Bacanora Minerals (BCN.V) - borate project has potential to deliver quick and robust cash flows

Full Report by Objective Capital , Mar 11, 2011 download full report
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Key Points:

• The Magdalena project has potential to deliver quick and robust cash flow
  The Magdalena borate deposit is an advanced project that has the potential to be fast-tracked to production. Projected capital costs are modest, with current estimates of less than US$7.5m. This, combined with a reasonable expectation of US$6m in annual cash flow will result in quick payback, followed by significant profit over a potential 30-year mine life. Bacanora plans an aggressive programme to continue development at Magdalena this year.

• Magdalena hosts a significant resource of colemanite
  The Magdalena borate project currently hosts an established NI 43-101-compliant mineral resource at Cajon, one of three known targets on the property. Bacanora estimates Cajon contains an indicated resource of 11.1 million tonnes, averaging 9.9 percent borate (B2O3), based on a cut-off of 8 percent. Further, the target hosts an inferred resource of 7.3 million tonnes, grading 9.3 percent B2O3. This resource is substantially larger at a cut-off of 5 percent.

• Magdalena offers considerable blue-sky potential
  Cajon is the most advanced of several mineral targets at Magdalena. The Bellota and Pozo Nuevo targets are at an earlier stage but offer significant potential for future development. Further, the property hosts two other occurrences, including the recently discovered Represo occurrence, where two drill holes encountered substantial intersections of colemanite.

• The greenfield Sonora lithium project is an interesting new development
  Bacanora recently wrapped up its first drilling programme on the La Ventana concession of its Sonora lithium project with promising results. Assays returned lithium in all four holes, with estimated grades of up to 2.71 percent lithium carbonate (Li2CO3) over 19.2 metres. Although at an early stage, the assays compare favourably with other lithium deposits, notably the Kings Valley deposit in Nevada, being developed by Western Lithium USA Corp., which hosts Stage 1 indicated resources of 10Mt grading 0.43% lithium and inferred resources of 10Mt grading 0.42% lithium.

• Bacanora’s Sonora lithium has the potential to be a low cost operation
  Cost of lithium from brine production is highly dependent on the brine magnesium content. Hard rock spodumene has higher mining costs and total costs of lithium carbonate derived from spodumene can be between two and three times higher than carbonate from brines. Bacanora’s hectorite target, potentially offers a low cost production opportunity.