Developing the Worlds Next Major Lithium Project Investor - - PowerPoint PPT Presentation

Developing the World’s Next Major Lithium Project

Investor Presentation JULY2018

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2

CORPORATE STRATEGY

3

Goal to become an international lithium production company with a portfolio of global projects

SONORA LITHIUM PROJECT, MEXICO Construction: 2018 Production: 2020 Market: Asia via Hanwa ZINNWALD LITHIUM PROJECT, GERMANY Feasibility study: 2019 Market: Europe ASIA

Market Ticker Market Cap Share Price AIM BCN ~£115m

(12.07.18)

86p

M&G Investment Funds – 10.04% Blackrock –9.80% Hanwa Co., Ltd – 9.20% Orr-Ewing Estate – 8.07% Cadence Minerals –8.00% Igneous Capital Ltd – 7.83% The Capital Group –6.40% D&A Income Ltd – 3.96% Other – 35.53%

Significant Shareholders

OVERVIEW

4

Experienced Management

Track record in mine development and production

43-101LithiumDeposit

8.8 Mt of LCE resources at Sonora, open pit mining *

Completed Feasibility Study

$1.25B NPV; 26% IRR *

Conventional Sulphate Process

Battery grade (99.5%) lithium carbonate produced from Pilot Plant

Strategic Partnership

Offtake agreement and equity partnership with Japanese trading group Hanwa for initial 5 years Stage 1 production*

Commencementof Construction

Construction of Stage 1 17,500tpa plant scheduled to commence immediately after funding is secured

Rapidly Growing Market

Strong demand from EV and energy storage industries with market growing >15% annually**

Approvals in Place*

MIA permits received. Land acquisition completed. Water licence permits granted

AIM listed company focused on building a 35,000 tpa lithium carbonate operation at Sonora in Mexico Cost Competitive

$3,910/t operating cost *

* (* FS 43-101, **SignumBox)

SONORA: INTEGRATED MINE AND LITHIUM CARBONATE PLANT

5

Lithium resource which lends itself to conventional open pit mining with planned low strip ratio

*LCE is the industry standard terminology for, and is equivalent to, Li2CO3. 1 ppm Li metal is equivalent to 5.32 ppm LCE / Li2CO3. Use of LCE is to provide data comparable with industry reports and assumes complete conversion of lithium in clays with no recovery or process losses.

97,389 Ha licence area, located 190km NE of Hermosillo in northern Mexico, consisting of 10 contiguous concessions* Low stripping ratio, open pit mining, no drill and blast* EIA environmental approvals received and acquisition of 100,000 hectares of land over the project* and water licence permits granted Lithium deposit with 8.8Mt LCE resource* 7Km of strike Lithium carbonate off-take in place with Hanwa Infrastructure: labour, water, road, rail, port Conventional sulphate route process*

Source: *Feasibility Study

SONORA LEASES – EXPLORATION UPSIDE

6

OUTCROPPING LITHIUM DEPOSITS COMBINED WIDTH OVER 40 METRES

7

CONVENTIONAL SULPHATE PROCESSING ROUTE

8

Open pit mining Trommel and screen Sulphate (Na2SO4) roast (900 degrees and 30 mins) to produce Li2SO4 Evaporation and precipitation Soda Ash (Na2CO3 ) addition SX and IX purification Li2CO3 product

PILOT PLANT: HERMOSILLO

9

▪ Integrated facility:

▪ Pre-concentration ▪ roasting ▪ leaching ▪ IX circuits

▪ Ongoing pilot plant operations and training ▪ Quality of the battery grade (>99.5%) lithium carbonate validated by HANWA off-take ▪ Believed that the Pilot Plant enables development and refinement of flowsheet to

• ptimise product quality

▪ It is the current intention to have continuous

• peration until 2019 to facilitate training prior

to production Believed that the Pilot Plant presents a cost effective way of optimising design, increasing BCN staff’s technical expertise, maintaining customer relationships

FEASIBILITY STUDY: IN NUMBERS

10

Pre-tax IRR

26%

Simple Payback Stage 1

4

(years)

Source: See Full Feasibility Numbers in Appendix

• Av. Operating costs

$3,910 /t Li₂CO₃

($3,418 net of K₂SO₄ credits)

K₂SO₄ production

Up to 30,000 tpa Post-tax IRR

21%

Pre-tax

NPV8 of $1.25B NPV0 of $3.4B

(based on $11,000/t Li₂CO₃ )

Stage 1 Initial Construction Capital Cost of

$420M

Post Tax

NPV8 of $802M NPV0 of $2.37B

(based on $11,000/t Li₂CO₃ )

PEER ANALYSIS: ESTIMATED INDUSTRY COST CURVE POST 2025

11

Favourable position on cost curve

550,000 Tonnes

Source:(*Canaccord April 2018, BCN 43-101).

