(Alliance News) - Bacanora Lithium PLC on Monday said it has raised nearly GBP8 million from one of its cornerstone shareholders, M&G PLC.
M&G has increased its stake in Bacanora to just shy of 20%, after taking 30.9 million new shares at a price of 25 pence each, raising GBP7.7 million in total.
Shares were 8.7% higher in London on Monday morning at a price of 28.00p each. M&G was recently spun-off from FTSE 100 life insurer Prudential PLC.
London-based Bacanora will use the cash to fund pre-construction work at the flagship Sonora lithium project in Mexico. Bulk earthworks are due to start in the first half of 2020, as well as an upgrade to the main access road.
Bacanora will also use the funding to place initial orders for some of the longest lead-time items required for the plant at Sonora.
Mark Hohnen, Bacanora's Chair, said: "Today's placing, following an inbound request from one of our long-standing institutional investors, M&G, represents in our view an endorsement of Sonora's potential to become a leading supplier of high-value lithium products to fast-growing industries such as electric vehicles and energy storage.
"It also further de-risks the required funding for the project, that continues to be progressed by our brokers, Canaccord and Citi, and which we are aiming to complete in first half 2020. With our highly supportive strategic partner and leading global lithium company, Ganfeng, undertaking a technical review of the project, we are working hard to ensure we hit the ground running as soon as this work has been completed."
"By allowing long lead-time items to be ordered and earthworks to commence, the funds raised will enable us to maintain the momentum behind our flagship project," Hohnen added.
Bacanora completed a GBP21.9 million investment from Ganfeng in October, giving it a 30% stake in the company and 23% of Sonora. Bacanora believes the engineering costs of the project remain in line with a feasibility study released in 2018 at USD420 million.
Bacanora has already secured a USD150 million debt facility with RK Mine Finance.
By George Collard; georgecollard@alliancenews.com
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M&G (MNG)