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Bacanora Minerals Ltd
Symbol BCN
Shares Issued 110,999,353
Close 2017-02-21 C$ 1.35
Market Cap C$ 149,849,127
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Bacanora to acquire 50% of lithium project in Germany

2017-02-21 11:38 ET - News Release

Mr. Mark Hohnen reports

BACANORA ANNOUNCES ACQUISITION OF 50% INTEREST IN STRATEGIC GERMAN LITHIUM ASSET

Bacanora Minerals Ltd. has entered into a definitive agreement (dated Feb. 17, 2017) to acquire a 50-per-cent interest in, and joint operational control of, the Zinnwald lithium project in southern Saxony, Germany, from SolarWorld AG, the largest solar panel producer in Europe. This is in line with management's vision to become a global lithium operator focused on projects with significant value-accretion potential and defined markets at both the product and geographic levels.

Highlights:

  • Zinnwald, which reportedly produced lithium carbonate in the 1950s, is located in a granite-hosted tin/tungsten/lithium belt that has been mined historically for tin, tungsten and lithium;
  • The project benefits from excellent access to the rapidly growing market for lithium in Germany, which is being driven by the automotive, renewable energy storage and chemicals industries;
  • Geographical location of the project provides potential access to new markets, which diversifies risk and complements potential target markets for the company's Sonora project in Mexico, where a feasibility study is on track for completion in 2017;
  • Bacanora will earn 50 per cent of the project in return for a cash consideration of five million euros and an undertaking to contribute five million euros toward the cost of completing of a feasibility study on the project, which is anticipated to take approximately 18 to 24 months to complete;
  • Access to the significant lithium technical expertise developed by SolarWorld over the past 10 years in the renewable energy industry;
  • Option to acquire the outstanding 50 per cent held by SolarWorld within a 24-month period for 30 million euros.

Bacanora chairman Mark Hohnen stated: "Zinnwald is a strategic asset located in close proximity to a thriving market for lithium and energy products. The project fits with both our corporate strategy to develop and operate integrated lithium projects to produce high-value lithium products, and also the commercial overlay which drives our acquisition strategy.

"Sonora continues to sit at the heart of our portfolio, and having produced battery-grade lithium carbonate from our 100-per-cent-owned pilot plant ahead of finalizing offtake agreements in Asia, we are committed to bringing this into production. However, Zinnwald provides us with exposure to an exciting new geographic market and adds hard-rock mineralization to our portfolio. We believe that with an ownership structure that is accretive to Bacanora, Zinnwald will further facilitate our ambition of becoming an independent global lithium operating group."

Zinnwald

The Zinnwald lithium project is located in southeast Germany, about 35 kilometres from Dresden and adjacent to the border of the Czech Republic, and within five kilometres of the town of Altenberg and 50 kilometres of the town of Freiberg.

The project is located in a granite-hosted tin/tungsten/lithium belt that has been mined historically for tin, tungsten and lithium at different times over the past 300 years. The strategic location of the project allows immediate access to the German automotive and downstream lithium chemical industries.

The Zinnwald project and leases are held by SolarWorld Solicium GmbH, a 100-per-cent-owned subsidiary of SolarWorld AG. The project has a historical resource estimate dated Oct. 1, 2014, which was reported in accordance with the Pan European Reserves Committee (PERC) code, comprising measured, indicated and inferred resources. A qualified person (under National Instrument 43-101 -- standards of disclosure for mineral projects) has not done sufficient work to confirm the historical estimate. Hence, Bacanora is not treating the historical estimate as current mineral resources or mineral reserves. However, Bacanora believes that the historical work at Zinnwald and the geological context of the deposit support the case for investing in further work to investigate the mineral resource and its potential for economic extraction.

 
Resource                Tonnes*       Li grade       Contained LCE** 
category                 (000s)           (ppm)            (tonnes)

Measured                10,283           3,661             200,277
Indicated               16,287           3,594             311,408
Inferred                 9,867           3,705             194,484

* Lithium cut-off of 2,500 parts per million and over two metres 
  vertical thickness.                                               
** LCE is the industry standard terminology for, and is equivalent
   to, lithium carbonate. One part per million lithium metal is 
   equivalent to 5.32 parts per million LCE/lithium carbonate. 

SRK Consulting (U.K.) Ltd. has briefly reviewed the historical work at Zinnwald and adjacent properties, and is working with the company to test the historical estimate and develop a future resource. It is expected that additional infill drilling and an updated geological and grade model will allow current mineral resources to be reported, following which a new technical report is expected to be prepared in accordance with National Instrument 43-101 and AIM note for mining and oil and gas companies standards.

In 2014, SolarWorld AG also completed a technical report on the project, prepared in accordance with the PERC code. Bacanora has reviewed the foregoing report (a copy of which has been published by SolarWorld AG on its website) and relied upon it in ascribing its internal valuations for the project and the negotiation of the transaction terms.

Bacanora's investment into the Zinnwald project gives the potential to provide entry into the fast-growing European lithium market, whereas the Sonora project continues to focus on offtake markets in Asia. In addition, the location of Zinnwald, adjacent to existing downstream German lithium chemical infrastructure and automotive manufacturing capacity, has the potential to allow the Zinnwald project to focus on the production of higher-value, downstream lithium products, which typically command premium pricing as compared with lithium carbonate products.

Martin Pittuck of SRK Consulting is the qualified person pursuant to National Instrument 43-101 and the AIM note for mining and oil and gas companies who has reviewed and approved the technical contents of this announcement.

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