Bacanora Minerals (BCN) has finally completed the pre-feasibility study for its lithium mine in Sonora, Mexico. The good news is that the project economics stack up well, and at current spot prices could generate $135m (£96m) in annual earnings before interest, tax, depreciation and amortisation.
Crucially, that's assuming the lithium carbonate spot price stays at around $6,000 a tonne, which gives Bacanora a lot of headroom. The miner now believes that, once potassium sulphate by-products are stripped out, its costs will be just $2,100 a tonne, which implies an operating profit margin of 65 per cent and puts Sonora among the least expensive lithium projects in the world.
Chief executive Peter Secker says the priority for 2016 is to sign two offtake partners - most likely based in China, Japan or Korea - ahead of a debt and equity fundraising to finance the $240m required to first production. That's on top of the C$23m (£12m) cash listed on the interim balance sheet. To hit full annual production of 35,000 tonnes, Bacanora will need a further $177m three years into the mine's two-decade lifespan.
Stifel Securities expects a full-year adjusted loss per share of 4.5p, against a loss of 3p in the year to June 2015.
BACANORA MINERALS (BCN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 76.5p | MARKET VALUE: | £74.4m | |
| TOUCH: | 75-78p | 12-MONTH HIGH: | 102p | LOW: 62p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 41¢ | NET CASH: | $23.2m | |
| Half-year to 31 Dec | Turnover (C$m) | Pre-tax profit (C$m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 0.03 | -1.3 | -2.00 | nil |
| 2015 | 0.04 | -4.0 | -4.00 | nil |
| % change | +28 | - | - | - |
Ex-div: na Payment: na £=C$1.89 | ||||
