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FS confirms positive economics for Bacanora's Zinnwald

The feasibility study for Bacanora Lithium’s Zinnwald lithium project in Germany has confirmed positive economics and favourable operating costs for the production of 5,112 tonnes per annum of battery-grade lithium fluoride, or 7,285tpa lithium carbonate-equivalent.
FS confirms positive economics for Bacanora's Zinnwald FS confirms positive economics for Bacanora's Zinnwald FS confirms positive economics for Bacanora's Zinnwald FS confirms positive economics for Bacanora's Zinnwald FS confirms positive economics for Bacanora's Zinnwald

Bacanora Lithium's Zinnwald lithium project has positive economics

Staff reporter

The FS estimates a post-tax net present value of €270 million (US$304.4 million) at an 8% discount rate, a payback of 6.1 years, an internal rate of return of 21.5%, favourable life of mine (LOM) operating costs and a 46% EBITDA operating profit margin over the 30-year mine life.

Bacanora said the average LOM annual EBITDA was estimated at €58.5 million, with the base case 30-years revenue and EBITDA forecast at €3.86 billion and €1.75 billion, respectively.

Zinnwald has an integrated plant designed to process about 570,000tpa of ore, with a capital cost estimate of €159 million, including mining, processing plant, infrastructure, tailings management, general administration costs and requisite contingencies.

The FS also allows for the sale of 32,000tpa of by-product potassium sulphate to the European fertiliser industry.

The current 30-year FS mine plans equates to less than 50% of the current identified mineral resources, with the demonstrated measured and indicated resource estimated at 35.51 million tonnes of ore at a lithium grade of 3,519ppm, containing 125,000t of contained lithium.

Zinnwald has an estimated total mineral reserve of 31.20Mt of ore at a grade of 3,004ppm containing 94,000t of contained lithium.

There is the potential to increase the resources and reserves, with the nearby Falkenhain and Altenberg DL exploration licences.

CEO Peter Secker said the FS proved Zinnwald could potentially generate significant value for shareholders.

"The €58.5 million in annual earnings that the €159 million capital investment is forecast to generate in each of the 30 years of mine life, the strong position on the global industry cost curve, the conventional processing route, and the exposure to fast-growing end markets such as EVs, all add to the compelling investment case that Zinnwald represents," he said. 

He said Bacanora was keen to realise the project's potential at the earliest opportunity, with project detailed design due to start in H1 2020, subject to board approvals and other milestones.

"We are already working hard to secure strategic partners to develop the project and we are actively considering a public listing for Deutsche Lithium, our 50%-owned subsidiary that holds Zinnwald, to help achieve our aim," he said.

Bacanora's shares (AIM:BCN) rose 4.5% on Wednesday to 26.4p (US33.57c), up from 25p at the start of the year and the intra-period dip to 12.5p in March.