Bacanora Minerals Ltd.
Building a high grade lithium producer to
become a quality supplier to innovative and
growing industries
Corporate Presentation: Q1, 2016
Disclaimer
IMPORTANT INFORMATION
The information contained in these slides has been prepared by Bacanora Minerals Ltd (“Company”). The information in these slides and the presentation made to you verbally is subject to
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Canadian Securities Law Reader Advisory: This document contains forward-looking information within the meaning of applicable Canadian securities legislation relating, but not limited to, Bacanora
Minerals Ltd.’s expectations, intentions, plans and beliefs. Forward-looking information can often be identified by forward looking words such as “anticipate”, “believe”, “expect”, “goal”, “plan”,
“intent”, “estimate”, “may” and “will” or similar words suggesting future outcomes or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or
performance. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We
cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the
forward-looking information.
Forward-looking information in this presentation includes, but is not limited to, the estimated future value of the Magdalena Borate Project and the Sonora Lithium Project. Disclosure pertaining to
such projects is derived from a Preliminary Economic Assessments (a "PEA") (in the case of the Magdalena Borate Project) and resource estimates prepared in accordance National Instrument 43-101
– Standards of Disclosure for Mineral Projects ("NI 43-101") (in the case of the Sonora Lithium Project) and applicable Canadian securities laws and regulatory policies. Such reports are available
under Bacanora's corporate profile on SEDAR at www.sedar.com and readers are encouraged to review such reports in their entirety. It should be noted that in the case of the Magdalena Borate
Project, the PEA and all figures reproduced herein are based upon indicated mineral resources. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated
economic viability. The NI 43-101 report in respect of the Sonora Lithium Project includes estimates for both indicated resources and inferred resources. Inferred mineral resources are those that
are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves. In order to complete the
aforementioned PEA and NI 43-101 report, the Qualified Person in respect of such reports has used forward looking information including, but not limited to, assumptions concerning lithium
commodity prices, cash flow forecasts, project capital and operating costs, commodity recoveries, mine life and production rates. Readers are cautioned that actual results, should they be realised,
may vary from those presented in the PEA and the NI 43-101 report. Further testing will need to be undertaken in order to confirm the economic feasibility of both the Magdalena Borate Project and
Sonora Lithium Project. There have been no prior pre-feasibility or feasibility studies undertaken for either the Magdalena Borate Project or the Sonora Lithium Project.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ
materially from those expressed in the forward-looking information include, but are not limited to: commodity price volatility; general economic conditions in Canada, the United States, Mexico and
globally; industry conditions, governmental regulation, including environmental regulation; unanticipated operating events or performance; failure to obtain industry partner and other third party
consents and approvals, if and when required; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; competition
for, among other things, capital, skilled personnel and supplies; changes in tax laws; and the other risk factors disclosed under our profile on SEDAR at www.sedar.com and within the body of the
PEAs. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
www.bacanoraminerals.com
2
Overview
Transitioning from exploration into development at its world class lithium asset
o AIM/TSX-V listed mineral development
company advancing a fully funded prefeasibility study at the Sonora Lithium
Project
o 5 million tonnes (LCE), large scale high
grade Indicated NI 43-101 resource,
located in Mexico, a low cost, mining
friendly jurisdiction
o Pilot plant lithium testwork, ongoing for
past 24 months, has produced high
quality lithium carbonate
o Over CAD$15M million invested to date
o
Strong cash position of CAD$20* million
o
Strong management team with extensive experience in developing production and off-takes for lithium
projects
o
Lithium hydroxide testwork ongoing
