and hopefully ours as we own 10-11%:

@Fingersxed 23 Mar '21
===[
There are so many catalysts around the corner and coming over the next 9 months
Czech listing
Nasdaq proper listing
EU funds grant/ grants
drill results
offtake1
offtake 2
offtake 3
offtake 4
official uplift in production
shift scenarios explained
piolot plant
Lithium price increases
tin price increases
etc etc etc
]===

There is also the potential for BCN and Ganfeng to announce plans to start at greater than 17.5ktpa and expand to more than 35ktpa. Verbally their CE has suggested that 20ktpa is what they are now planning, and expanding to 50ktpa, or larger, is on the cards.

"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.
]===

This will almost certainly mean that our JV will be required sooner and in greater quantities both in the short term and medium to long term which should add value here.

We might also get decent news from our Australian Yangibana rare earth mineral JV, or Lithium Australian JV's, who knows? I'm hopeful we've got plans lined up, but we are focused on getting Amapa over the line before pursuing these.

Anyway, fingers crossed for 20% of Amapa, hopefully soon! Monday even. ;-)

Ob

For the benefit of those new looking in on the back of recent gains and publicity the latest webinar can be found at:

"Watch the Cadence Minerals #KDNC? webinar hosted by Vox Markets & Turner Pope Investments" (8 Apr 2021)
https://www.youtube.com/watch?v=wZNJua-kYM4
===[
Cadence Minerals CEO, Kiran Morzaria, presents that latest investor presentation and answers questions from the investment community. On the back of investor demand there is an emphasis on the progress and future of Amapa. Kiran also discusses the Company’s joint ventures including lithium projects in Australia.
]===

Amongst all the noise on here there are some very well informed posters who I'm sure would be willing to help guide you to answering any questions you may have.

In summary we are waiting for news that we have concluded with the banks and are now in possession of 20% of the Amapa Iron ore project having released $2.5m in escrow, with an option to go to 27% for $3.5m, some of which has been paid already, and a first refusal, of which the terms are not fully clear to me at least, to go to 49%. This project has previously been valued at $1.2B by Anglo American and IMHO has the potential to be valued greater than this in the light of vastly improved exchange rates and decent iron ore prices, especially if expansion plans are executed.

Ob.

Actually thinking about it, it was probably the share sale that takes the several days to clear before it can be transferred. That would make more sense. Anyway, I Bed and ISA nowadays...

Morning @Bannor. Completely agree. It was just a heads up for those that didn't know that the transfer can take several days. Or a least used to take several days if doing it yourself, it was many years ago I found this out the hard way! LoL. Obviously it's practically instant when your platform Bed and ISA's for you - and that is the point I guess. ;-) The spread they use will depend on several factors. Some are able (and willing!) to put it through with practically no spread.

Indeed @Bannor. Just a friendly warning from my experience for those who don't have £20k to put in the ISA before they sell the shares. I thought I was being clever. LoL.

changeover tomorrow by the way.

Beware DIY Bed and ISA, I once thought I'd do this myself. Sell. Transfer. Buy. But hadn't banked on it taking a few days for the transfer to clear before I was able to buy back - even though it was the same platform. Fortunately the share price fell over those few days and I ended up with more shares. But I won't be doing that again, especially for shares where news is imminent! LoL. If you don't know how long it takes for your platform to transfer funds, you could do a DIY Bed and ISA for a small part of what you want to transfer, as a test?

Yes. sp then eb.

Sounds about right if the market goes with the historical Anglo valuation of $660m. Hopefully within weeks of achieving 20% we'll be updated with a half decent NPV valuation when the scoping study is released, which will hopefully confirm the impact improved exchange rates and iron ore prices have had, potentially 2 or even 3 times that, or more if it dares to dream of expansion scenarios. ;-)

Ob