(Alliance News) - Bacanora Lithium PLC on Friday announced the signing of an investment and offtake agreement with Chinese lithium producer Ganfeng Lithium Co Ltd.
Shares were 27% higher on Friday afternoon at a price of 48 pence each.
Bacanora in May agreed a provisional investment from Ganfeng in May, which would help it develop the Sonora lithium mine in Mexico.
Ganfeng, the world's largest lithium producer by production capacity, will invest GBP14.4 million into Bacanora for 30% of the company, with the right to appoint a director to Bacanora's board. Ganfeng is also investing GBP7.6 million into the holding company of Sonora for 23% of that firm.
Ganfeng has an option to increase its stake in the holding company to 50% at a value based on Bacanora's share price at the time, expiring in two years.
The offtake deal will see Ganfeng take 50% of Bacanora's stage one production, and up to 75% of stage two production.
The Chinese firm is to also review designs for the Sonora mine to help reduce costs, and provide a team to help Bacanora reach first production in 2021.
Bacanora Chief Executive Peter Secker said: "The signature of these agreements with Ganfeng is another significant milestone in the development of the Sonora project.
"Ganfeng's operational expertise and industrial credibility is a strong endorsement of the Sonora project's potential to break the lithium industry's current supply duopoly of hard-rock and brine, and combine the speed of production of the first with the low operational cost per tonne of the second."
"Ganfeng's commitment to the Sonora project will be demonstrated during the financing of both the equity and project funding stages of the capital expenditure required to complete stage one of the Sonora project," Secker continued.
"So, in conjunction with our existing senior debt facility from RK Mine Finance, we are now much closer to completing the construction funding for stage one and transforming Bacanora into a major supplier of battery grade lithium to fast growing industries, such as electric vehicles and energy storage."
