Bacanora Lithium has signed investment and offtake agreements with China’s Ganfeng Lithium (GFL), producer of lithium metals and compounds.

Both agreements are largely on the same terms as outlined in the company’s announcement in May and have now been submitted to the relevant authorities in China for their consent.

The investment, which is expected to be completed by the end of July, would be part of Bacanora’s finance package for the construction of an initial 17,500tpa lithium carbonate operation at its Sonora project in Mexico.

Cadence holds nearly 1.5% of Bacanora’s equity and 30% of Mexalit and joint venture companies.

Bacanora Lithium CEO Peter Secker said: “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 Sonora Project will be demonstrated during the financing of both the equity and project funding stages of the capital expenditure required to complete Stage 1 of the Sonora Project.”

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By GlobalData

As part of the investment agreement, Ganfeng will acquire a 29.99% equity interest in Bacanora for a cash consideration of £14.4m.

Ganfeng will have the right to nominate one director to the main board of Bacanora and also pre-emption rights in relation to new share issues proportionate to its interest in Bacanora.

In addition, the company will possess the right to acquire an initial 22.5% interest in a subsidiary of Bacanora which holds the Sonora project, for a cash payment of £7.56m.

Ganfeng will have exclusive off-take rights to purchase 50% of all lithium products produced at Sonora for the life of the mine during Stage 1 production.

The company will also have the option to increase its off-take to 75% of all lithium products during Stage 2 of production.