Where is it?
- The Bacanora Minerals' company laboratories are situated in Hermosillo, which is a large town in the Northwest Mexican state of Sonora. Hermosillo is already well acquainted with heavy industry, having a Ford stamping and assembly plant.
What does the company do?
- The company has interests in both Borate and Lithium projects, with the most popular assets being the ten Lithium concessions in the Sonora region of Mexico. This being said, we shouldn't discount tone value of the Borate project, because if (as expected) it enters production in the fourth quarter of 2015, it will provide revenues to help fund the Lithium mines, or provide an asset that could be sold.
- The ten Lithium concessions can be split via ownership as follows:
- Two concessions are wholy owned by Bacanora Minerals.
- Eight concessions are joint owned between Rare Earth Minerals and Bacanora Minerals.
- This gives an overall split of 78% to Bacanora Minerals against 22% to Rare Earth Minerals, with Rare Earth Minerals also currently holding 12% of Bacanora Minerals.
Borate Uses:
- Currently Borate is mostly used to provide heat resistance for glass wear, with 43% of global annual production being used for this, while the next biggest use is in detergent manufacture at 23% of the total annual production.
Lithium Uses:
- The largest market for Lithium is currently in ceramic thermal shock resistance, at 32% of the annual global production. The next biggest market is in rechargeable batteries, which takes 22% of the annual global production, but this percentage is rising quickly with increasing demand from companies like Tesla and the continuing tech-boom.
What is the Lithium production method?
- The laboratories contain the only in-house Lithium carbonate extraction that doesn't use sulphuric acid, making the processing of lithium a more environmentally friendly process. The only other similar company using this method is Western Lithium, although they're not using an in-house facility.
Lithium Number Crunching:
- The current net present value (stated by Bacanora Minerals) of the Sonora Lithium Project is $848,000,000 based on an 8% discount. While this is the most conservative number, numbers much higher than this have been throw around as well./
- Colin Orr-Ewing said in a Proactive Investors interview that the expected mine life is forty years with a production of 40,000 tonnes per year.
- This gives a project value for the mine over its expected lifetime of $10,400,000,000 in revenue and $7,300,000,000 is profit.
- Based on a average production cost of $1,500 per tonne you have an annual gross profit of $184,000,000
- The CAPEX for the project is estimated to be around $113,000,000. Although, one ought to remember that these figures can vary significantly up and down.
Extra Reading:
The Takeover Potential of Bacanora Minerals:
http://themaskedstocktrader.blogspot.co.uk/2014/09/bacanora-minerals-possible-takeover.html
Understanding the Tesla Rumours:
http://themaskedstocktrader.blogspot.co.uk/2014/08/bacanora-minerals-analysis-of-tesla.html
Sources:
http://www.bacanoraminerals.com
http://www.bacanoraminerals.com/reports/
http://www.proactiveinvestors.co.uk/companies/stocktube/2978/bacanora-minerals-chairman-on-demand-for-borates-and-lithium-2978.html
Poetical Trader on LSE (I thoroughly recommend that you read his/her posts if you're not already privy with them).
All the best,
The Masked AIM Trader
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