LITHIUM SUPPLY & PRICING

12

2 0 1 7 a v e ra ge g l o b a l p r i c i n g a r o u n d $ 1 2 , 00 0/t *

(* SignumBOX November 2017) (** Orocobre, SignumBOX, others)

Lithium Supply by Origin 2017* Lithium Demand by Application*

Australia 30% Chile 37% Argentina 14% China 14% US… Others 3% 62% 25% 8% 5%

Batteries Ceramics & Glass Metallurgy&Aluminum Others 5,000 10,000 15,000 20,000 25,000 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030

Base Case High Case Supply and Demand to 2020** Lithium Carbonate Historic Price and Forecast (US$/tonne*)

COMMERCIALISING SONORA

13 ▪ Hanwa Co., LTD is a Japan-based trading company and a trader of battery chemicals in the Asian region ▪ Milestone Off-take Agreement: ▪ Lithium carbonate off-take for initial 5 years Stage 1 production which has subsequently extendedto 10 years ▪ FOB contract for battery grade lithium carbonateat market pricing ▪ Company-level investmentdemonstratesHanwa's commitment to Bacanora: ▪ Hanwa acquired an initial10% equityinterest in Bacanora ▪ The Company sees Hanwa as a cornerstone investor that will aid in the procurement oflong term project debt funding

Hanwa agreement is a long term off-take for 10 years of Stage 1 production at commercial pricing

PROPOSED TRANSACTION

14

S O U R C E S O F F U N D S U S E O F P R O C E E D S 1

Bacanora Lithium Plc is seeking to raise $100 million to begin construction of the Sonora Lithium Project’s Stage 1

Item Cost ($m) Beneficiation plant 1.7 Processing plant 25.6 Infrastructure 38.0 EPCM / owner cost 21.0 Contingency 10.7 Total Capex 97.0 Working Capital 3 Initial Funds Needed* 100 Source Amount ($m) Placing of new ordinary shares 100 Initial Sources of Funds 100 T R A N S A C T I O N D E T A I L S

➢ Transaction to be conducted by way

• f

a placing

• f

new

• rdinary

shares (“Placing Shares”) in Bacanora Lithium Plc ➢ Proposed timetable  16 July (am) - books open  Books close at the discretion

• f

the Bookrunner

Note: 1) the above use of proceeds and sources of funds is solely for the development of the Sonora project; the Company has theexisting financial resources to meet ongoing corporate needs *These are the funds needed to develop the Project until Q1 2019

FINANCING PLAN AND PROJECT TIMELINE

15

H 2 2 0 1 8 – Q 1 2 0 1 9

$460m

2020 H1 19 H2 18 H1 18 H2 19

H2 Order long lead items. Civil earthworks construction H1 Mechanical engineering and infrastructure Q1 Commissioning H2 Delivery of Long Lead

• Items. Structural

construction

Proposed Financing Plan Sonora Project timeline

16

APPENDIX

KEY DATA

17

Graham Edwards (11.79%) M&G Investment Funds (10.04%) Blackrock (9.80%) Hanwa Co., LTD (9.20%) Cadence Minerals (8.00%) Orr-Ewing Estate (8.07%) The Capital Group (6.40%) Other (36.70%)

NOMAD Cairn Financial Advisers LLP Broker Canaccord Genuity

Market AIM Ticker: BCN MARKET CAP:

~£115m

(12.07.18)

Note: Shareholding Percentages are as of 11 January 2018

60 70 80 90 100 110 120 130 140 150 160

BOARD

18

Mark Hohnen – Executive Chairman

▪ Extensive international business experience in wide range

• f

industries inc. mining and exploration, property, investment, software and agriculture ▪ Founding Chairman of Cape Mentelle and Cloudy Bay wines ▪ Director

• f

Kalahari Minerals and Extract Resources

Jamie Strauss – Lead Independent Director

▪ 30 years’ experience within the stockbroking and miningfinancesector ▪ Has raised in excess of $1bn for projects in both energy and mineral world on behalf of leading institutions in UK, Europe, North America and Australia

Junichi Tomono – Non-Executive Director

▪ Representative of Hanwa under the terms of the agreement ▪ Over 22 years’ experience with Hanwa during - worked in the Metals, Chemicals, Alloys, Scrap metals and Mining divisions ▪ Special focus on thebattery chemicals sector

