Shares in lithium explorer and developer Bacanora Minerals (LSE: BCN) surged after it announced its Chinese partner had more than doubled its stake in the company’s Sonora project in Mexico.
Cornerstone investor Gangfeng Lithium, China’s largest producer of the battery metal, will invest £21.8 million (US$29 million) to increase its holding in Bacanora’s flagship project from 22.5% to 50%.
Bacanora said the investment was a “huge milestone” in the development of Sonora, which should start producing in 2023.
The Chinese lithium producer, which has major supply agreements with batteries and electric vehicle makers, including Elon Musk’s Tesla, said it believed Sonora was a key project.
“We have been working with Bacanora on the exciting Sonora lithium project for over two years and are delighted to be increasing our investment in what we believe to be a world-class lithium project,” Gangfeng’s deputy chairman Wang Xiaoshen said in a statement.
Site work to start in 2021
Bacanora’s funding requirement for an initial 17,500 tonne-per-year operation amounts to about US$420 million. The Chinese firm committed to contributing US$100 million on the project.
Besides Gangfeng’s investment, Bacanora has also secured a US$150 million debt facility with RK Mine Finance.
Bacanora said it was on track to begin site works at Sonora in the first half of 2021, subject to the completion of financing. Although the project has been delayed by Covid-19, the company said the overall timeline would likely not be affected.
The Sonora mine is expected to produce 35,000 tonnes lithium per year at full tilt.
Ganfeng has interests in mines in Australia, Argentina and Canada, and 70,000 tonnes of lithium carbonate-equivalent of annual conversion capacity in China.