Ganfeng will also invest at 25p per share for a 29.9% stake in Bacanora
Bacanora Lithium PLC (LON:BCN) has received a cash injection of £14.4mln from Ganfeng, the world’s largest lithium metal producer.
Ganfeng will invest at 25p per share for a 29.9% stake in Bacanora, but can also take a 22.5% direct stake in the Sonora lithium project in Mexico.
Taking up that option will cost Ganfeng a further £7.56mln with, if it chooses, the opportunity eventually to increase its stake in Sonora to 50%.
Bacanora has been looking for investors to help fund construction of the mine, which has been estimated to cost US$460mln in its first phase.
If Ganfeng exercises its full 50% option over Sonora, the amount needed has effectively been halved said Peter Secker, Bacanora’s chief executive.
“With a senior debt facility with leading resource finance provider RK Mine Finance secured and the proposed strategic investment from Ganfeng, we have made significant progress towards the completion of the construction funding of the Sonora Project.”
The first phase at Sonora will see the construction of a 17,500 tonnes per annum (tpa) Li2CO3 (lithium carbonate) operation.
Through the deal, Ganfeng can also acquire 50% of all Sonora’s lithium production during phase 1, with an option to increase this offtake to 75% in phase 2 when production will rise to 35,000tpa.
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“It is not just Sonora’s finance package that would be substantially de-risked, we would also gain access to Ganfeng’s proven expertise in developing lithium projects, thereby significantly de-risking the construction phase at Sonora,” added Secker.
“In return, Ganfeng gains exposure to a large and scalable lithium project which, with estimated LOM operating costs of c.US$4,000/t of Li2CO3, has the potential to become one of the lowest cost suppliers of battery grade lithium to fast-growing industries.”