LONDON (Alliance News) – Bacanora Minerals Ltd Tuesday said it is negotiating a number of non-binding agreements with potential offtake partners for the lithium it will produce from the Sonora project in northern Mexico, building on its deal with US-based Tesla Motors earlier this year.
Bacanora owns all of the La Ventana lithium concession at Sonora, and owns 70% of the El Sauz and Fleur concessions and 70% of the Megalit concession. Rare Earth Minerals owns the other 30% of the El Sauz and Fleur concessions and the rest of the Megalit concession, which surrounds the other concessions.Rare Earth Minerals PLC, which owns parts of the Sonora project and also has a 17.19% stake in Bacanora at a corporate level, released its own, but also identical statement on Tuesday.
Bacanora, as the operator, is currently focused on developing the Sonora project and is completing a pre-feasibility study and designing the plant that will enable the company to produce up to 50,000 tonnes of lithium carbonate per year.
On Tuesday, Bacanora said it is currently negotiating a number of letters of intent, memoranda of understanding, draft agreements and non-disclosure agreements with the potential offtake partners after hosting many of them at site and plant visits, it said.
"The various discussions and ongoing negotiations referenced in this announcement indicate that the Sonora lithium project is now receiving a significant amount of interest from major trading houses in Asia and Europe for supply of lithium products," said Peter Secker, chief executive of Bacanora.
In November, Bacanora completed a placing of 11.5 million shares at 77.0 pence each to raise GBP8.8 million to progress Sonora, with Rare Earth taking up its share of the placing to maintain its stake in the company.
Bacanora said it has sufficient funding moving forward to allow the Hermosillo pilot plant at the project to be upgraded so it can cope with continuous metallurgical operations, which are scheduled to start in January 2016.
The pilot plant will treat bulk lithium samples mined from Sonora, producing offtake samples that can be sent to the potential buyers, which will span Europe, Asia and North America.
As a result, discussions with potential offtake partners will continue for the next six months, subsequent to the pre-feasibility study for the project being released before the end of the first quarter of 2016, said Bacanora.
Back in September, Bacanora mobilised a second drill to Sonora to speed up the drilling programme being conducted after signing a major deal with US-based Tesla Motors to sell lithium hydroxide to feed the manufacturing of batteries at Tesla's planned "Gigafactory" in Nevada in the US, which will produce energy storage products and electric vehicles.
Timing is important as the Sonora project must race to meet Tesla's schedule over the next few years in order to retain the deal. The quality of the product from the project must also meet certain requirements.
Bacanora shares were up 0.5% to 79.90 pence per share on Tuesday afternoon whilst Rare Earth shares were trading down 1.3% to 0.681p.
By Joshua Warner; [email protected]; @JoshAlliance
Original Article: http://www.lse.co.uk/AllNews.asp?code=y5t147y7&headline=Bacanora_Rare_Earth_Negotiating_Further_Offtake_Deals_For_Sonora