Ray Hodgkinson – Non-Executive Director

▪ Retired Professional Engineer in Alberta,Canada ▪ 40 years’ experience working in oilfields and gasfields in Western Canada, northern Russia and Japan ▪ Founding Director of Canadian mining companies Westcore Energy Ltd and Bacanora Minerals ltd and energy company Troy Energy Corp

Dr Andres Antonius – Non-Executive Director

▪ A Mexican national who has held positions in the Government of Mexico as well as in the privatesector and academia ▪ Previously Undersecretary for Energy Policy and a staff member at the AgricultureSecretariat ▪ Currently CEO of Plan B,a provider of strategic adviceto a rangeof clients ▪ B.A., Masters and PhD degree in Economics fromHarvard University

Eileen Carr – Non-Executive Director

▪ Has been a key member of teams behind the development of a number of successful mining

• perations across theworld

▪ Holds several executive directorships in the resource sector, including CFO at both AIM traded Monterrico Metals plc and Alexander Miningplc

Derek Batorowski– Non-Executive Director

▪ Over 20 years of experience in the oil and gas & mineral exploration industries ▪ Experienced in accounting, finance, corporate planning, treasury, & taxation with both public and privatelarge and small oil & gas producers and small cap mineral exploration companies

Peter Secker – CEO and Executive Director

▪ Mining engineer with over 30 years’ experience in the resources ▪ Built and operated a number of mines and metallurgical processing facilities in Africa, Australia, China and Canada

MANAGEMENT

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Janet Boyce CFO Ms Boyce is a certified public accountant who has held a number of senior financial roles, with over 15 years experience in the resources sector, includingGroup Chief Financial Officer and ExecutiveDirector of Gemfields plc. Eric Carter Project Director Over 22 years lithium production expertise with FMC Lithium, extensive experience in lithium carbonate, lithium hydroxide and lithium metal process operations. Has designed, built and operated plants producing lithium carbonate from spodumene and clays in North and Central

• America. Has more than 30 years construction and projectmanagementexperience in the United States and Canada.

Gaspar Mendez Project Manager 20 years experience in the mining industry, with a successful track record in the development and operation of several gold projects in Mexico. He is a certified Project Management Professional and has a Master’s degree in Business Administration and a Bachelor’s degree in Chemical Engineering. Samir Chefai Pilot Plant Manager Over 20 years of experience in metallurgy, mill design and operation, with a Master’s degree in Mineral Processing and a Bachelor’s degree in Chemical Engineering. Has worked on several large projects in North and South America, Africa and Asia including, Lithium, Aluminum, Copper, Gold and Zinc. Mahmoud Besbes Hydromet Process Engineer A Chemical Engineer specializing in the development and operation of battery grade lithium carbonate processes. Has operated Lithium Carbonatespodumene and clay plants,having worked on a number of complex metallurgical projects in Canadaand Mexico. Mario Ramirez Construction Manager Over 25 years of project construction management experience in copper, gold and silver extraction plants in Mexico, Peru, Spain and the United States, overseeing the construction of green and brown field projects. Expertise in all aspects of project management for the full project cycle, from feasibility to closure. Curtis McCullough Construction Manager Over 30 years of heavy industrial experience in the Chemical, Cryogenics, Energy, Petroleum, and Mining industries. Has developed and maintained variousprojectcontrol systems for the Start-up and Commissioning of a number of largescaleprojects acrossthreecontinents. Rob Eastabrook Commercial Manager 30 years of experience in the Energy and Mining sectors, with 20 years in base and precious metals mining. Specialized in mine site Finance, Supply Chain and Commercial Management. Has worked on large mining projects across the globe, in Australia, Papua New Guinea, Kyrgyzstan and Bolivia. Corecompetencies includerisk management,contractnegotiation,and costcontrol. Jorge Martinez HSE Manager Over 15 years of experience as an HSE professional and an ISO 14001 / OHSAS 18001 Auditor, Significant experience in the mining, metallurgy, power generation and construction sectors. Has provided consulting services for more than 60 projects in Mexico, Central America and the

• Caribbean. Has successfully designed,implemented and certified numerous HSE Management Systems.

