SMM News: Ganfeng Lithium, a Chinese supplier of electric vehicle raw materials, has agreed to buy a 30 per cent stake in London-listed Bacanora Mining Company, completing its plan to build a lithium mine in Mexico. The deal is the latest acquisition by Ganfeng lithium, as well as stakes in mines in Australia and Argentina and agreements with Volkswagen and Tesla to supply lithium. Ganfeng Lithium will also provide funds to help Bacanora advance the Sonora project, a deposit that has never been developed before, aimed at extracting lithium from clay in northern Mexico. Specifically, Sonora projects have low operating costs, large scale and easy to expand. Wang Xiaoshen, vice chairman of Ganfeng lithium, said: "We expect investment in Bacanora and Sonora lithium projects to be the strategic cornerstone for Ganfeng lithium to become the world's largest lithium producer."
Bacanora has been trying to raise money for the Sonora project, and last year, Bacanora abandoned a $100m share sale at the last minute because of weak investor demand. Peter Sai Ke, chief executive of Bacanora, said the financing was "nearing completion" and that he would seek to raise the remaining equity financing once the Ganfeng lithium deal was approved by Chinese regulators. Bacanora said the mine, which needs a total of $420 million to start construction, raised $240 million last year in the form of debt and equity. Ganfeng Lithium agreed to pay £14.4 million for 25p a share, below Bacanora's closing price of 26.75p on Friday.
Ganfeng Lithium can also choose to buy Sonora projects directly for £7.5 600000. A 5% stake and nominate a director to the board of directors of the project-level company. Bacanora says it also has the right to increase that stake to 50 per cent within 24 months. As a result of the investment, Ganfeng lithium will receive 50 per cent of all lithium in the first phase of Sonora production, with Bacanora shares up 5 per cent to 28p in early trading in London.
The company's shares have risen 18 per cent so far this year. Most of the world's lithium comes from hard rock mines in Australia or salt water from South America. The price of lithium carbonate has fallen by more than 40 per cent in the past year as supplies of lithium carbonate have increased at Australian mines. However, analysts expect demand for lithium to remain strong as leading carmakers launch mass-market electric cars, all of which use lithium in batteries.
We know that the quality of, Bacanora Lithium lithium clay ore is quite different from that of ordinary spodumene ore, such as lower lithium content and lower stripping ratio, which will lead to new requirements for smelting lithium extraction process. Ganfeng lithium industry intends to acquire Bacanora Lithium shares, or for its lithium extraction process is a conversion. However, the mining cost of clay mine is superior to that of spodumene. Comprehensively speaking, the proposed acquisition has a certain positive significance for the distribution of lithium resources in the upper reaches of Ganfeng lithium industry.
Scan QR code and apply to join SMM metal exchange group, please indicate company + name + main business
