Bacanora Lithium Share Discussion Threads

[ifthecapfits] 23/2/2018 15:45

Bit disappointing this pull back - might have to get some more.

[marvelman] 22/2/2018 16:32

W Resources, a Tungsten miner, has just financed its new mine using Blackrock (yes Blackrock). They have funded the mine build but the cost is eye watering....average 13% interest over 5 years, a 3% "arrangement" fee and 5% of the fully diluted company in warrants....doubt BCN will fare much better but I hope they will.

[compnews1] 22/2/2018 09:10

The cost of £300k is not that much to worry but can't see the rationale for moving to London when it is easier to get debt from the US. The key risk now is getting financing at 8%. Can't wait to hear this news then still time to ente.

[igbertsponk] 21/2/2018 13:27

Needs to be in UK as that is where its shareholders are. The shareholders it expects to finance its mine. £330k is peanuts.

[pugugly] 21/2/2018 11:05

£330K cost of changing domicile - Can it be justified ? Only immidiate winners look like the legal profession etc
"General

The costs, charges and expenses payable by the
Company in connection with or incidental to
the Arrangement and Admission, including registration
and stock exchange fees, legal and accounting
fees and expenses, are estimated to amount to
GBP330,000, excluding any VAT applicable thereon."

[gold map] 21/2/2018 09:32

Video - In Ground end Q2 18https://youtu.be/ZnTBS5AL3BY

[igbertsponk] 19/2/2018 11:32

What "recent decision to go for debt & equity financing"?
That has always been the plan.

[compnews1] 19/2/2018 11:25

Wood Mackenzie is a well known company whom I have dealt with for many years. They are very good at their work. We can't ignore lithium but at what share price?. I am happy to wait for the outcome of getting financing for the project. Recap - they evaluated the project based 100% equity finance and NPV post tax at 8% discount rate, $11000 lithium price is US$802 million. I have just found a Feasibility Study done by Ausenco for the Sonora Lithium project and on page 10 of the actual report(link below)it said price is the most sensitive variable (as I have previously said on this forum) and that 30% change in price would change the NPV by aprroximately $600 million. In light with this new information done by Wmac, it makes me more vigilant on the share price As they said in the report that NPV is based on 100 equity finance, it seems to me that they fail to get financing at 8% hence their recent decision to go for debt & equity financing. I am no expert on this corporate financing but putting the information gather from various source, I would stay away until their success in getting financing. Ok, share price may go up 5%-10% but it is a safe bet then loosing 30%. Food for thought


hxxp://www.bacanoraminerals.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf

[steeplejack] 19/2/2018 09:52

FT article in 17/18th weekend issue

Contains article headed Lithium faces 5bn dollar test as supplier stake sale electrifies buyer interest.

References the fact that the Canadian company PotashCorp which acquired a 32 percent stake in Chiles SQM some 20 years ago will now be forced to sell the stake as a condition of its merger with rival Agrium.’While only a handful of companies are likely to compete for the stake,the eventual price will be an important measure of how seriously the hype around electric cars is being taken’The stake is currently valued at around 4.7bn dollars.

The price of lithium carbonate has more than doubled over the past two years to hit 14,500 dollars a tonne.However,according to consultancy Wood Mackenzie,if electric vehicles reach 5 percent of car and light truck globally by 2025 from their current level of 2 percent,lithium prices will fall to 6900 dollars a tonne by 2025.However,if that share,including plugin hybrids,climbs to 12 percent by 2025,lithium prices will remain at current levels and move towards a long term price of 13600 dollars a tonne,the consultancy forecasts.

