logo-loader

Strong lithium market can only be good news for Bacanora, says Numis

Published: 07:15 15 Dec 2016 EST

lithium
First production at Bacanora's Sonora lithium project is slated for 2019

The strong lithium market bodes well for Bacanora Minerals Ltd (LON:BCN) and could almost treble the explorer’s net asset value per share (NAVPS), so says City broker Numis.

Bacanora’s exposure to the metal comes from its Sonora lithium carbonate project in Mexico.

Recent reported spodumene (an important source of lithium) prices have risen 38% to US$905 per tonne, while lithium carbonate pricing has hit the US$10,000 a tonne mark.

Those figures come against Numis’ long term pricing assumptions of US$660 per tonne and US$6,500 a tonne respectively.

With the rise in lithium prices, Bacanora’s net asset value should follow in the same direction, Numis suggests.

“Running the current contract price of US$10,000 per tonne through our model would increase our NAVPS for Bacanora from £1.30 per share to £3.33 per share,” the broker said in a note.

Numis also notes that the post-US election fall in the Mexican peso should provide even more of an uplift, given that around 80% of the operating costs and 70% of project capex at Sonora are peso denominated.

Bacanora is due to complete a feasibility study at Sonora in the first quarter of the New Year.

Numis expects the mine to initially produce around 17,000 tonnes of lithium carbon a year, scaling its way up to 35,000 tonnes.

Construction at Sonora is scheduled to be completed by the end of 2018, with first production slated for 2019.

Shares in Bacanora were down slightly at 70.5p.

Bacanora Lithium 'fully financed and ready to develop the Sonora mine...

Bacanora Lithium's (LON:BCN) Peter Secker catches up with Proactive London's Katie Pilbeam about their latest US$65m financing with Ganfeng Lithium exercising its pre-emptive rights.  The chinese giant has increased its position to 28.8% meaning that it remains BCN’s largest...

on 02/09/2021