www.bacanoraminerals.com
(*See press release 16.11.15: £8.8 Million Raised to Advance Sonora Lithium Project )
3
Board and Key Data
Highly experienced Board with proven track records in the natural resource arena
Colin Orr-Ewing
Chairman & Director
•
•
•
Shane Shircliff
Director
•
•
James Leahy
Non-Executive Director
•
•
•
•
Kiran Morzaria
Non-Executive Director
•
•
Mark Hohnen
Non-Executive Director
•
Began career as an investment manager for the
Shell Pension Fund
35 years’ experience spanning both the oil and
mining industries
Mr. Orr-Ewing also consults to a fund management
company on its natural resources portfolios
15 years’ experience in the mining and resources
industry in various senior executive roles
Worked on a range of projects including uranium,
gold, silver, coal, industrial minerals, diamonds as
well as oil, gas and coal
Significant Shareholders
Rare Earth Minerals Plc
16,632,915
17.21%
Igneous Capital Ltd (1)
15,000,000
15.52%
Colin Orr-Ewing
10,968,793
11.35%
M&G Investment Funds
8,399,642
8.69%
D&A Income Ltd
5,303,030
5.49%
Saorse Limited
3,510,046
3.63%
Began his career at the LME
29 years in the mining industry as a specialist
corporate broker, including mining finance,
origination and equity sales
Worked on a wide range of projects, worldwide
Substantial
experience
with
international
institutional fund managers, hedge funds and
sector specialists
Holds a Bachelor of Engineering (Industrial
Geology) from the Camborne School of Mines and
an MBA (Finance) from CASS Business School
Fifteen years’ experience in the mineral resource
industry
Extensive international business experience in a wide range
of industries including mining and exploration, property,
investment, software and agriculture. He was founding
Chairman of Cape Mentelle and Cloudy Bay wines, was also a
director of Kalahari Minerals and Extract Resources.
www.bacanoraminerals.com
Market
Ticker
NOMAD
Market
Cap
23.11.15
Broker
AIM/ TSX-V
BCN
Cairn
Financial
Advisers
£78.75 m
HD Capital
Partners Ltd
(1) Graham Edwards is the ultimate beneficial owner of Igneous. Mr. Edwards is also one of
the potential beneficiaries of a trust that owns D&A Income Limited, which owns 5,303,030
Common Shares representing 5.49 per cent. of the issued share capital of the Company.
4
Management
Led by a CEO who negotiated the 1st large scale, long term lithium off-take with a Chinese SOE
Peter Secker
CEO
Mining engineer with over 30 years’ experience in the resources industry. During his career he has built and operated a number of mines and
metallurgical processing facilities in Africa, Australia, China and Canada. His operating and project experience spans a number of commodities,
including titanium, copper, iron ore, gold and lithium. For the past 10 years Peter has been Chief Executive of a number of publicly listed
companies, most recently as CEO of Canada Lithium Corporation whilst developing the Quebec Lithium project.
Martin Fernando
Vidal Torres
President and Director
Mr. Vidal has been with Bacanora since 2011 when he joined the firm as Vice President, Exploration – Mexico. Besides his role as President and
Director of Bacanora, he currently serves as Director and sole administrator of MITSA and MSB, two fully-owned Mexican subsidiaries of
Bacanora and the operating vehicles for the development of the Company's projects owned in Mexico. He also serves as Director and sole
administrator of Mexilit and Megalit, two Mexican subsidiaries that are owned by Bacanora (70%) and Rare Earth Minerals Ltd (30%). Mr. Vidal
started his career as geologist with the US Borax exploration team and has many years of experience working in Northern Mexico, particularly in
the project areas that Bacanora are now developing.
Eric Carter
Project Manager
Over 22 years’ lithium carbonate production expertise with FMC in North America, with extensive experience of lithium hydroxide and lithium
metal process operations.
David Serratos
Pilot Plant Manager
Joined Bacanora in 2012. Currently he serves as Plant Manager on the Bacanora pilot plant, being responsible of design and manufacturing of
plant equipment, process development, working systems and general control of the plant. Prior to that, he served as General Manager in the
automotive industry, being responsible designing and assembling automotive components. His expertise also includes the design and
manufacturing of thermal-solar systems including its automation and later involved in process development and project and construction
management. David graduated from the University of Sonora (1991) and holds a BSc in Industrial Engineering.