Wherever bidders end up sitting on the spectrum of forecasts,they will also be competing against a backdrop in which lithium prices have unleashed a surge in supply.Companies are hunting for the metal,including in Cornwall,Nevada,Mali and Australia,where there has been a rapid build up of production.As a result,some analysts who follow the industry forecast a surplus for the next few years,’Why would you buy a 5bn dollar stake in a resource that is geologically abundant’,asks one investor.Ben Isaacson,an analyst at Scoia bank in Toronto,says SQMs share price reflects lithium prices well above the marginal costs of production which isnt realistic.The lithium price will fall to a long term average of between 8000-10000 dollars per tonne he forecasts.’Theres a clock ticking on this deal
‘he says ,’this should be bought at a discount ,this should not be bought at a premium.’

‘Lithium is experiencing a far bigger demand shock’,says says Howard Klein,a New York based partner at RK Equity which advise companies in the sector.The sale of the SQM stake will reveal just how valuable the world thinks that shock is.

[gozo] 12/2/2018 13:45

I've just sold mine...any mention of TW or share prophets instantly makes me nervous....I'll leave it at that!

[igbertsponk] 12/2/2018 12:05

TW makes a classic mistake in thinking that a large spike in lithium prices would mean we couldn't afford batteries. Lithium is just 4% of the cost of a battery - its cost could go up by a multiple without having much effect on overall battery prices.

[waccybaccy] 12/2/2018 11:53

At least TW likes this....

If you want to invest in lithium, don't ignore Bacanora
By Gary Newman | Sunday 11 February 2018

If you like this, please share this article using the buttons below

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Lithium has been all the rage amongst AIM investors over the past few years, but the reality is that many of the projects which people have been getting excited about will fail to ever actually produce anything.

Some of these small outfits have seen crazy increases to their market caps as private investors were driven into a buying frenzy by very early stage exploration results, and then have fallen just as fast when people have woken up to the fact that actually extracting any lithium is many years down the line, if ever.

However, there seems to be no doubt that lithium has an important part to play in the future and its use will become even more widespread in batteries, with the potential for high levels of growth in demand – assuming of course that the price stays at a level which makes it viable for people to switch (such as in the case of electric/hybrid cars). I personally don’t see prices for the commodity reaching the highs that some have talked about, as few would be willing to, or could afford to, buy products containing lithium if that became the case.

What has surprised me with the ‘lithium rush’ on AIM is that many seem to have ignored the one company which is already at a fairly advanced stage and which is actually likely to reach full-scale production any time soon, that being Bacanora Minerals (BCN).

Fair enough, at a share price of 106p to buy and a market cap of £136 million odd it isn’t going to see the potentially huge overnight fluctuations in share price of the tiny outfits (nor can it be as easily manipulated by some of the characters who’ve been involved with pumping other companies). But at the same time a fair bit of risk has already been removed, and if the project turns out to be as good, and valuable, as it looks on paper, then there is still plenty of potential to make a large return by investing longer term and seeing it through to fruition.

Bacanora has already proven up the Sonora lithium project in Mexico, where it holds 100% of La Ventana, and 70% interests in Mexilit and Megalit, which all come under this area. A feasibility study has already been carried out which gives the project a net present value (8% discount factor) of in excess of $1.2 billion, and with life of mine operating costs of $3,910/t it is well insulated against fluctuations in lithium carbonate prices – especially given that the study was carried out based upon a flat commodity price of $11,000/t over the life of the mine.

At the end of 2017 typical prices in South America were around $14,000/t, significantly higher than the level the study was carried out at, and although I am far less bullish than some on where prices are going, I still certainly see them higher during the life of this mine.

There is also potential for further upside to its reserves, which currently stand at nearly 3.7 million tonnes on a proven and probable basis net to Bacanora, via the conversion of lithium still classed in the resources category.

Like any major mining project, actually getting it to the production stage won’t be cheap, and a staged development is going to see 17,500tpa produced for the first four years, at a cost of $420 million. Then stage two will see that increased to 35,000tpa, at a cost of a further $380 million.

Given that Japanese company Hanwa has already agreed to take between 70% and 100% of stage one production, and has acquired 10% of Bacanora, I would expect that some form of debt funding will be secured for the project. As part of this the company is looking to re-domicile from Canada to the UK, where access to funding is easier to secure, subject to shareholder and regulatory approvals.

