Bacanora Minerals’ huge lithium mine has been valued at $1.25bn
Bacanora Minerals is one step closer to pumping some much-needed lithium into the market after a positive feasibility study today valued its flagship project at $1.25bn (£936m).
Sonora, Bacanora's battery-grade lithium carbonate mine in Mexico, has the potential to become one of the world's top lithium mines, chief executive Peter Secker told City PM.
The feasibility study confirmed favourable operating costs of a 35,000-tonnes-per-year operation. The company aims to begin production of 17,500 tonnes per year by 2019 in phase one, which will cost $420m, and four years later it will begin phase two at a cost of $380m to double production.
Operating costs were estimated to be as low as $3,190 per tonne, well below the current market price of between $12,000 and $20,000 a tonne.
Bacanora's Aim-listed shares rose 4.7 per cent 96.85p at the time of writing. The company is also listed in Canada.
Analysts at Canaccord Genuity said the feasibility study left Bacanora in a "strong" operating position to take advantage of Sonora's "world class, long life resource base".
"With funding expected to be in place from early 2018, we expect a substantial uplift in the valuation of BCN in the coming 12-24 months," they said.
Secker said the company already has more than $20m in the bank to start pre-development work, and it has a strong shareholder base with investors including BlackRock, M&G and Capital Group. The firm has already started talking to development banks, and with the feasibility study under its belt, it will "start those discussions in earnest next year".
Secker said the lithium market is going to see huge growth between 2020 and 2030. Demand for lithium, which is used in battery production, currently outstrips supply with a number of significant car manufactures making electric vehicle pledges over the next few years.
"It's a very good time for a new lithium producer to be coming into the market," he said. After last year saying 2020 would be a "magical" year for lithium, he today said: "It’s going to be a magical decade."