China-based Ganfeng Lithium has signed a new joint venture agreement with Bacanora Lithium, a lithium development and exploration company, for the Sonora Lithium Project in Mexico.

Ganfeng, which is the cornerstone investor and offtake partner of Bacanora Lithium, has recently exercised its option to increase its stake in Sonora Lithium (SLL), the holding company of the lithium project, from current 22.5% to 50%.

By providing £21.8m in funds to Bacanora Lithium, Ganfeng intends to acquire an additional 27.5% stake in SLL.

The funds will be used by Bacanora Lithium for the development of the Sonora project located in northeast of Sonora State.

Bacanora Lithium CEO Peter Secker said: “We are pleased that Ganfeng and Bacanora have agreed terms on the updated joint venture agreements and look forward to the completion of Ganfeng’s investment to own 50% of the Sonora Lithium Project.

“As already noted, their investment further de-risks the Project and reduces the equity demands on Bacanora’s own shareholders to fund Phase 1 of the Project.

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“The Sonora Lithium Project is now well placed to be in production in 2023 and delivering battery-grade lithium products into the fast-growing energy storage market.”

The new joint venture agreement will be subject to certain approvals and consents from authorities in China.

While Ganfeng will lead the engineering, procurement and construction activities related to the project, Bacanora will serve as the operator.

Last year, Bacanora Lithium announced plans to divest its 50% stake in Zinnwald lithium project located in southeast Germany, about 35km from Dresden, in exchange for a majority stake in Erris Resources.