Aim-listed Bacanora Lithium has signed an investment and offtake agreement with Chinese producer Ganfeng Lithium.
Ganfeng will invest £14.4-million in Bacanora for a 29.9% stake.
At project level, Ganfeng invested £7.5-million for a 22.5% stake in Bacanora’s Sonora lithium project, in Mexico. Ganfeng has the option to increase its interest in the project to 50% within 24 months and will also appoint one director to the board of Sonora Lithium – the holding company for the project.
Further, under the terms of a long-term offtake agreement, Ganfeng will buy 50% of Stage 1 lithium production from the project and up to 75% of Stage 2 lithium production from the project at a market-based price per tonne.
Further, Ganfeng will provide a plant and process commissioning team to assist Bacanora in delivering first production in 2021.
“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 project will be demonstrated during the financing of both the equity and project funding stages of the capital expenditure required to complete Stage 1. 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 1 and transforming Bacanora into a major supplier of battery grade lithium to fast growing industries, such as electric vehicles and energy storage,” explained Bacanora CEO Peter Secker.
Ganfeng deputy chairperson Wang Xiaoshen commented that the agreements advance Ganfeng’s growth strategy to become the world’s largest lithium producer. “Over the rest of the year, we will work closely with Bacanora’s management team to optimise project capital costs and evaluate potential economies of scale in the Sonora project. “