Derek Batorowski
CFO and Director
Over 22 years’ experience in the mineral exploration industry at both the national and international level. Derick’s specific focus has been in
accounting, finance, corporate planning, treasury and taxation sectors with both public and private companies.
Lizeth Soriano
Laboratory Manager
Joined Bacanora in 2012 as laboratory analyst and served as Laboratory Manager since 2013, being responsible for the experimental
metallurgical area at laboratory and pilot plant scales on the different projects that the Company is developing. Prior to joining us, Lizeth served
as professor in the Universidad del Valle de México and participated in various research programs focused in the production of clay-based
photo-catalyzers for water treatment plants. She is a graduate of the University of Sonora where she holds a BSc in Process Engineering and a
Master Science degree in Chemical Engineering.
Daniel Calles
Senior Geologist
With Bacanora since 2011 and currently serves as Principal Geologist, being responsible for all of the fieldwork conducted by the Company in its
different projects as well as responsible for supervision, logging, sampling and reporting on the continuous drilling campaigns that the
Company is conducting. Prior to joining Bacanora, Daniel had nine years of experience working in different companies as exploration geologist
in base and precious metals, mostly in northwestern Mexico. Daniel has a BSc. in Geology from the University of Sonora (2006).
Cordelia Orr Ewing
Corporate Manager
Joined Mirabaud Securities, the broking arm of the Swiss private bank, in 2009 where she supported the Corporate Broking and Natural
Resources teams. Subsequent to that, she joined Williams de Broe, a well established private client stockbroker, where she was involved in
assessing client / transaction suitability. Cordelia joined Strand Hanson, in June 2010, as a analyst within the Corporate Finance team,
specialising in Natural Resources transactions. Thereafter she joined Bacanora Minerals (in 2014) to assist with the AIM flotation and ongoing
management of the Company’s UK operations. Cordelia is Company Secretary for the Association of Mining Analysts.
www.bacanoraminerals.com
5
Strategy
Strategy to become a large scale lithium producer, combining high grades and scalability,
with potential upside from borates
Target to complete Feasibility process
at Sonora Lithium Project
o Deliver a pre-feasibility study for
35,000tpa Li2CO3 operation by Q1
2016
o Evaluate significant resource upside
with potential to grow project to
50,000tpa Li2CO3
The Magdalena Borate Project will
potentially provide up to 50,000tpa of
boric acid production for domestic
use:
o Boric acid pilot plant and study work
ongoing in tandem with lithium
development
o Complete Bankable feasibility study by
Q1, 2017
o Ongoing
testwork
lithium
hydroxide
www.bacanoraminerals.com
(LiOH)
6
Lithium Portfolio
Ideally positioned for infrastructure and proximity to markets
www.bacanoraminerals.com
7
The Lithium Market
A key component in a range of innovative industries providing strong market dynamics
o High energy storage (lithium batteries), insulating and heat
resistant capabilities
o 11% annual growth in global consumption between 20122017 forecast
o Total global production for 2013 was 186,000 tonnes of
lithium carbonate equivalent (LCE) (source: USGS)
o Expected increase in global demand to 280,000 tonnes pa
LCE by 2020 (source: USGS)
Smart
phone
batteries
Tablet
rechargeable
batteries
o Tesla aiming for 500,000 vehicles per year by 2020 and
over 40 new models of HEV and EV to be released in China
by 2015
o 85% of lithium production is from 4 companies, (FMC,
Rockwood, SQM and Tianqi)
Electric
Vehicles
o Sector M&A activity increasing - US$6 billion merger
between Albemarle and Rockwood (July 2014)
Smart Grids
*LCE is the industry standard terminology for, and is equivalent to, Li2CO3. 1 ppm Li metal is equivalent to 5.32 ppm
LCE / Li2CO3. Use of LCE is to provide data comparable with industry reports and assumes complete conversion of
lithium in clays with no recovery or process losses.
