Bacanora is a Canadian TSX.V listed explorer and developer of industrial minerals in Mexico with a primary focus in Lithium and Borates. Its major project is the:
Sonora Lithium Project – located in the Sonora State Northern Mexico, situated 180 km northeast of Hermosillo.
The project consists of the La Ventana and La Ventana 1 (“La Ventana”) concessions, which are owned 100% by Bacanora, with declared inferred resources for the La Ventana Lithium Deposit totalling 60 million tonnes, averaging 3,000 ppm Li (equivalent to 1.6% lithium carbonate equivalent ("LCE") assuming 100% recovery and no process losses) or 930,000 tonnes of LCE. These resources were prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). REM owns 12.19% of Bacanora.
Bacanora has published a Preliminary Economic Assessment on the La Ventana Deposit with the following
summary:
• 35,000 tonnes per annum of battery grade LCE. (Assuming $6,000 per tonne of LCE)
• Capital expenditure US$114 million.
• 20 year open pit mine life.
• Internal Rate of Return of 138%.
• 1.9 year payback on cost of capital.
• Operational expenditure - US$ 1,958 per tonne LCE
• Net Present Value (8% discount rate) of US$848 million.
During the year Bacanora also completed the preliminary metallurgical testing undertaken by the Metallurgical Division of Inspectorate Exploration and Mining Services Ltd ("Inspectorate") of Richmond, Canada. The testing was conducted on a total of 4 samples averaging 9.88 kilograms each. The samples consisted of split drill core with 2 samples from each of the upper and lower clay units.
The bench scale testing focused on two process options designed to liberate lithium into solution from the clays.
The first option was pugging with sulphuric acid followed by a water leach; the second option tested roasting of the clays with several combinations of reagents with the roasted product leached with water in order to put lithium into solution. Results of these solubility tests indicate that the roast–leach process is most favourable as 86.7% of lithium in the upper clay and 88.6% of lithium in the lower clay was put into solution.
Test work on the lithium-bearing solutions derived from the roast–leach process included two stages of evaporation to concentrate the lithium. With the addition of another reagent to the concentrated solutions a precipitate was formed. Assays of the precipitate from the upper clay ranged from 14.6% to 15.85% Li or 77.8% to 84.5% lithium carbonate. Precipitate from the lower clay ranged from 15.5% to 16.96% Li or 82.2% to 90.4% lithium carbonate.
Subsequent to the year end this March, Bacanora announced the commissioning of a pilot plant and have begun the pilot scale testing of the recovery process on the La Ventana deposit.
El Sauz / Fleur Project, Mexico (30% owned by REM)
The contiguous El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions (the "Joint Venture #1 Lands") are owned 70% by Bacanora and 30% by REM under Joint Venture #1. The farm-in licences cover the 34 square kilometre El Sauz and Fleur concessions adjacent to and along strike from Bacanora‘s La Ventana discovery.
The El Sauz / Fleur project is a strike extension of La Ventana and La Ventana1 concessions, and has [very?] similar geology and structural controls.
Excellent progress has been made in the development of these concessions. We agreed the Joint Venture #1 in February 2013 and in October 2013 we declared a maiden Inferred resource for the El Sauz and Fleur concessions (prepared to NI 43-101 standards) totalling 88,271,000 tonnes, averaging 3,163 ppm Li at a 2,000 ppm cut-off
(1.68% lithium carbonate equivalent) or 1,483 million tonnes of LCE.
Drilling has continued on these areas during the year to infill and identify further extensions of the deposit. In December 2013 we announced significant lithium bearing intervals were intersected in all of the holes of the Stage 2 drilling campaign.
The first 6 holes of Stage 2 tested, by way of infill and step out holes between the first 5 holes of Stage 1, a strike length of 2,100 metres of the clay units south from the southern boundary of the La Ventana concession across the Fleur and onto the El Sauz concession. Within the area drilled, the average intercept length for the Upper Clay Unit was 35.84 metres (33.69 metres estimated true thickness) and 27.37 metres (25.73 metres estimated true thickness) for the Lower Clay Unit.