Additionally, the company is also in the process of taking on another major investor, NextView Capital, which agreed in December to purchase 33 million shares at 94.53p to raise over £31 million, and to take this holding as a long term investment. That is yet to be completed, but the date for doing so has now been extended and it is on track.

Bacanora is making a loss – although it does generate some revenue from its Sonora pilot processing plant which has been operating for over two years – and burns through quite a bit of cash, but that is to be expected from a company at this stage.

In addition to Sonora, it does also have the Magdalena borate project, also in Mexico, but for the time being the company has decided not to invest any further capital into this project. It also has a 50% interest in Zinnwald in Germany, and although at an earlier stage and with further drilling required, it does already have measured and indicated resources, and Bacanora do have the option to acquire the remaining 50% following the completion of a feasibility study over the next 18 months or so.

There is still plenty of risk here, but I think that the upside potential is worth that, especially given that the shares have dropped back recently, having hit highs of 157p in early January, and I would be surprised to see them drop as low as the 94p placing price. This is one to buy and hold for the long term, as it has the potential to be big.

[compnews1] 12/2/2018 08:40

I am pleased for some of you holding the stock as the price has gone up. However, moving HQ to London tell me that they could not get financing from next door, the US. This reminded me an AIM company I used to work for who was listed in London but ended up getting debt in the US at 10% a few years back. What does the impact of raising significant debt & equity do to the sp? Thought for the day. Good luck

[johnny_magic] 11/2/2018 20:09

You must be disappointed to see the market moving against your view. BCN almost $2 CAD on Friday at close.

[johnny_magic] 11/2/2018 20:06

It seems you never have anything positive to post - suggest you find another outlet for your negativity. Hardly surprised to see this down on Friday based on market sentiment. Don't think this had anything to do with the financing IMHO. With the partners already on board securing a good financing deal is not going to be too much of a tall order.

[pugugly] 09/2/2018 07:51

"The Company now intends to raise a significant amount of new debt and equity financing to fund its growth as an international lithium company with new projects in Mexico and Germany and believes that a UK domiciled company with its primary listing on AIM is the best way to achieve this. The Company intends to move its head office and its senior management to the UK, and as a result the Board anticipates that the Re-domicile will result in significant cost and administrative savings for the Company and its subsidiaries (the "Group")."

Pre market MM reaction is apparently to mark down by 5%

[richsawko] 07/2/2018 13:24

Exactly my point, I see it also as a positive move

[igbertsponk] 07/2/2018 12:59

Forget the old CFO - look at the new hire. From Gemfields where she was CFO, a much bigger outfit (Faberge owner!).
Clearly a massive statement of intent as they professionalise the business and move towards being a major lithium producer.

[igbertsponk] 07/2/2018 12:50

if the valuation is light then the share price must be cheap.

[compnews1] 07/2/2018 12:17

Hi IgbertSponk, no I am not accumulating as I find the share price is still expensive for me. As I previously commented, the valuation is light. Having worked in this oil/mining industry, I find it odd/concerned that they replaced the CFO - why change if he was that good, not because of changing from development to production stage- not logical. Where are they with financing. We all have our own view and it is risk/reward level one needs to take.

[igbertsponk] 07/2/2018 10:37

compnews1 doesn't seem to have a good thing to say about the company - he's obviously accumulating.

[richsawko] 07/2/2018 10:31

The change in CFO reasons given are completely plausible given the transition into production. It appears that the negative sentiment on here is not completely innocent. I suggest everyone does their own research before making decisions based on comment here. Then no one can apportion blame

[compnews1] 07/2/2018 09:24

The market is calming "temporarily", once earthquake strikes it will revisit, that is when the US interest rate raises, no doubt that it will, will disturb the equity market. The change of CFO at this critical stage of the project development bothers me alot - clearly they have failed to get financing for the project. This reminded me an aim company I used to work for. So look after our purse well!!!! don't rush in yet