Sources: www.cleantechnica.com and Lithium Market Outlook 2017, Roskill Information
www.bacanoraminerals.com
8
Lithium Views
Toyota said last month it has sold more than 5 million
gasoline – electric hybrid vehicles as of the end of March
since they first went on sale in 1997
"Lithium
supply
security has become a
top priority for Asian
“
The global lithiumion battery market
was estimated at
$17.5bn in 2013.
Market size to
technology companies"
quadruple ($70B)
U.S. Geological Survey
by 2020
”
“
The total
Current forecasts predict
the global market for Li- addressable market
ion batteries in passenger
size for Tesla
vehicles will grow from Energy products is
$3.2 billion
in 2013 to
$24.1 billion in
2023.
enormous
and much
easier to scale globally
than vehicle sales
”
Sources: www.insideevs.com / www.bloomberg.com
www.bacanoraminerals.com
9
EV’s to Grid Storage
Lithium Consumption Estimated at 410,000tpa by 2025
Lithium carbonate consumption by application*:
Cell phone:
Laptop:
Hybrid:
EV
Grid
3g
30g
7kg
25-50kg
500 kg/
MWh
“The global lithium battery market
estimated at $17.5bn in 2013
expected to quadruple ($70B) by 2020”
Historical Price Declines in Consumer and Automotive Lithium-ion
Batteries
www.bacanoraminerals.com
NEC and Amergin Energy’s 60-MW storage
network will provide over 525 MW‐hours of
flexible power
*http://www.evworld.com/article.cfm?storyid=1826
10
Lithium Supply and Pricing
Recent 2015 pricing from China shows a range of $5-6,500 per tonne**
Roskill’s Analysis of Production Costs
Growth Across all Applications to 2018*
www.bacanoraminerals.com
Lithium Carbonate Prices – US$/ metric tonne****
Growth Across all Applications to 2025***
(*Fox-Davies: The Lithium Report) (** Metal Bulletin) (*** SignumBOX estimates, March 2013)
(**** SignumBOX 2015)
11
Sonora Lithium Project – Overview
Amongst one of the world’s largest lithium resources – high grade and scalable
o 104,064 Ha licence area, located 190km NE of Hermosillo
in northern Mexico, consisting of 10 contiguous
concessions
o Scalable production strategy to produce up to 50,000 tpa
of lithium carbonate
o
o
o
Pre-feasibility at La Ventana concession and design of full scale
lithium plant currently ongoing
Due for completion in Q1 2016
2 years of pilot plant operations to produce high grade lithium
carbonate undertaken
o Working with a number of potential off-take customers for
its future lithium production
o NI43-101 resources
o
o
Indicated: 5.0 Mt of LCE (364Mt at 2,600 ppm Li)
Inferred 3.9 Mt of LCE (355 Mt2,000 ppm Li)
o Further expansion and resource drilling planned for late
2016
o Access to excellent infrastructure
www.bacanoraminerals.com
12
Sonora Lithium Resource
Large resource lends itself to conventional open pit mining with planned low strip ratio
Classification
Concession
La Ventana
Owner
Minera Sonora
Borax
El Sauz
Indicated
Fleur
Mexilit (JV-1)
El Sauz1
Indicated Total
La Ventana
Minera Sonora
Borax
El Sauz
Inferred
Fleur
Mexilit (JV-1)
El Sauz1
Inferred Total
Geological Unit
Clay
Tonnes
(Mt)
Clay Grade Contained Contained Metal Contained LCE
attributable to
(Li ppm)
Metal (Kt Li)
(Kt LCE)
Bacanora (Kt
LCE)
Lower Clay
75
3,500
261
1,385
1,385
Upper Clay
66
1,500
99
523
523
Lower Clay
60
2,900
174
924
647
Upper Clay
47
1,100
52
274
192
Lower Clay
60
4,300
258
1,365
956
Upper Clay
50
1,600
81
428
300
Lower Clay
4
4,000
15
80
56
Upper Clay
3
1,200
3
18
13
Combined
364
2,600
943
4,997
4,070
Lower Clay
55
3,800
209
1,108
1108
Upper Clay
80
1,500
120
636
636
Lower Clay
85
1,600
136
721
505
Upper Clay
55
800
44
233
163
Lower Clay
20
4,200
84
445
312
Upper Clay
20
1,500
30
159
111
Lower Clay
20
4,000
80
424
297
Upper Clay
20
1,200
24
127
89
Combined
355
2,000
727
3,853
3,220
See press release dated 23.11.15: Indicated Mineral Resource Estimate increased to 5.0 million tonnes of LCE at the Sonora Lithium Project
1.LCE is the industry standard terminology for, and is equivalent to, Li2CO3. 1 ppm Li metal is equivalent to 5.32 ppm LCE / Li2CO3. Use of LCE is to provide data comparable with industry reports
and assumes complete conversion of lithium in clays with no recovery or process losses .
