London-listed lithium developer Bacanora expects to complete the finance package for its Sonara project, in Mexico, in the first half of next year, as it keep its focus set on starting production at the mine “at the earliest opportunity”.

The company has major institutions and industry players on its shareholder register and has a strong retail investor following, chairperson Mark Hohnen said in a shareholder update ahead of the firm’s annual general meeting on Thursday.

“Thanks to the progress made over the last 12 months, Bacanora has a cash-rich balance sheet which enables us to invest in long-lead items and commence bulk earthworks. Our focus remains to start production at Sonora at the earliest opportunity, as we look to realise the project's potential and, in the process, generate value for all our shareholders,” he said.

In the last year, Bacanora has secured one of the world’s largest lithium producers, Ganfeng Lithium, as a 29.9% cornerstone investor, as well as a joint-venture development partner with a 22.5% direct investment in the project. For the interest in the company and the project, Ganfeng paid Bacanora £21.96-million.

It also has in place two guaranteed offtake agreements with Ganfeng and Hanwa for 100% of the Stage 1 production and with Ganfeng for 75% of the Stage 2 production.

Bacanora also still has the continued support of its earliest institutional investor, M&G, which increased its investment in the company to 19.9%.

“In order to appreciate the value of our company, it is important to understand what first attracted Ganfeng and M&G to Bacanora and our world-class Sonora lithium project in Mexico.I believe this includes Sonora's large-scale and high-grade resources, proven processing route, robust economics, strong shareholder base, a management team with a proven track record of delivery, a supportive jurisdiction, and access to end markets.  Sonora is set to be one of the lowest cost operators in the industry at around $4 000/t production cost.  This low-cost profile is a significant advantage at a time when Australian hard rock producers' higher cost production models are coming under increasing pressure as a result of falling spodumene prices,” said Hohnen.

A feasibility study on the project has confirmed the positive economics and favourable operating costs of 35 000 t/y of battery-grade lithium carbonate.

The project has measured and indicated mineral resources estimated at five-million tonnes comprising 1.9-million tonnes of measured resources and 3.1-million tonnes of indicated resources of lithium carbonate equivalent (LCE) and an additional inferred mineral resource of 3.7-million tonnes of LCE.

The feasibility study envisages an openpit operation using continuous miners to mine the ore zones and a truck-and-shovel fleet to remove the waste material. An estimated 37.1-million tonnes of ore will be mined over the planned 19-year mine life, with a lithium grade of 4 151 parts per million and an average stripping ratio of about 3.4:1 over the life-of-mine.

The process plant has been designed to initially process 1.1-million tonnes a year of ore during Stage 1 of the project, subsequently increasing to an estimated 2.2-million tonnes a year at Stage 2, producing 17 500 t/y and 35 000 t/y of lithium carbonate respectively.

The plant design also includes a circuit to produce up to 30 000 t/y of potassium sulphate and/or sulphate of potash product through a series of evaporation and precipitation stages.