- Bacanora Minerals has issued an update on the feasibility study for a 35,000 tpa lithium carbonate operation at the company's flagship Sonora project in Mexico.

The FS - which is scheduled for completion in late 2017 - is focused on a two-phase open-pit mine and lithium carbonate processing facility with a life of over 20 years:

- Phase 1: 17,500 tonnes per year of battery-grade Li2CO3, for the first 2 years

- Phase 2: Expansion to 35,000 tonnes Li2CO3 per year

Bacanora said: "Operating and capital cost work for the FS is nearing completion.

"Operating costs (OPEX) and capital costs (CAPEX) estimates for the phase 1 17,500 tpa operation are being updated from those previously developed in the Sonora project pre-feasibility study (PFS) of April 2016.

"As a soft rock deposit, operating costs at Sonora are anticipated to be lower than typical hard rock deposits due to the lack of a need for the lithium ore to be drilled, blasted, crushed and ground prior to processing.

"While Sonora's OPEX is expected to be higher than brine deposits in Chile, the length of time required to produce Li2CO3 should be considerably shorter.

"Flow sheet work is being finalised with the focus being on optimising Li2CO3 production at Sonora.

"With this in mind, a sodium sulphate (Na2SO4) roast, utilising sodium sulphate produced from one of the Sonora Project process re-cycle streams, has been developed in preference to the more expensive gypsum (Ca2SO4) roast previously contemplated.

"The flow sheet is currently being subjected to metallurgical variability and locked-cycle testwork in Australia.

"Ausenco Engineers is currently undertaking final plant layout, capital equipment tenders and flow sheet optimisation work.

"In addition, mechanical and metallurgical optimisations of the Hermosillo pilot plant are currently being undertaken as a result of the past 12 months operating improvements and advances to continue to improve flow sheet ergonomics and operations.

"In tandem with this, IMC Mining Consultants in Tucson is continuing mine plan optimisation and equipment selection for the open pit mining operation. Local infrastructure at Sonora, consumable chemicals and final design for heavy vehicle access to the site continue to be a focus.

"In addition, one of the previous schedule priorities for provision of energy has been resolved with five independent proposals being received from local energy and pipeline groups for supplying energy to Sonora.

"These include both gas and electrical energy supplies.

"Ahead of the completion of the FS, Hanwa Co, the company's strategic partner, continues to facilitate discussions in Japan with regards to securing long-term project debt funding to contribute to the construction capital.

"Preliminary discussions have also commenced with additional debt providers for more traditional project financing packages.

"The pricing environment for lithium carbonate has continued to strengthen with Seeking Alpha indicating April 2017 lithium carbonate contract prices in the order of US$14-15,500/t.

"Hanwa is a leading Japan-based global trading company and one of the larger traders of battery chemicals in the Asian region."

Chief executive Bacanora Peter Secker said: "The FS at Sonora is scheduled for completion by the end of the year.

"In anticipation of this and assisted by our strategic partner Hanwa, discussions are already underway with long term debt providers with regards to funding the construction of what we believe will be a world class lithium operation in Sonora.

"This is to allow us to commence the estimated 18 month build programme, subject to final Board approval, as we look to capitalise on the anticipated need for new battery grade supplies of lithium carbonate to come on stream to satisfy an expected step-up in demand from fast growing industries, such as electric vehicles and energy storage."

At 9:54am: [LON:BCN] Bacanora Minerals Ltd Ord Npv di share price was -1p at 85.5p

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