Ganfeng’s lithium expertise set to power Bacanora’s Mexico project

Hanwa

14/10/2019 18:16

* Bacanora shares up more than 50% this year
    * Says Ganfeng brings 'depth of knowledge'
    * Production now expected early 2022

    By Barbara Lewis
    LONDON, Oct 14 (Reuters) - London-listed Bacanora Lithium
 BCNB.L  plans a $300 million capital raise early next year and
says a deal with China's Ganfeng Lithium Co Ltd  002460.SZ 
 1772.HK  puts it in a better position to raise cash than when
it cancelled a smaller share sale last year.
    Bacanora's Sonora lithium project in Mexico is one of many
that have fallen behind schedule as production of the battery
mineral tests traditional mining skills and the market is
volatile because of uncertainty about supply and demand.
    After withdrawing a planned London $100 million capital
raise in July 2018, Bacanora announced in June this year it had
reached an investment and offtake agreement with Ganfeng
Lithium, one of the world's biggest lithium producers.
    The deal has helped to boost Bacanora's share price more
than 50% this year and it rose to its highest level in a month
following Monday's announcement of the deal's completion.
 urn:newsml:reuters.com:*:nL3N26Z23J
    Under the agreement, Ganfeng will become the biggest
shareholder with a 29.99% equity interest in Bacanora and a
22.5% joint venture investment in the Sonora lithium project.
    Wang Xiaoshen, the vice president of Ganfeng and the
vice-chairman of its board of directors, was also on Monday
named a director of Bacanora.
    Bacanora CEO Peter Secker said he welcomed the "depth of
knowledge" Ganfeng brought.
    "Everyone was saying we had a lot of strong shareholders,
but we did not have any lithium operating expertise," he said. 
    Apart from Ganfeng, which will also get 50% of Bacanora's
lithium production, other top 20 shareholders are Hanwa of
Japan, which has a contract for the other 50% and BlackRock
 BLK.N , the world's biggest asset manager.
    Secker says a $300 million equity placing "in the early part
of next year" will be more attractive as Chinese expertise,
including in clay lithium deposits, such as Sonora, propels the
project forward.
    Construction should begin in the second quarter of 2020,
with production starting in early 2022, roughly six months later
than previously expected, Secker said.
    In addition to the Sonora Lithium Project, Bacanora also has
a 50% interest in the Zinnwald Lithium Project and the
Falkenhain and Altenberg Licences in southern Saxony, Germany.
    Secker said the focus was Sonora and Bacanora has said it
plans to spin out the European assets.
    Canaccord Genuity, which rates Bacanora "buy," said in a
note it saw "attractive upside for the stock".
    Over the last five years, Ganfeng has bought into four major
international projects, two of which are Australian hard rock
mines now producing, and has invested more than $530 million in
mining developments, it said.   

 (Reporting by Barbara Lewis in London
Additional reporting by Ernest Scheyder in Houston
Editing by Matthew Lewis)
 ((Barbara.hm.Lewis@thomsonreuters.com; +44 207 542 2932;
Reuters Messaging:
barbara.hm.lewis.thomsonreuters.com@reuters.net))