BCN.L Regulatory News (BCN)

13 November 2020

Bacanora Lithium plc

("Bacanora" or the "Company")

Ganfeng exercises option to increase investment in Sonora Lithium Ltd ("SLL")

HIGHLIGHTS

· Ganfeng Lithium Co., Ltd ("Ganfeng"), Bacanora's cornerstone investor and offtake partner, has today approved a resolution to exercise its option to increase its stake in the Sonora Lithium Project (the "Project");

· This additional investment demonstrates Ganfeng's ongoing commitment to the Project, which targets production in 2023, subject to completion of financing;

· Ganfeng will exercise its right to subscribe for 73,955,680 new Ordinary Shares in SLL at 29.59p at a total value of £21,883,485, subject to certain conditions as set out below; and

· Bacanora will remain as the project operator in Sonora, while Ganfeng will be responsible for leading the engineering, procurement and construction ("EPC") of the Project.

Bacanora Lithium plc (AIM: BCN), a lithium development company, is pleased to announce that the Board of directors of its cornerstone investor and offtake partner, Ganfeng Lithium Co., Ltd ("Ganfeng"), has today approved a board resolution to exercise Ganfeng's option to increase its stake in Sonora Lithium Ltd ("SLL") from 22.5% to 50% (the "Option"). SLL is the operational holding company for the Sonora Lithium Project (the "Project").

This is a significant milestone in the development of the Sonora Lithium Project and demonstrates Ganfeng's ongoing commitment to the Project which is targeting production in 2023. As part of this development timetable, Ganfeng is continuing its engineering programme and has already completed its flow sheet design for the production of battery grade lithium. Ganfeng is now integrating this work into the final engineering design and remains on schedule to deliver its final engineering packages to Bacanora during H1, 2021. Ganfeng continues to work with its equipment suppliers to determine equipment delivery times to align with a target of production in 2023.

Bacanora therefore remains on schedule to commence initial site works at Sonora in 2021, subject to completion of financing, which would enable commencement of production at the plant in 2023. This timeframe coincides well with the anticipated increase in lithium demand from European, Asian and US electric vehicle manufacturers expected that year.

Under the terms of the SLL Joint Venture Agreement, details of which were announced on 20 May 2019, Ganfeng will exercise its right to subscribe for 73,955,680 new Ordinary Shares in SLL resulting in Ganfeng owning 50% of the enlarged issued share capital of SLL. The price of the new shares is based on the 20 Day Volume Weighted Average Price (VWAP) of Bacanora Lithium Plc's ordinary shares. As at 10 November 2020, the VWAP was 29.59p and accordingly Ganfeng will subscribe for a total of 73,955,680 new Ordinary Shares in SLL at a total value of £21,883,485. Ganfeng will now apply to the relevant authorities in China, predominantly the State Administration of Foreign Exchange (SAFE), in order to allow the funds to be remitted to the UK.

On completion of the exercise of the Option, the Board of SLL shall comprise two Bacanora appointed Directors and two Ganfeng appointed Directors. Bacanora will remain as the project operator in Sonora, while Ganfeng will be responsible for leading the engineering, procurement and construction ("EPC") activities associated with the Project. The current joint venture agreement will be amended to incorporate the updated provisions for the new 50:50 joint venture arrangement.

Completion of the exercise of the Option is conditional on, amongst other matters, completion of the definitive documentation and regulatory approvals. Further announcements will be made in due course.

Peter Secker, CEO of Bacanora said:

"We are delighted by this further show of confidence from our partner Ganfeng in the Sonora Lithium Project. Their investment further de-risks the Project and reduces the equity demands on Bacanora's own shareholders to fund Phase 1 of the Project. With recent trends in electric vehicle purchases showing significant year on year growth and lithium storage batteries starting to play a strategic role in the storage of renewable energy, the Sonora Lithium Project is now well placed to be in production in 2023 and delivering battery grade lithium products into the fast growing energy storage market."

Mr Wang Xiaoshen, Deputy Chairman of Ganfeng said:

"We have been working with Bacanora on the exciting Sonora Lithium Project for over two years and are delighted to be increasing our investment in what we believe to be a world class lithium project. We continue to support the Company with its engineering and technical development at Sonora and look forward to commencing project construction in 2021, with a target of production in 2023."

ENDS

For further information please visit www.bacanoralithium.com or contact:

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014

Notes to editors

Bacanora Lithium Plc is an AIM-listed (ticker 'BCN') lithium development and exploration company. The Company is focused on building, in collaboration with its major shareholder and offtake partner, Ganfeng Lithium (the world's largest lithium metals producer), a 35,000 tonne per annum open pit lithium carbonate operation at its flagship asset, the Sonora Lithium Project in Mexico. The Sonora Lithium Project has 8.8 million tonnes of lithium carbonate (Li2CO3) equivalent resources, with an approximate 250-year resource life, as detailed in its December 2017 Feasibility Study.

Sonora Lithium Ltd ("SLL") is the operational holding company for the Sonora Lithium Project and owns 100% of the La Ventana concession. The La Ventana concession accounts for 88% of the mined ore feed in the Sonora Feasibility Study which covers the initial 19 years of the project mine life. On completion of this option exercise, SLL will be owned 50% by Bacanora and 50% by Ganfeng Lithium Co., Ltd. SLL also owns 70% of the El Sauz and Fleur concessions. 

Bacanora also owns 44.3% of Zinnwald Lithium Plc (AIM: ZNWD), which in turn owns a 50% interest in the Zinnwald Lithium Project and the Falkenhain and Altenberg Licences in southern Saxony, Germany.

Cautionary Statement Regarding Forward-Looking Information

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: commodity price volatility; general economic conditions in the UK, the United States, Mexico, Germany and globally; industry conditions, governmental regulation, including environmental regulation; unanticipated operating events or performance; failure to obtain industry partner and other third party consents and approvals, if and when required; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; competition for, among other things, capital, skilled personnel and supplies; changes in tax laws; and the other risk factors disclosed under our profile on SEDAR at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

Important notice

The contents of this announcement have been prepared by and are the sole responsibility of Bacanora.