BCN.L Regulatory News (BCN)

Bacanora Minerals Ltd

('Bacanora' or the 'Company')

Acquisition of 50% Interest in Strategic German Lithium Asset

Bacanora, the London and Canadian listed (AIM: BCN, TSXV: BCN) resource developer focused on building an international lithium company, is pleased to announce that it has entered into a definitive agreement (dated 17 February 2017) to acquire a 50% interest in, and joint operational control of, the Zinnwald Lithium Project ('Zinnwald' or 'the Project') in southern Saxony, Germany from SolarWorld AG ('SolarWorld'), the largest solar panel producer in Europe. This is in line with management's vision to become a global lithium operator focused on projects with significant value accretion potential and defined markets at both the product and geographic levels.

Highlights:

· Zinnwald, which reportedly produced lithium carbonate in the 1950s, is located in a granite hosted Sn/W/Li belt that has been mined historically for tin, tungsten and lithium

· The Project benefits from excellent access to the rapidly growing market for lithium in Germany which is being driven by the automotive, renewable energy storage and chemicals industries

· Geographical location of the Project provides potential access to new markets, which diversifies risk and complements potential target markets for the Company's Sonora project in Mexico where a Feasibility Study is on track for completion in 2017

· Bacanora will earn 50% of the project in return for a cash consideration of EUR5 million and an undertaking to contribute EUR5 million towards the cost of completing a Feasibility Study on the Project, which is anticipated to take approximately 18-24 months to complete

· Access to the significant lithium technical expertise developed by SolarWorld over the past ten years in the renewable energy industry

· Option to acquire the outstanding 50% held by SolarWorld within a 24 month period for EUR30 million

Bacanora Chairman Mark Hohnen stated, "Zinnwald is a strategic asset located in close proximity to a thriving market for lithium and energy products. The Project fits with both our corporate strategy to develop and operate integrated lithium projects to produce high value lithium products, and also the commercial overlay which drives our acquisition strategy."

"Sonora continues to sit at the heart of our portfolio and having produced battery grade lithium carbonate from our 100% owned pilot plant ahead of finalising off-take agreements in Asia, we are committed to bringing this into production. However, Zinnwald provides us with exposure to an exciting new geographic market and adds hard rock mineralisation to our portfolio. We believe that with an ownership structure that is accretive to Bacanora, Zinnwald will further facilitate our ambition of becoming an independent global lithium operating group."

Zinnwald

The Zinnwald Lithium Project is located in southeast Germany, some 35 km from Dresden and adjacent to the border of the Czech Republic and within 5km of the town of Altenberg and 50 km of the town of Freiberg.

The Project is located in a granite hosted Sn/W/Li belt that has been mined historically for tin, tungsten and lithium at different times over the past 300 years. The strategic location of the project allows immediate access to the German automotive and downstream lithium chemical industries.

The Zinnwald Project and leases are held by Solarworld Solicium GmbH, a 100% owned subsidiary of SolarWorld AG, the largest solar panel producer in Europe. The Project has a historical resource estimate dated 1st October 2014 which was reported in accordance with the PERC Code[1], comprised of Measured, Indicated and Inferred Resources.[2] A Qualified Person (under National Instrument 43-101 - Standards of Disclosure for Mineral Projects ('NI 43-101')) has not done sufficient work to confirm the historical estimate; hence Bacanora is not treating the historical estimate as current Mineral Resources or Mineral Reserves. However, Bacanora believes that the historical work at Zinnwald and the geological context of the deposit support the case for investing in further work to investigate the Mineral Resource and its potential for economic extraction.

Notes:

* Li cut-off 2,500pm and >2 metres vertical thickness.

** LCE is the industry standard terminology for, and is equivalent to, Li2CO3. 1 ppm Li metal is equivalent to 5.32 ppm LCE / Li2CO3. Use of LCE is to provide data comparable with industry reports and assumes complete conversion of lithium in clays with no recovery or process losses.

SRK Consulting (UK) Ltd has briefly reviewed the historical work at Zinnwald and adjacent properties and is working with the Company to test the historical estimate and develop a future resource. It is expected that additional infill drilling and an updated geological and grade model will allow current Mineral Resources to be reported, following which a new technical report is expected to be prepared in accordance with NI 43-101 and AIM Note for Mining and Oil & Gas Companies standards.

In 2014, SolarWorld AG also completed a technical report on the Project, prepared in accordance with the PERC Code.[3] Bacanora has reviewed the foregoing report (a copy of which has been published by SolarWorld AG on its website) and relied upon it in ascribing its internal valuations for the Project and the negotiation of the transaction terms. 

Bacanora's investment into the Zinnwald project gives the potential to provide entry into the fast-growing European lithium market whereas the Sonora project continues to focus on off-take markets in Asia. In addition, the location of Zinnwald, adjacent to existing downstream German lithium chemical infrastructure and automotive manufacturing capacity, has the potential to allow the Zinnwald Project to focus on the production of higher value, downstream lithium products, which typically command premium pricing as compared to lithium carbonate products.

Martin Pittuck of SRK Consulting (UK) Limited is the Qualified Person pursuant to NI 43-101 and the AIM Note for Mining and Oil & Gas Companies who has reviewed and approved the technical contents of this announcement.

For further information, please contact:

ABOUT BACANORA:

Bacanora is a Canadian and London listed minerals explorer (TSX-V: BCN and AIM: BCN). The Company explores and develops industrial mineral projects, with a primary focus on the Sonora Lithium Project. The Company's operations are based in Hermosillo in northern Mexico and it currently has two significant projects under development in the state of Sonora. 

The Sonora Lithium Project, which consists of ten mining concession areas covering approximately 100 thousand hectares in the northeast of Sonora State. The Company, through drilling and exploration work to date, has established an Indicated Mineral Resource (in accordance with NI 43-101) of 4.5 million tonnes (LCE) and 2.7 million tonnes Inferred.[4] A PFS completed in Q1 2016[5] demonstrated the economics associated with becoming a 35,000 tpa lithium carbonate and 50,000 tpa SOP producer in Mexico.