Bacanora’s independent directors, who consider Ganfeng’s offer as ‘attractive’, intend to recommend the deal to shareholders once it becomes a formal proposal. The possible deal would be subject to Chinese authorities’ approval.

According to the latest offer, Ganfeng will acquire the remaining shares in Bacanora at 67.5p per share. The deal values Bacanora Lithium at up to £267m.

In February 2021, Ganfeng said that it will raise its stake in Bacanora from 17.41% to 28.88%. This deal is planned to be completed soon.

During the same month, Ganfeng signed a joint venture agreement with Bacanora for the development of the Sonora Lithium Project in Mexico.

The JV agreement has been signed after Ganfeng exercised its option to increase its stake to 50% from 22.5% in Sonora Lithium (SLL), the holding company of the lithium project.

The China-based firm is the cornerstone investor and offtake partner of Bacanora.

Ganfeng will acquire the additional 27.5% stake in SLL by providing £21.8m in funding, which will be used towards the development of the Sonora project.

The latest Ganfeng offer to Bacanora comes amid the surging price of lithium, a key electric vehicle battery ingredient, following a three-year downturn, triggering a wave of agreements in the sector.

Last month, a merger deal was signed between lithium producers Galaxy Resources and Orocobre.