Bacanora Minerals: Sonora Prefeasibility Considers Up to 35,000 Tpa of Lithium Carbonate Production

After market close on Wednesday, Bacanora Minerals (TSXV:BCN,LSE:BCN) released results of a prefeasibility study for its Sonora lithium project in Mexico. 
Highlights of results included an after-tax net present value (NPV) of US$542 million at an 8 percent discount rate and an after-tax internal rate of return (IRR) of 25 percent.
The project is slated to produce 17,5000 tonnes per year of battery-grade lithium carbonate for its first two years, before expanding to 35,000 tonnes per year of production. There’s also potential for Sonora to produce up to 50,000 tonnes per year of potassium sulphate for the fertilizer industry.
As announced previously, the company intends to immediately commence a definitive feasibility study for the project. The company is fully funded through to completion of the study.

“With a Pre-Tax NPV of US$776M and an IRR of 29%, the PFS supports that Sonora is well placed to become one of the next major lithium producers, supplying fast growing industries, such as electric vehicles, smartphones, and energy storage,” said Bacanora CEO Peter Secker in a statement. “The next key step in the development of Sonora is a Feasibility Study, which is fully funded and expected to be completed in Q1 2017.”
Parts of the Sonora project, including the El Sauz, El Fleur and Megalit concessions, are 30 percent owned by Rare Earth Minerals Plc (LSE:REM). Last August, the companies were center stage in the lithium space after announcing the first – albeit conditional and light on detail – supply agreement with Tesla Motors (NASDAQ:TSLA) for its lithium-ion battery gigafactory in Nevada.
That’s generated plenty of excitement, but it’s worth noting that a number of analysts have been exercising a bit more caution with regards to the deal (see here and here) and with regards to the project (see here).
In any case, Bacanora’s story is certainly one to watch for lithium investors. In addition to commencing a definitive feasibility study, the company says it’s planning to seek out additional offtake partners. “With recent lithium price increases in the Asian market we believe that Sonora is a highly compelling project with which to generate value for shareholders,” Secker added.
At close of day on Wednesday, shares of Bacanora were up 4.55 percent to $1.38 per share on the Toronto Venture Exchange. In London, shares of the company were up 3.64 percent to GBX74.62.

 
Securities Disclosure: I, Teresa Matich, hold no investment interest in any of the securities mentioned in this article.