The Sonora deposit is believed to have formed by hydrothermal alteration as a result of alkaline volcanism effecting layers of volcaniclastic sedimentary rocks deposited in a basin environment. The origin and timing of the mineralised content remains unclear with regard to source and whether the alteration was essentially syn-genetic with deposition of the sedimentary rocks or whether the alteration is a post depositional event. Additional work is required to clarify the origin of these deposits.

Mineralisation on the concessions consists of a series of lithium-bearing clays that occur within two bedded sequences, the Upper and the Lower Clay units, which are separated by an ignimbrite sheet.

Bacanora understands there to be a number of lithium-bearing clay minerals, with polylithionite being the only one currently positively identified. The clay units are believed to have formed from supergene or diagenetic alteration of volcanic ash. The clay layers also contain relict quartz and feldspar crystal shards, lithic fragments and silica bands, and traces of other minerals. The layers are locally interbedded with reddish terrigenous beds composed of sand and silt-sized material.

Initial interpretation has indicated a high grade lithium core in the area covered by the La Ventana, El Sauz and Fleur concessions where the lithium grades are generally above 3,000 ppm Li. This high grade zone extends from the middle of La Ventana southward across Fleur and approximately a third of the distance south into El Sauz. The best grades of lithium are associated with elevated levels of calcium, caesium, magnesium, potassium, rubidium and strontium; however, the correlation (especially for magnesium) is not one-toone.

On La Ventana, the best grades of lithium are co- incident with elevated levels of potassium and caesium and are found in the southern part of the deposit. Magnesium appears to be irregularly distributed and does not follow lithium or the other alkalis. Mineralised intervals within the clay units vary for the Upper Clay Unit from 25% to 80% of the overall thickness and from 40% to 100% for the Lower Clay Unit, depending on the cutoff used.

Further mineralogical studies are recommended to determine what minerals host the various alkalis in the clay units. Results of such studies could have an impact on beneficiation of these minerals and recovery of the alkalis.

Mining operations will be carried out with front end loaders and haul trucks for waste mining and an ancillary fleet of dozers, graders and water trucks. Ore mining will be done with surface miners which have better selectivity for mining the lithium clays up to the contact with adjacent lithologies.

The open pit phase designs are based on 10 m mining benches (sub-divided into five 2 m benches for scheduling), 20 m wide haul roads (includes allowance for berms and ditches) and 42o inter-ramp slope angle on the hanging wall (east) side of the pits. The lithium clay beds dip to the east and there are no haul ramps on the final east wall of the reserve pit so the inter-ramp slope angle and overall slope angle are the same at 42° for the final pit based on geotechnical investigations. The internal mining phases used for the 19 year production schedule have ramps on the east wall to facilitate waste stripping when mining extends beyond the 19 year mine plan.

The mine plan covers the first 19 years of production and there are additional mineral resources and reserves to extend mining and processing beyond 19 years. For the 19 year mine schedule, a total of 37.1 Mt of ore at a diluted grade of 4,151 Li ppm and 1.76% K and a stripping ratio of 3.4:1 will be mined. The Li cutoff grade for material sent to the plant is 1,500 ppm during years 1 to 18 and 2,000 ppm during year 19.

The flowsheet consists of the following unit processes:

- Beneficiation to recover lithium into a fine ground stream while rejecting coarse gangue using grinding, screening and hydrocyclone classification

- Sodium sulfate roasting, which converts the lithium to water soluble Li2SO4 at 900°C, in the presence of gypsum, sodium sulfate and limestone

- A hydrometallurgical section where the roast product is repulped in water to form an impure Li2SO4 PLS. Impurities are then removed from the PLS using precipitation and ion exchange prior to the evaporation and precipitation of battery grade lithium carbonate

- Potassium sulfate is recovered from the barren liquor using crystallisation and selective dissolution. The filtrate is returned to the sodium sulfate circuit

- Sodium sulfate is produced from the PLS via crystallization and stockpiled for either reclaim for reuse in the roasting circuit or for disposal or gifting.