Operator : Ganfeng Lithium
Ownership: 30% Joint Venture at 31/05/2024
Location:
Sonora State, Northern Mexico
Development Stage:
International Arbritration
Project Summary
- JV Partner Ganfeng Lithium 3rd largest lithium compound producer in the world
- 8.8 Mt of LCE resources at Sonora (4.9 Mt LCE on JV areas)
- Planned annual production Lithium Carbonate ~ 35,400 tpa
- Mine Life – 20 years
- Ore mined from our JV areas – ~ 72 Kt LCE year 8-19
Strong economic potential of two stage open-pit operation at Sonora
| Net Present Value | US$ 802 million |
| Annual production | 35,000 tpa battery grade Li2CO3 |
| Construction capital costs | US$ 800 million (Stage 1 & 2) |
| Operating cost (with credits) | US$ 3,418/t Li2CO3 |
| Lithium Carbonate pricing assumption | US$ 11,000/t Li2CO3 |
Additional Information
Current Status of Project
Ganfeng has been developing the Project, consisting of an open pit mine and lithium chemical product processing facility in Sonora, Mexico. The principal planned lithium product for the Project is lithium hydroxide.
In April 2022 and May 2023, the Mexican Government changed its Mining Law, which included prohibiting lithium concessions, declaring lithium as a strategic sector, and giving exclusive rights for lithium mining operations to a state-owned entity. These changes were not meant to affect existing concessions, such as those held by Mexilit and Megalit. Ganfeng believe the reforms should not impact their project’s concessions because they were granted before the Mining Law Reform. This aligns with the principles of legality and non-retroactivity of laws outlined in the Constitution of Mexico.
The DGM warned that the concessions could be cancelled if the Mexican subsidiaries did not provide enough evidence within a specified timeframe to prove their compliance with minimum investment obligations for developing lithium concessions from 2017 to 2021. As of May 2023, Mexilit and Megalit had submitted extensive evidence of their timely compliance with the minimum investment obligations for the lithium concessions. However, in August 2023, the DGM issued a formal decision notice to the Mexican subsidiaries, cancelling nine lithium concessions, including those owned by Mexilit and Megalit.
The cancellations for the lithium concessions issued by the DGM are not final and are subject to ongoing appeals. Ganfeng and Cadence believe that the Mexican Subsidiaries have complied with their minimum investment obligations, as Mexican law requires. Ganfeng have filed administrative as they believe these resolutions violate Mexican and international law and infringe upon their fundamental due process rights.
In November 2023, Cadence issued a Request for Consultations and Negotiations (“Request”) to the Government of Mexico under the United Kingdom-Mexico Bilateral Investment Treaty (“BIT”). The Request pertains to the alleged revocation of the mining concessions for the Sonora Lithium Project (the “Project”) by the Mexican General Directorate of Mines, as announced by Cadence on 31 August 2023, and related acts and omissions by Mexico.
In their Request, Cadence and REMML have identified various BIT obligations that Mexico has breached, including Mexico’s obligation not to unlawfully expropriate the investments of UK investors such as Cadence and REMML and its obligation to treat such investments fairly and equitably.
Mineral Resource and Reserves
The Sonora Project holds one of the world’s larger lithium resources and benefits from being both high grade and scalable. The polylithionite mineralisation is hosted within shallow dipping sequences, outcropping on the surface. A Mineral Resource estimate was prepared by SRK Consulting (UK) Limited (‘SRK’) in accordance with NI 43-101. The following tables present the summary of current lithium resources for the Project; these Mineral Resources are inclusive of Mineral Reserves:
The Mineral Reserves contained within Cadence’s joint venture with Bacanora is scheduled to mined (under the feasibility published in 2018) in years 9 to 19. Further details of the planned mining schedule can be found on pages 137-139 of the Feasibility Study
MINERAL RESERVES (Cut-off grade if 1,500 ppm Li)
| Category | Tonnes Ore (000t) | Li (ppm) | K (%) | LCE (000t) | LCE attributable to Cadence (000t) |
| Proven | 80,146 | 3,905 | 1.64 | 1,666 | 116 |
| Probable | 163,662 | 3,271 | 1.36 | 2,849 | 723 |
| Total | 243,808 | 3,480 | 1.45 | 4,515 | 839 |
MEASURED AND INDICATED MINERAL RESOURCES
| Category | Cut–off (Li ppm) |
Tonnes (000t) | Li (ppm) | K (%) | LCE (000t) | LCE attributable to Cadence (000t) |
| Measured | 1,000 | 103,000 | 3,480 | 1.5 | 1,910 | 134 |
| Indicated | 1,000 | 188,000 | 3,120 | 1.3 | 3,130 | 785 |
| Total | 1,000 | 291,000 | 3,250 | 1.4 | 5,038 | 919 |
INFERRED MINERAL RESOURCES
| Category | Cut–off (Li ppm) |
Tonnes (000t) | Li (ppm) | K (%) | LCE (000t) | LCE attributable to Cadence (000t) |
| Inferred | 1,000 | 268,000 | 2,650 | 1.2 | 3,779 | 559 |
The Sonora Lithium Project and Details of Cadence Ownership
The Sonora Lithium Project consists of nine granted concessions. Two of the concessions (La Ventana, La Ventana 1) are owned 100% by subsidiaries of Ganfeng Lithium Co., Ltd (“Ganfeng”). El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions are owned by Mexilit S.A. de C.V. (“Mexilit”), which is owned 70% by Ganfeng and 30% by Cadence. The Buenavista and San Gabriel concessions are owned by Megalit, which is owned 70% by Ganfeng and 30% by Cadence.