Sonora Lithium Project

Operator : Bacanora Minerals

Ownership : 19% to 43%

Location:

Sonora State, northern Mexico

Development Stage:

Bankable Feasibility Ongoing

Background

The Sonora Lithium Project consists of 10 concessions which confer rights for exploration, mining and production. all of which are located between 190 km northeast of Hermosillo, Mexico and 180km south of the USA-Mexico border. These concessions cover approximately 97 thousand hectares and target key areas of lithium enrichment. Cadence owns in total between 19% and 43% economic interest in these concessions.

A Pre-Feasibility Study (“PFS”) was completed in April 2016 which estimated a project pre-tax IRR of 29%; NPV of US$776M, (at an 8% discount rate); and simple payback of five years, based on a flat US$6,000/t for battery grade lithium carbonate over the life of mine. The PFS has targeted initial production of 17,500 tonnes (t) of lithium carbonate (Li2CO3) per annum, expanding to 35,000 t of Li2CO3 per annum two years later. Once at this level this mine would represent one of the single largest sources of lithium compounds in the current market.

As of April 2016 these areas contained and Indicated Mineral Resource estimated at 259 million tonnes (“Mt”) averaging 3,200 ppm Li for 4.5 Mt of Lithium Carbonate Equivalent (“LCE”), in addition to an Inferred Mineral Resource estimated at 160 Mt averaging 3,200 ppm Li for 2.7 Mt of LCE.

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 . The MRE comprises an Indicated Mineral Resource estimated at 259 Mt averaging 3,200 ppm Li for 4.5 Mt of LCE, in addition to an Inferred Mineral Resource estimated at 160 Mt averaging 3,200 ppm Li for 2.7 Mt of LCE. Mineral Resources are stated inclusive of Mineral Reserves.

The Mineral Reserves for the Sonora Lithium Project was reported using a cut-off grade of 1,200 ppm lithium and comprised of a Probable Mineral Reserve of 130 MT averaging 3,014 ppm Li for 2.1 Mt of LCE.

APRIL 2016 LITHIUM RESOURCE STATEMENT

ClassificationClay Tonnes (Mt)Clay Grade – Li ppmClay Grade – K%Contained Metal
Kt LCE
Contained Metal
Kt LCE attributable to KDNC
Indicated25932001.444631474
Indicated16032001.32740777

APRIL 2016 LITHIUM MINERAL RESERVE STATEMENT

ClassificationClay Tonnes (Mt)Li ppmK%Kt LCEKt LCE attributable to KDNC
Probable129.731051.282083557

The Sonora Lithium Project and Details of Cadence ownership.

Cadence owns a direct interest of approximatley 19% of Bacanora.  The Sonora Lithium Project is comprised of the following lithium properties:

  • La Ventana, La Ventana 1, and Megalit 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 19% of Bacanora, has an indirect interest in these concessions of 19%.
  • 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 19.12% in Bacanora, has a total economic interest in Mexalit of 43%.
  • The Buenavista, and San Gabriel concessions, which are held by Megalit S.A de C.V (“Megalit”). Cadence Minerals has a 30% direct interest in Megalit through its Joint Venture with Bacanora, and when combined with Cadences’ direct interest of 19% in Bacanora, has a total economic interest in Megalit of 43%.