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Bacanora Minerals has received $ 150 million from the London Red Kite Fund to develop its lithium project in Mexico.
The London-listed company said it is "competitive" with RK Mine Finance, a subsidiary of Michael Farmers hedge fund Red Kite.
"We believe that in recent years there have been few senior debt facilities of this size in Junior Resources," said Bacanora CEO Peter Secker. "In addition, we believe the Facility's costs and conditions are highly competitive compared to other debt packages recently reported for greenfield lithium projects in Canada and Australia."
The $ 150 million Facility is divided into two separate Eurobonds. A $ 136 million bond will have an interest rate of 8 percent over the three-month Libor for six years, said Bacanora. A $ 56 million separate bond has a 20-year term and is repaid with reference to the monthly lithium production of $ 160 per tonne of lithium produced.
In addition, Bacanora grants 6-month warrants exercisable over a five-year period with a premium of 20 percent on the weighted average price of the Company's 20-day shares.
However, analysts at Numis said the cost of debt is more expensive than expected.
"While it's positive that Bacanora has secured debt, the first bond is more expensive than we had previously planned, as the second bond is more of a very expensive electricity," they said. "We remain cautious on the stock, both in view of the substantial funds that the company still needs and because of the aforementioned uncertainties."
According to analysts in Canaccord, Bacanora still needs around $ 300 million to develop its first activities in the Sonora lithium project, which produces 17,500 tonnes of lithium a year.
Bacanora continues financing discussions with Japanese trading house Hanwa, a shareholder of the company, as well as "other strategic, long-term investors for additional funding".