www.bacanoraminerals.com
13
Lithium Extraction
Estimated Operating Costs
Source
$/t Li2CO3
Brines
2,000-3,000
Clays*
2,500-3,300
Hard rock
3,000-5,000
Li2CO3 product
SX and IX
purification
Na2CO3 addition
Leach and
precipitation
Gypsum roast (1,000
degrees and 30 mins)
Tromel and screen
Open pit
mining
www.bacanoraminerals.com
(* Western Lithium PEA)
14
La Ventana, Fleur and El Sauz
Production potentially near the bottom of the cost curve
o PEA(1) completed on La Ventana
o Proposes that operating costs are towards the
bottom of the cost curve when compared with
other lithium producers
o Optimisation underway - current plans focused
on roasting which is cheaper as opposed to
pugging which was considered in the PEA
o International engineering groups completing
PFS:
o
o
o
o
SRK: Resources
IMC: Mining
SGS: Metallurgical testwork
Ausenco:
Process
engineering
infrastructure
and
1. It should be noted that a Preliminary Economic Assessment was previously completed in respect of the Ventana
concession only. Since the time of that PEA, a renewed resource estimate has been produced in respect of the
entirety of the Sonora Lithium Project. As a result, reliance on the prior PEA is very limited and is mention here
solely to illustrate cost estimates, as discussed above.
www.bacanoraminerals.com
15
Pilot Plant in Hermosillo
A cost effective way of conducting analysis & increasing BCN staff’s technical expertise
o An integrated lithium carbonate facility with preconcentration, roasting and leaching circuits
o High grade (99.5%) lithium carbonate lab production
achieved
o On-site laboratory with equipment and facilities to
process and test assays from samples sourced from the
borate and lithium concessions
o Able to process up to 125 assays per day
o Metallurgical tests on-going to refine and optimise the
boric acid production
o Enables development and refinement to beneficiate and
upgrade the materials
o Grade enhancements have been achieved
www.bacanoraminerals.com
16
Mexico*
Supportive operational environment with positive fiscal terms applied by a stable government
Economy:
o Second largest GDP in Latin America at US$1.0 trillion
o Free market economy and part of NAFTA
o US$23 billion mining foreign investment over last 10 years
o Fourth biggest exporter of cars globally
Mining:
o World’s largest silver producer, 8th largest gold producer, 10th largest copper producer
o Generates >330,000 direct mining jobs
o International investment ranking at #33 (out of 122 countries) by Fraser Institute*
o Over 15% of Mexico’s land mass registered under mining concessions
o Approximately US$18 billion investment in mining industry between 1999 and 2013
www.bacanoraminerals.com
(* Source: www.promexico.gob.mx) (**Fraser Institute 2014)
17
Borate Portfolio
www.bacanoraminerals.com
18
The Borate Market
Borates are used in a variety of important materials and industrial applications
Global Boron Compound Uses. Source: US Borax
o Uses include:
o
o
o
o
Insulation fibreglass, glass manufacturing, ceramic
glazes and porcelain enamels
Agriculture is also a large user of borates worldwide
given it is one of the seven essential micronutrients vital
for fertilisation, fruit and seed production
