Bacanora Minerals Announces Full Year Results

RNS Number : 6543N

Rare Earth Minerals PLC

27 October 2016

 

Rare Earth Minerals Plc

("Rare Earth Minerals" or "REM")

Bacanora Minerals Financial Results for the year ended 30 June 2016

Rare Earth Mineral Plc (AIM: REM) is pleased to announce that Bacanora Minerals Ltd ("Bacanora") the lithium company which is developing the Sonora Lithium  Project in northern Mexico, has today announced its financial results for the year ended 30 June 2016. The full Bacanora  announcement can be found at: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BCN/13014495.html 

REM owns a direct interest of 19.12% of Bacanora, and 30% of the Mexalit and Megalit companies which hold various concessions. Further details of REM's ownership of Bacanora and the Sonora Lithium Project are detailed below.

Highlights of the Bacanora release include:

Operational

·     Bacanora has successfully completed a 4,000 metre drilling programme at the Sonora Lithium Project, comprising 3,000 metres focused on upgrading a portion of the current mineral resource from the indicated to measured category, in conjunction with 1,000 metres for geotechnical and hydrological drilling for a Feasibility Study ("FS"). 

·     A total of 3,896 metres were drilled in 31 in-fill holes on La Ventana; along with 560 metres in 5 geotech holes. 16 more holes are programmed to complete the geotech study. Intercepts of the upper clay range from 6.1 to 49.2 metres in length with an average thickness of 30.8 metres and those for the lower clay range from 3.4 to 26.9 metres with an average thickness of 20.45 metres, these including all of the conducted drilling in this area. 

·     This drilling will update the previously announced Indicated Mineral Resource of 259 Mt averaging 3,200 ppm Li for 4.5 Mt of lithium carbonate equivalent ("LCE"). SRK Consulting (UK) Limited ("SRK") has started to update the resource model and an updated Mineral Resource Estimate ("MRE") is anticipated to be published in calendar Q1 2017 sequential with the commencement of mine planning and open pit designs for the FS.

·     Battery grade lithium carbonate samples from the Bacanora pilot plant have been distributed to Japan for preliminary appraisal and testing by potential end-users.

·     On April 15, 2016, Bacanora filed on SEDAR the results of the Pre-Feasibility Study ("PFS") for the development of mine and lithium carbonate ("Li2CO3") processing facility at the Sonora Lithium Project ("Project"). The positive results estimate a pre-tax Internal Rate of Return ("IRR") of 29% and an associated pre-tax Net Present Value ("NPV") of US$776 million at an 8% discount rate. The PFS was prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). In addition, Bacanora filed an amended Mineral Resource Estimate ("MRE") prepared in accordance with NI 43-101 for the Sonora Lithium Project.

·     The PFS highlighted the strong economic potential of producing up to 35,000 tonnes of battery grade Li2CO3, and up to 50,000 tonnes of potassium sulphate ("K2SO4") per year.

·     Working with the same consultants that prepared the PFS, Bacanora has commenced a FS for a two stage mine and processing facility to produce up to 35,000 tpa of lithium carbonate. As part of this study we have completed an infill reserve drilling program, provided lithium carbonate samples to potential end-users, appointed international engineering and technical consultants to undertake the geological resource modeling, metallurgical testwork, mine designs and process engineering, as well as recruited additional technical personnel with lithium development and operating expertise. Ausenco Limited ("Ausenco") has now completed approximately 35% of the FS and is scheduled to have the FS completed in late calendar Q1 2017.  Bacanora is fully financed through to the FS, initial project development and the start of the construction stages.

Financial

·     During the quarter ended December 31, 2015, the Company completed a private placement financing of approximately $17.9 million (approximately £8.8 million) via the placing of 11,476,944 new common shares at a price of $1.51 (£0.77) per share.  Through the financing, the Company secured its first major institutional shareholder, M&G Investments, as well as receiving support from existing shareholders.

·     During the quarter end June 30, 2016, the Company had raised approximately $14.7 million (approximately £7.7 million) via the placing of 9,750,000 units at a price of approximately $1.48 (£0.79) per unit with certain funds and accounts managed by BlackRock.  Each unit was comprised of one new common share of the Company and 0.3 of one warrant, with each whole warrant being exercisable into one common share at a price of approximately $1.48 (£0.79) at any time subsequent to July 25, 2016, but on or before September 30, 2016.  Accordingly, an aggregate of 9,750,000 common shares and 2,925,000 warrants were issued.  On September 30, 2016, all of the 2,925,000 warrants were exercised into 2,925,000 new common shares, for total proceeds of approximately $3,938,200.

The Sonora Lithium Project and Details of REM's ownership:

REM owns a direct interest of 19.12% of Bacanora. The Sonora Lithium Project is comprised of the following lithium properties:

- La Ventana, La Ventana 1, and Megalit concessions, which are 100 percent owned by Minera Sonora Borax S.A. de C.V.("MSB"), a wholly-owned subsidiary of Bacanora; REM, through its direct interest of 19.12% of Bacanora, has an indirect interest in these concessions of 19.12%.

- El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions, which are held by Mexilit S.A. de C.V. ("Mexilit"). REM has a 30% direct interest in Mexalit through its Joint Venture with Bacanora, and when combined with REM's direct interest of 19.12% in Bacanora, has a total economic interest in Mexalit of 43.38%.

- The Buenavista, and San Gabriel concessions, which are held by Megalit S.A de C.V ("Megalit"). REM has a 30% direct interest in Megalit through its Joint Venture with Bacanora, and when combined with REM's direct interest of 19.12% in Bacanora, has a total economic interest in Megalit of 43.38%.

For further information, please contact:

Rare Earth Minerals plc                                                                     [phone]

Andrew Suckling

Kiran Morzaria

WH Ireland Limited (Nomad & Broker)                                           [phone]

James Joyce

James Bavister

Square1 Consulting                                                                            [phone]

David Bick

Brian Alexander

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.

 

END

 

 

MSCLLFVVITLDFIR