BACANORA ESTABLISHES STRATEGIC LONG-TERM PARTNERSHIP too bad Erin can't do something like this with their boron!
2017-04-10 Bacanora Minerals Ltd. has entered into a strategic partnership with Hanwa Co. Ltd., a leading Japan-based global trading company and one of the larger traders of battery chemicals in the Asian region, with reported net sales of more than 1.5 trillion yen in 2016. The agreement comprises both an initial 10-per-cent equity investment in Bacanora and an offtake agreement for up to 100 per cent of the battery-grade lithium carbonate (Li2CO3) produced at the Sonora lithium project. The company is targeting to produce 17,500 tonnes of Li2CO3 per year (stage 1), commencing in 2019. After two years of producing at this level, the company plans to lift production to 35,000 tonnes per year (stage 2).
Overview
- Milestone offtake agreement for up to 100 per cent of Li2CO3 produced at Sonora:
- Hanwa to purchase 70 per cent to 100 per cent of lithium carbonate produced during stage 1;
- Tonnage-based contract for battery-grade lithium carbonate at market pricing, with final pricing to be finalized prior to commencement of production;
- Option to increase the offtake tonnage by up to 100 per cent at stage 2 production;
- Company-level investment demonstrates Hanwa's commitment to Bacanora and represents the entry of a new long-term, supportive investor to the register:
- Hanwa to acquire an initial 10-per-cent interest in Bacanora, raising approximately 10,175,000 British pounds (approximately $16,896,000) in proceeds to the company through the placement of 12,333,261 shares at a price of 82.5 pence (approximately $1.37) per share;
- Hanwa is entitled to present a nominee for election to the board of directors of Bacanora and has a pre-emptive right to maintain its 10-per-cent equity interest;
- Hanwa shall have an option to increase its equity interest in Bacanora to 19.9 per cent;
- The agreement provides a financing platform for the project; Hanwa represents a cornerstone investor and will aid in the procurement of long-term project debt financing;
- Validates the quality of the battery-grade (plus-99.5-per-cent) lithium carbonate product and Bacanora's production process;
- Hanwa has received numerous samples of the company's battery-grade product and has distributed samples to a number of its customers.
Bacanora's chairman, Mark Hohnen, stated: "This partnership with one of Japan's leading battery chemical traders is transformational for Bacanora: it significantly reduces the overall risk profile of the project; validates our production process; and provides us with an excellent platform with which to fund the future development of Sonora, our advanced lithium project in Mexico. Importantly, a long-term, supportive relationship has been established between ourselves and Hanwa, who will take a 10-per-cent interest in our company and also purchase between 70 per cent and 100 per cent of the total lithium carbonate production from our unique asset, highlighting their confidence in our processing methods and our ability to execute on the exciting opportunity that Sonora presents. This will be priced at market prior to production.
"Crucially, this relationship provides Bacanora with a further aligned cornerstone investor ahead of project financing and establishes a mantel from which we hope to leverage towards project debt financing out of Japan to contribute towards the construction of a significant lithium carbonate operation in Mexico. We are delighted to have delivered on our stated objective to secure a partner within the buoyant Asian lithium carbonate market and look forward to continuing this theme in the coming months as we work towards the completion of our feasibility study."