Found in most cleaning and detergent products
Boron is also uniquely capable of capturing neutrons
and is used in nuclear shielding and cooling for nuclear
reactors
o Boric acid is a widely used industrial mineral, current
market price: $620-900 per tonne (source: Industrial
Minerals)
o China is the largest consumer of boron based
materials with consumption of approx. 1.1Mtpa*
o Major constraints for the supply of boron are low
abundance, concentrated reserves and historically
complex manufacturing process*
o 72% of global production from 2 producers – Rio
Tinto and Eti Maden (State owned Turkish business)**
www.bacanoraminerals.com
Other, 25%
Glass and
Fibreglass,
43%
Detergents,
3%
Agriculture
Nutrients,
10%
Ceramics and
Tiles, 19%
Demand is growing, fuelled by:
Rising urban
populations
particularly in
Asia
Growth
within the
agricultural
sector
Improved
standards in
construction
industry
Discovery of
new
technological
applications
* Source: www.transparencymarketresearch.com ** http://www.etimineusa.com/en
19
Magdalena Borate Project – Overview
Represents an opportunity to develop domestic Mexico boric acid production
Map of Bacanora Minerals’ Concessions
o
100% owned, 16,503 Ha borate project located in the
Magdalena Basin, Sonora State in northern Mexico
o
7 concessions with El Cajon the most advanced
o
NI 43-101 indicated resource of 11.06m tonnes at 10.6%
grade for 1,170,000 tonnes of boron trioxide (B₂O₃)
o
Boric acid pilot plant work ongoing
o
Test pit and pilot plant operational with new boric acid
circuit
o
o
o
o
o
Produced 99% boric acid purity (independently verified)
930 tonnes from the borates have been processed
through the pilot plant with samples of 99% boric acid
sent to potential off take customers
Pilot plant study to be commenced based on higher value
boric acid
Indicated Resources Estimate for El Cajon Deposit
Unit
Cut-off
(B₂O₃)%
Tonnage
(mt)
Grade
(B₂O₃)
Tonnes
(B₂O₃)
A
8
7.49
10.8
808,000
B
8
0.81
9
72,000
C
8
2.76
10.5
290,000
11.06
10.6
1,170,000
Previous CAPEX estimate of approximately US$10 million
Established infrastructure; grid supply, road, water and rail
nearby
Total
(A+B+C)
www.bacanoraminerals.com
20
El Cajon
The open pit at El Cajon, Magdalena
Geological Cross Section through the El Cajon Deposit
www.bacanoraminerals.com
21
Borate Processing
www.bacanoraminerals.com
22
Estimated Development Timeline
Sonora sits at the heart of BCN; Magdalena has the potential to provide boric acid production
Q4 15
Q1 16
Q2 16
Q3 16
Q4 16
Lithium
PFS 43-101 Resource Update
PFS 43-101 Pre-Feasibility Study
Lithium pilot plant operations
Off-take negotiations
Bankable Feasibility Study
Borates
Borate pilot plant studies
Borates production strategy report
www.bacanoraminerals.com
23
Investment Case
Large scale lithium asset with
significant production potential
High grade and scalable
Stable
jurisdiction
Proven
management
LiOH testwork
underway
Strong cash
position
www.bacanoraminerals.com
24
Contact
Bacanora Minerals Ltd
Peter Secker
E: info@bacanoraminerals.com
www.bacanoraminerals.com
St Brides Partners Ltd
Financial PR
Elisabeth Cowell/ Frank Buhagiar
T: +44 (0) 20 7236 1177
www.stbridespartners.co.uk
www.bacanoraminerals.com
25