SIGNIFICANT RESOURCES AND RESERVES

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A large lithium resources – high grade and scalable

Category Tonnes Ore (000t) Li (ppm) K (%) LCE (000t) LCE attributable to BCN (000t) Proven 80,146 3,905 1.64 1,666 1,550 Probable 163,662 3,271 1.36 2,849 2,126 Total 243,808 3,480 1.45 4,515 3,676

M e a s u r e d a n d I n d i c a t e d R e s o u r c e s * M i n e r a l R e s e r v e s : ( C u t - o f f g r a d e o f 1 , 5 0 0 p p m L i ) *

Category Cut–off (Li ppm) Tonnes (000t) Li (ppm) K (%) LCE (000t) LCE attributable to BCN (000t) Measured 1,000 103,000 3,480 1.5 1,910 1,776 Indicated 1,000 188,000 3,120 1.3 3,130 2,345 Total 1,000 291,000 3,250 1.4 5,038 4,119

Notes: (i) Mineral Resources that are not Mineral Reserves and do not have demonstrated economic viability. (ii) Tonnes rounded to the nearest thousand. (iii) The conversion factor from % Li to LCE is 5.323.

Category Cut–off (Li ppm) Tonnes (000t) Li (ppm) K (%) LCE (000t) LCE attributable to BCN (000t) Inferred 1,000 268,000 2,650 1.2 3,779 3,220

I n f e r r e d M i n e r a l R e s o u r c e s *

(* See NI 43-101)

FEASIBILITY STUDY: POSITIVE ECONOMICS

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E s t i m a ted p a y b a c k

• f a p p r o x ima tely

f i v e y e a r s

Discount Rate Base Case Pre Tax NPV (US$ million) Base Case Post Tax NPV (US$ million) 0% 3,425.1 2,371.4 2% 2,644.3 1,808.0 4% 2,054.0 1,381.7 6% 1,602.4 1,055.2 8% 1,253.0 802.5

Sensitivity Analysis

FeasibilityStudyKeyIndicators Value Pre-tax NetPresentValue($ 000) 1,253,027 Pre-tax IRR (%) 26.1% SimplePaybackStage1 4 Initial ConstructionCapital CostStage1 ($ 000) 419,616 ConstructionCapital CostStage2 ($ 000) 380,262

• Av. LOMoperating costs ($/tLi2CO3)

3,910

• Av. operatingcosts ($/tLi2CO3 netof K2SO4 credits)

3,418 Post-taxNPV(at8%discount) ($ 000) 802,464 Post-taxIRR (%) 21.2%

• Av. annualEBITDAwith co-products ($ 000)

229,362

• Av. Annual Li2CO3production capacity Stage1

17,500 t

• Av. AnnualLi2CO3production capacity Stage2

35,000 t

• Av. Annual K2SO4 productionStage2

30,000 t

Feasibility Study Key Indicators

Construction Capital Costs (rounded to nearest US$’000)

Category FS Estimate Stage 1 (US$000) FS Estimate Stage 2 (US$000) Mining 17,611 17,614 Beneficiationplant 18,483 18,483 Lithium processing plant 158,288 158,285 Plant Services 55,334 55,334 Infrastructure 58,841 23,581 EPCM/Owner cost/Indirect 72,912 72,393 Contingency 38,147 34,569 Total 419,616 380,262 Category Stage 1 (US$/t Li2CO3) Stage 2 (US$/t Li2CO3) Average LOM (US$/t Li2CO3) Mining 295 499 490 Processing 3,093 3,266 3,198 G&A 263 209 222 Total 3,651 3,974 3,910

Project Operating Costs

INVESTMENT CASE

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Large lithium deposit Company-making asset with US$1.25Bn NPV Conventional sulphate processing route Japanese trading house as strategic partner Fast-Growing End Markets Experienced Management Team

Transitioning from lithium explorer to lithium developer

ZINNWALD LITHIUM PROJECT

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Strategic asset located in close proximity to a thriving market for lithium and energy products

▪ 50% interest in and joint operational control of Zinnwald ▪ 35km from Dresden on the Czech Republic border in an historic granite hosted Sn/W/Li belt ▪ Historically mined for tin and tungsten over the past 300 years ▪ FS underway focused on development of higher-value, downstream lithium products expected to take 18-24 months ▪ Option to acquire outstanding 50% on completion of Feasibility Study ▪ Measured, Indicated and Inferred PERC resource of 36.4Mtat gradeof 3,600ppmLi ▪ Additional drilling completed ▪ Testing for Sn and K2SO4by-products planned

Resource Category Tonnes (000) Li Grade (ppm)

Measured 10,283 3,661 Indicated 16,287 3,594 Inferred 9,867 3,705

CONTACT

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Bacanora Lithium plc

Peter Secker E: info@bacanoralithium.com www.bacanoralithium.com

St Brides Partners Ltd

Financial PR Frank Buhagiar/ Megan Dennison T: +44 (0) 20 7236 1177 www.stbridespartners.co.uk