BCN.L Regulatory News (BCN)

Bacanora Lithium plc / Index: AIM / Epic: BCN / Sector: Natural Resources

25 November 2019

Bacanora Lithium plc ("Bacanora" or the "Company")

Issue of Equity to Cornerstone Shareholder

Bacanora Lithium plc (AIM: BCN), the London traded lithium exploration and development company, is pleased to announce that it has raised £7,729,150 (approximately US$10 million) via the placing of 30,916,601 new ordinary shares in the Company (the 'Placing Shares') with one of its long standing cornerstone shareholders, M&G Plc, at a price of 25 pence per Placing Share (the 'Placing'), increasing their strategic holding in Bacanora to 19.9%. The net proceeds of the Placing will be used to support pre-construction works at the Company's Sonora Lithium Project in Mexico ('Sonora' or the 'Project') where a feasibility study has indicated highly favourable economics of a battery grade lithium carbonate operation, including US$1.25 billion NPV, 26% IRR and operating costs among the lowest in the industry at around US$4,000/t of lithium carbonate.

Following the Placing, initial planned works at the Project will involve the commencement of the bulk earthworks on site in H1 2020 and an upgrade to the primary access road. In addition, the funds raised will be used to place the initial orders for some of the longest lead-time items in the concentrator, pyrometallurgy and hydrometallurgy sections of the lithium plant. The placing of orders for long lead-time items at this early stage will enable the construction and installation of the lithium plant to commence once the technical review currently being undertaken by strategic partner Ganfeng Lithium Co., Ltd. ('Ganfeng') has been completed.

As part of its Strategic Investment, Ganfeng recently completed a 29.99% equity investment in Bacanora and a 22.5% investment at the Sonora project level. Following the Placing, Ganfeng retains pre-emption rights to maintain its existing interest in Bacanora at 29.99%.

Bacanora Chairman Mark Hohnen said: "Today's Placing, following an inbound request from one of our long-standing institutional investors, M&G, represents in our view an endorsement of Sonora's potential to become a leading supplier of high-value lithium products to fast-growing industries such as electric vehicles and energy storage. It also further de-risks the required funding for the Project, that continues to be progressed by our brokers, Canaccord and Citi, and which we are aiming to complete in H1 2020. With our highly supportive strategic partner and leading global lithium company, Ganfeng, undertaking a technical review of the Project, we are working hard to ensure we hit the ground running as soon as this work has been completed. By allowing long lead-time items to be ordered and earthworks to commence, the funds raised will enable us to maintain the momentum behind our flagship project.

"Forecast lowest quartile operating costs, a 200 year plus resource base and high-grade, high value end product ideally position Sonora to play a major role in the ongoing battery technology revolution that promises to transform and reshape how businesses and industries operate. We are focused on capitalising on this opportunity for the benefit of all our shareholders and I look forward to providing further updates on our progress."

Issue of Equity & Total Voting Rights

Application has been made for the 30,916,601 new ordinary shares to be admitted to trading on AIM ("Admission"). Admission is expected to occur on or around 28 November 2019. These new ordinary shares will rank pari passu with the existing ordinary shares in issue. Following admission of the new ordinary shares, there will be 222,981,837 ordinary shares in issue. This number may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company. This placing was arranged by WH Ireland Ltd acting as sole placing agent. The placing is conditional, inter alia, on Admission becoming effective.

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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

ABOUT BACANORA LITHIUM:

Bacanora owns ten mining concession areas covering approximately 100 thousand hectares in the northeast of Sonora State in Mexico. Seven of these ten mining concessions (the "Sonora Lithium Project"1) were included in the Feasibility Study announced on 12 December 2017. The Company, through drilling and exploration work to date, has established a Measured plus Indicated Mineral Resource estimate of over 5 Mt (comprising 1.9 Mt of Measured Resources and 3.1 Mt of Indicated Resources) of LCE2 and an additional Inferred Mineral Resource of 3.7 Mt of LCE. The Company's Feasibility Study has established Proven Mineral Reserves (in accordance with NI 43-101) of 1.67 Mt and Probable Mineral Reserves of 2.85 Mt LCE and confirmed the economics associated with becoming a 35,000 tpa lithium carbonate and 30,000 tpa SOP producer in Mexico. In addition to the Sonora Lithium Project, the Company also has a 50% interest in the Zinnwald Lithium Project and the Falkenhain Licence in southern Saxony, Germany. Each of the Zinnwald Lithium Project and the Falkenhain Licence are 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 Zinnwald Lithium Project and the Falkenhain Licence provides close geographical proximity to the German automotive and downstream lithium chemical industries.

1. 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. SLL is owned 77.5% by Bacanora and 22.5% by Ganfeng Lithium Ltd. SLL also owns 70% of the El Sauz and Fleur concessions, which are held by Mexilit S.A. de C.V. ("Mexilit").

2. LCE = lithium carbonate (Li2CO3) equivalent; determined by multiplying Li value in percent by 5.323 to get an equivalent Li2CO3 value in per cent. 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.

IMPORTANT NOTICE

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