Home » Cadence Minerals (KDNC) » Cadence Minerals #KDNC – Feasibility Study Estimates $1.25bn NPV for Sonora Lithium Project

Cadence Minerals #KDNC – Feasibility Study Estimates $1.25bn NPV for Sonora Lithium Project

Cadence Minerals #KDNC is pleased to announce that Bacanora Minerals Ltd #BCN has today published a summary of the Feasibility Study for the Sonora Lithium Project in Mexico. The results confirm the positive economics and favourable operating costs of a 35,000 tonnes per annum (“tpa”) battery grade Li2CO3 operation.  The FS estimates a pre-tax project Net Present Value (“NPV”) of US$1.253 billion at an 8% discount rate and an Internal Rate of Return (“IRR”) of 26.1%, and Life of Mine (“LOM”) operating costs of US$3,910/t of lithium carbonate (“Li2CO3“).

Following the results of the FS, Bacanora intends to progress the Sonora Lithium Project through the development stages over the next 24 months with the detailed design engineering phase currently scheduled for late Q1 2018.

The full Bacanora announcement can be found at: Bacanora Minerals Feasibility Study

Highlights from the Bacanora release:

 Two stage open-pit operation at Sonora: Stage 1 – 17,500 tpa for 4 years; Stage 2 – 35,000 tpa

  • Estimated Project pre-tax IRR of 26.1%; NPV of US$1.253 billion (at 8% discount rate) with a simple Stage 1 project payback of four years. Revenues are based on a flat US$11,000/t for battery grade Li2CO3 over LOM, significantly below the current Li2CO3 price range of US$12,000 – 20,000/t
  • Low estimated LOM operating costs of US$3,910/t of Li2CO3 – lower than the new lithium brine operations being reported in Argentina
  • Average LOM annual earnings before interest, taxes, depreciation and amortisation (“EBITDA”) estimated at US$229 million per annum

Sonora: a large lithium deposit

  • Measured plus Indicated Mineral Resource estimate of over 5 million tonnes (“Mt”) (comprising 1.9 Mt of Measured Resources and 3.1Mt of Indicated Resources) of lithium carbonate equivalent (“LCE”)and an additional Inferred Mineral Resource of 3.7 Mt of LCE
  • Low stripping ratio: open-pit mine design indicates a total of 37.1 Mt of ore to be mined over the planned 19-year mine life with an average stripping ratio of approximately 3.4:1 over LOM

Conventional flow sheet: uses established sulphate route processing technology

  • Integrated plant designed to initially process 1.1Mt of ore per year during Stage 1, subsequently increasing to 2.2 Mt per year for Stage 2
  • Stage 1 capital cost estimate of US$420 million includes – mining, processing plant, infrastructure, construction of Tailings Management Facility, general administration costs as well as the requisite contingencies
  • Potential to sell up to 30,000 tpa of potassium sulphate (“SOP”, “K2SO4“) for sale to the Mexican fertiliser industry

Next Steps: advance Sonora towards production to satisfy expected continuing growth in demand for lithium driven by growing sectors such as electric vehicles and energy storage

Subject to Bacanora board approval and other key milestone events, project detailed design is expected to commence in late Q1, 2018.

Kiran Morzaria, Chief Executive Officer of Cadence, commented: “These results confirm the potential of the Sonora Project to become a significant producer of battery grade lithium for the emerging industries of electric cars and advanced energy storage. Together with Bacanora’s existing off take agreement, Bacanora is now moving onto the development phases of the Project and we look forward to its continued progress towards production.”

The Sonora Lithium Project and Details of Cadence’s ownership:

Cadence Minerals holds approximately 9% of the equity in Bacanora Minerals and 30% of Mexalit and Megalit joint venture companies. Mexalit is the owner of the El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 mineral concessions. These concessions form part of the Sonora Lithium Project as assessed in the FS published a Summary of which has been published today by Bacanora.

Megalit does not form part of the Sonora Lithium Project and does not form part of the FS released by Bacanora.

The direct and indirect interests of Cadence in the Sonora Lithium Project and other mineral concessions in the Sonora province are as follows: 

  • La Ventana and La Ventana 1, which are 100 percent owned by Minera Sonora Borax S.A. de C.V.(“MSB”), a wholly-owned subsidiary of Bacanora; Cadence, through its direct interest of approximately 9% of Bacanora, has an indirect interest in these concessions of approximately 9%.
  • El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions, which are held by Mexilit S.A. de C.V. (“Mexilit”). Cadence has a 30% direct interest in Mexalit through its Joint Venture with Bacanora, and when combined with Cadence’s direct interest of approximately 9% in Bacanora, has a total economic interest in Mexalit of approximately 36%. 
  • Buenavista, San Gabriel and Megalit concessions, which are held by Megalit S.A. de C.V. (“Meglait”). Cadence has a 30% direct interest in Megalit through its Joint Venture with Bacanora, and when combined with Cadence’s direct interest of approximately 9% in Bacanora, has a total economic interest in Megalit of approximately 36%.

– Ends –

For further information please contact

Cadence Minerals plc

+44 (0) 207 440 0647

Andrew Suckling

Kiran Morzaria

WH Ireland Limited (NOMAD & Broker)

+44 (0) 207 220 1666

James Joyce

James Sinclair-Ford

Hannam & Partners LLP (Joint Broker)

+44 (0) 207 907 8500

Neil Passmore

Giles Fitzpatrick

Square1 Consulting

+44 (0) 207 929 5599

David Bick

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School. 

About Cadence Minerals

Cadence is dedicated to smart investments for a greener world. The planet needs rechargeable batteries on a global scale – upcoming supersized passenger vehicles, lorries and buses – require lithium and other technology minerals to power their cells. Cadence is helping find these minerals in new places and extracting them in new ways, which will meet the demand of this burgeoning market. With over £25 million vested in key assets globally, Cadence is helping us reach tomorrow, today.

Cadence invests across the globe, principally in lithium mining projects. Its primary strategy is taking significant economic stakes in upstream exploration and development assets within strategic metals. We identify assets that have strategic cost advantages that are not replicable, with the aim of achieving lower quartile production costs. The combination of this approach and seeking value opportunities allows us to identify projects capable of achieving high rates of return.

The Cadence board has a blend of mining, commodity investing, fund management and deal structuring knowledge and experience, that is supported by access to key marketing, political and industry contacts. These resources are leveraged not only in our investment decisions but also in continuing support of our investments, whether it be increasing market awareness of an asset, or advising on product mix or path to production. Cadence Mineral’s goal is to assist management to rapidly develop the project up the value curve and deliver excellent returns on its investments.

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