Proposed Placing to raise US$100 million (the “Placing”) to begin construction of the Sonora Lithium Project in Mexico (“Sonora” or the “Project”)
Bacanora Lithium plc (AIM:BCN), the London listed lithium exploration and development company, is pleased to announce a proposed placing to raise gross proceeds of US$100m by way of a placing (the “Placing”) of new ordinary shares in the Company (the “Placing Shares”).
The combination of the Placing proceeds and the initial US$25m drawdown from the previously announced US$150m Red Kite Mine Finance senior debt facility (“RK Facility”) will give the Company sufficient funds to begin construction on the Project, the intended commissioning for which is in Q1 2020.
The Placing Shares are being offered by way of a bookbuild (the “Bookbuild”) which will be launched immediately following this Announcement. The number of Placing Shares and allocations are at the discretion of Canaccord Genuity Limited (“Canaccord” or the “Bookrunner”) and a further announcement confirming these details will be made in due course. WH Ireland Limited, Ashanti Capital and Steubing AG are acting as placing agents in the transaction (collectively the “Placing Agents”). Members of the public are not entitled to participate in the Placing and none of the Placing Shares are being offered or sold in any jurisdiction where it would be unlawful to do so.
The Directors recognise the importance of giving existing shareholders an opportunity to participate in Company’s ongoing funding should they be unable to participate in the Placing, and consequently intend to raise up to EUR 8m by way of an open offer to existing shareholders following completion of the Placing. Further details of the open offer will be announced in due course.
Bacanora Lithium PLC (AIM:BCN) CEO Peter Secker Interview – June 18th, 2018
Summary
· The primary purpose of the Placing is to provide the Company with sufficient funds to begin construction of the Project by ordering the long lead items and beginning the required civil works.
· The gross proceeds from the Placing will allow the Company to continue towards its stated intention of commissioning the Project during Q1 2020.
· The issue of the Placing Shares is structured as a placing of new ordinary shares pursuant to the authorities granted at the Company’s General Meeting held on 16 February 2018.
· The timing of the closing of the Bookbuild and the final number and allocation of the Placing Shares to be issued are to be determined at the discretion of the Company and the Bookrunner.
· Following the closing of the Bookbuild, a further announcement will be made confirming final details of the Placing.
Rationale for the Placing and Use of Proceeds
· The Company completed its Feasibility Study on the Project in February 2018 demonstrating the Project’s potential to become a leading supplier of high value lithium carbonate.
· The capital cost estimated for Stage 1 production of 17,500 tpa of lithium carbonate at the Project at US$420m. In addition to the US$420m capital cost, the Company estimates that US$40m of additional funding will be required for working capital purposes. Therefore, the total funding required for Stage 1 of the Project is estimated to be US$460m (“Construction Funding”).
· All required approvals are in place, subject to raising the financing, for Bacanora to begin construction of the Project.
· The gross proceeds of US$100m from the Placing will be utilized to begin and progress construction as per the schedule outlined in the DFS published in January 2018 and will be allocated as follows:
o Beneficiation plant – US$1.7m
o Processing plant – US$25.6m
o Infrastructure – US$38.0m
o EPCM/Owners – US$21.0m
o Contingency – US$10.7m
o Working capital – US$3m
· It is expected that the gross proceeds from the Placing, together with the drawdown of the first tranche from the RK Facility and the Company’s existing cash balances will allow the Project to be meaningfully progressed until the end of Q1 2019.
· As announced concurrently, the Company has received a commitment to conditionally invest US$25m from its existing shareholder, Hanwa Co., Ltd (“Hanwa”) at the time of and conditional on the Company securing the Construction Funding, and has entered into a conditional agreement with a new strategic investor, the State General Reserve Fund of Oman (“SGRF”) for another US$65m investment at the same time. In addition, the Company has secured a $150m senior debt facility from Red Kite Mine Finance (“RK”).
· The combined total of the Placing, the proposed SGRF and Hanwa investments and the previously announced RK Facility is $340m. Accordingly the Company intends to raise a further $120m of funding prior to the end of Q1 2019. The proposed investments by SGRF and Hanwa are subject to the Company securing the Construction Funding.
· The Company will continue discussions with various potential funders with a view to optimizing the capital structure by the time the full Construction Funding is in place.
· The gross proceeds of the Placing and the wider fundraise will be used exclusively by the Company for the Project.
The Placing
Bacanora has entered into a placing agreement (the “Placing Agreement”) with Canaccord who is acting as sole bookrunner in relation to the Placing and the Placing Agents. Pursuant to the Placing Agreement, Canaccord has agreed, in accordance with its terms, to use reasonable endeavours to place the Placing Shares with certain new and existing institutional and other investors. The Placing is not underwritten.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu with the existing ordinary shares including the right to receive all future dividends and distributions declared, made or paid by reference to a record date falling after their issue.
The Company will apply for the Placing Shares to be issued on closing and to be admitted to trading on AIM (“Admission”).
The Placing is conditional upon, inter alia, Admission becoming effective and the Placing Agreement between the Company and the Bookrunner becoming unconditional and not being terminated. Further details of the Placing Agreement can be found in the terms and conditions of the Placing contained in the Appendix to this Announcement (which forms part of this Announcement).
By choosing to participate in the Placing and by making a verbal offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement (including the Appendix) in its entirety and to be making such offer on the terms and subject to the conditions in this Announcement, and to be providing the representations, warranties and acknowledgements contained in the Appendix.
Your attention is drawn to the detailed terms and conditions of the Placing set out in the Appendix to this Announcement.