The average length of sample intervals in the Upper Clay is 1.47 metres and lithium values range from 27 to 5,910 ppm Li, averaging 1,404 ppm lithium for individual samples. For the Lower Clay Unit the average length of sample intervals is 1.49 metres and lithium values in individual core samples range from 1,250 to 9,660 ppm lithium, averaging 4,177 ppm lithium.
The results from a further 7 holes were announced in January 2014 which significantly increased the potential size of the El Sauz – Fleur project. These holes showed lithium values averaging 1,683 ppm (0.90% LCE) over 20.88 metres in the upper clay and 4,821 ppm Li (2.57% LCE) over 28.80 metres in Lower Clay, which were in line with expectations.
More importantly further drilling identified the deposit extending a further 3 kilometres and surface sampling had recorded grades up to 16,410 ppm (1.64 % Li or 8.7% LCE).
These results confirmed the continuity of the clays identified during the initial drilling programme, and demonstrate the consistency in the thickness of the clays units and grade of lithium within the clays.
Bacanora is now updating the resource figures for both the El Sauz/Fleur and La Ventana projects with the goal of increasing the resource size and upgrading part of the resource to indicated and/or measured categories.
In addition Bacanora is preparing the Preliminary Economic Assessment on the El Sauz/Fleur project which is anticipated to be completed by the end of March 2014.
REM has been very pleased with the progress made at the EL Sauz-Fleur project. Drilling continues to increase the size of the project with further drilling expected to test additional extensions over the coming months.
During the year we defined around 1.48 million tonnes of LCE resource and the significant increase in drilled strike length in the current drilling campaign should have a material impact on the size of the LCE resource once this programme is completed.
The construction of the pilot testing pilot plant is also very positive news as it will refine the metallurgical recovery techniques required to maximize the extraction of the Lithium from the clays, where we have already seen excellent progress to date.
Buenavista, Megalit and San Gabriel, Mexico (30% owned by REM)
In December 2013 we announced Lithium bearing units identified in the La Ventana and El Sauz/Fleur deposit have were identified at surface in 4 parallel trending sequences.
As a result of which REM entered into a new joint venture ("JV #2") with Bacanora that covers these new discoveries and increased concessions under both joint ventures from 5,325 hectares to 100,140 hectares (247,451 acres).
The new concessions cover strategic ground surrounding the entire Sonora Lithium Project, where lithium-bearing clay units have now been identified at surface in 4 parallel and arcuate north-westerly trending sequences that are estimated to extend for at least 40 kilometers in strike length. Reconnaissance work by Bacanora has identified clay units on the new concessions where surface samples of the clays have analysed up to 1,350 parts per million lithium.
REM’s new JV #2 deal with Bacanora:
The new Megalit concession staked by Bacanora totals approximately 94,815 hectares (234,291 acres) in area and is contiguous with and surrounds the entire Sonora Lithium Project in northern Mexico. Bacanora‘s key and strategic 1,500 hectare San Gabriel and 649 hectare Buenavista concessions which immediately joins their La Ventana deposit.
The key terms of the additional concessions package deal (JV #2) with Bacanora are:
• REM is to acquire an initial 10% interest in the additional concessions package by paying Bacanora $250,000 and spending $500,000 on exploration and drilling over a 12 month period. - all conditions under the terms of the joint venture agreement between Bacanora and REM satisfied on 26th March 2014.
• After the first 12 month period, REM then has the right, at its election, to increase that interest in the additional concessions package to 30% by paying Bacanora another $500,000 and spending a further $1,000,000 on drilling and exploration over a further 12 month period.
• REM will have an exclusive right of first refusal to further negotiate terms to increase the interest in the additional concessions package to a maximum of 49.9%, provided the terms comply with the Company's stated investment strategy. This right of first refusal will expire on 1 December 2015.
