Directors up stake in Bacanora as Cadence sells 8.9m shares

JOHANNESBURG (miningweekly.com) – UK-based mining investment firm Cadence Minerals has realised profit of £2.7-million on the partial sale of its equity stake in Bacanora Minerals, which is developing the Sonara lithium project in Mexico.

Cadence sold 8.90-million shares, representing 42% of its equity stake in Bacanora, for £6.23-million. The investment group purchased these shares between June 2013 and September 2014 for £3.56-million.

Cadence was in negotiations with a single strategic investor who was interested in taking a material portion of its interest in Bacanora, but the company said this week that it ceased negotiations with the single investor and that it had instead sold the 8.9-million shares to several investors.

An existing institutional investor in the company has taken the opportunity to increase its stake, as well as two members of Bacanora’s board, among other parties. Chairperson Mark Hohnen bought 714 285 shares and nonexecutive director James Strauss bought 42 857 shares, taking their respective shareholding in the company to 1.15% and 0.08%.

“We welcome the purchase of existing shares in Bacanora by institutional investors and members of the board. Having a shareholder register which already includes a number of blue chip institutions, as well as a strategic partner in the form of leading Japanese trading house Hanwa will be invaluable, as the feasibility study at the Sonora project nears completion and we move closer to the construction phase of what we believe will be a world-class lithium operation,” CEO Peter Secker said on Thursday.

Subsequent to the disposal, Cadence holds 9.3% of the equity in Bacanora and 30% of Mexalit and Megalit joint venture companies. Mexalit is the owner of the El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 mineral concessions, which form part of the Sonora project.

Cadence said that it continued to have confidence in Bacanora and its management team, but as an investment company, it had decided to realise the profits from its investment in the lithium developer.

“We look forward to being a supportive shareholder and joint venture partner in the development of the Sonora lithium project. We continue to believe that the Sonora lithium project has the potential to be a significant producer of battery-grade lithium carbonate and will form an important part of the global lithium compound supply chain in the coming years.”

Cadence said it would redeploy some of the sale proceeds from the Bacanora sale for reinvestment in other early stage mineral exploration companies where it could hold larger stakes and add its management expertise.

“…it will be an increasingly stronger theme with our new investments that we take a more active role in the management of the companies we invest in,” the company said.

An April 2016 prefeasibility study states that the Sonora project contains some 7.2-million tonnes of lithium carbonate equivalent (LCE) within the indicated and inferred mineral resource estimate categories, of which 2.1-million tonnes of LCE are classified as probable mineral reserves. Of these mineral resources and reserves, 4.1-million tonnes of LCE total mineral resources and 1.7-million tonnes of LCE probable mineral reserves are within mineral concessions owned by Mexalit.

Megalit does not form part of the Sonora lithium project as defined by the PFS and as yet has had no mineral resource estimate carried out on it.