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Bacanora Lithium secures US$150M debt funding for 1st-stage Sonora development

Bacanora Lithium PLC secured a US$150 million senior debt facility with RK Mine Finance for the first-stage development of its Sonora lithium project in Mexico.

First-stage operations at Sonora are expected to produce 17,500 tonnes of lithium carbonate per year, increasing to 35,000 tonnes with the second stage. Stage-one CapEx is estimated at US$419.6 million with production expected to start in 2020.

The company said July 5 that the new facility can be conditionally drawn in three tranches of US$25 million, US$50 million and US$75 million, with the first tranche available immediately. Discussions are ongoing regarding additional funding.

The facility is structured as two separate Eurobonds. Under the main bond, Bacanora issued secured notes of US$150 million nominal amount at a purchase price of US$138 million.

The six-year notes bear an interest rate of three months London Interbank Offered Rate plus 8% per annum, payable only on drawn down principal, with interest to be capitalized every three months during the first two years and subsequently paid in cash every three months.

Under the second bond, the company issued secured notes of US$56 million nominal amount with no interest at a purchase price of US$12 million, with a 20-year term. The nominal amount is repayable by reference to monthly lithium production at a rate of US$160/tonne of lithium produced, with any remainder repayable at the end of the term.

Bacanora also granted 6 million warrants, exercisable over five years at a 20% premium to its 20-day volume weighted average price.

Earlier in the year, Chinese institutional fund management group NextView Capital failed to complete a £31.2 million investment in Bacanora. The funds had been earmarked for construction at Sonora.