Sonora Lithium Project

Operator : Bacanora Minerals

Ownership (30/08/2018) : 7.5% Equity Interest – 30% Joint Venture

Location:

Sonora State, northern Mexico

Development Stage:

Bankable Feasibility Completed

Background

Strong economic potential of 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)
  • 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/t2,3
  • 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 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’)  (‘LCE’)4 and an additional Inferred Mineral Resource of 3.7 Mt of Lithium Carbonate Equivalent
  • 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 (‘TMF’), general administration costs as well as the requisite contingencies

Mineral Resource and Reserves

The Mineral Resource Estimate (“MRE”) for the Sonora Lithium Project was reported using a cut-off grade of 1,000 ppm lithium and was contained within a pit shell based on reasonable optimization parameters . Mineral Resources are stated inclusive of Mineral Reserves.

The Mineral Reserves for the Sonora Lithium Project was reported using a cut-off grade of 1,500 ppm lithium and comprised of a Probable Mineral Reserve of 244 MT averaging 3,480 ppm Li for 3.5 Mt of LCE.

DECEMBER 2017 LITHIUM MINERAL RESOURCE STATEMENT

ClassificationClay Tonnes (Mt)Clay Grade – Li ppmClay Grade – K%Contained Metal
Kt LCE
Measured10334801.51910
Indicated18831201.33130
Inferred26826501.23779

DECEMBER 2017 LITHIUM MINERAL RESERVE STATEMENT

ClassificationClay Tonnes (Mt)Li ppmK%Kt LCE
Proven8039051.61666
Probable16432711.42849
Total24434801.54515

The Sonora Lithium Project and Details of Cadence Ownership

Cadence owns a direct interest of approximately 7% of Bacanora.  The Sonora Lithium Project is comprised of the following lithium properties:

  • La Ventana and La Ventana 1 concessions, which are 100 per cent. owned by Minera Sonora Borax S.A. de C.V.(“MSB”), a wholly-owned subsidiary of Bacanora; Cadence Minerals, through its direct interest of 7% of Bacanora, has an indirect interest in these concessions of 7 %.
  • 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 Cadences’ direct interest of 7% in Bacanora, has a total economic interest in Mexalit of 35%.

Projects Outside the Sonora Lithium Project

Cadence also owns a 30% direct interest in The Megalit, Buenavista, and San Gabriel concessions, which are held by Megalit S.A de C.V (“Megalit”) which when combined with Cadences’ direct interest of 7% in Bacanora, has a total economic interest in Megalit of 35%.

These areas are not part of the mining plans of the Sonora Lithium Project and have not been assessed in sufficient detail to provide a 43-101 compliant Mineral Resource Estimate.