Shares in lithium explorer and developer Bacanora Minerals (LON:BCN) jumped as much as 13% to 37p on Friday morning 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 ($29m) 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 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 media statement.
Bacanora’s funding requirement for an initial 17,500 tonnes-per-year operation amounts to about $420 million. The Chinese firm committed to contribute a total of $100 million in project-level spend.
Besides Gangfeng’s investment, Bacanora has also secured a $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 completion of financing. Activities planned for this year have been delayed by covid-19, but the company said the overall project timeline may not be affected by the hold ups.
The Sonora mine is expected to produce 35,000 tonnes of lithium per year at full tilt.
Ganfeng has interests in mines in Australia, Argentina and Canada and around 70,000 tonnes of lithium carbonate equivalent of annual conversion capacity in China.