Chinese giant takes £14m stake in London lithium miner Bacanora as batteries energise sector

One of China’s largest lithium producers has today announced it will invest more than £14m in a London-listed miner in a bid to sure up supply of the in-demand metal.

Ganfeng Lithium this morning announced the £14.4m deal to buy just under a third of Bacanora Lithium’s stock in new shares.

Read more: Bacanora Minerals' huge lithium mine has been valued at $1.25bn

Bacanora is exploring a Mexican mining prospect and is looking for $420m in funding to move ahead with construction.

“We’ve been looking for an industry player who has lithium experience to come on board to give validation to the project,” chief executive Peter Secker told Morning Wire

Help from Ganfeng will also bring suppliers from China to te table offering cheaper prices than before and reducing the mine's capital costs.

“We will get help from them on the engineering side, they've built and commission mines before,” he added.

The investment, and others from corporate investors and stakeholders give the project a “clear line of sight” Secker said today.

The deal with Ganfeng will be completed at the end of June and construction will start towards the end of the third quarter this year, with production coming online in the middle of 2021.

“We’re just looking for the financing, we could start work on site straight away,” Secker said.

Shares were up by 6.5 per cent today to 28.5p.

The investment comes amid huge potential growth in the lithium sector as the metal becomes increasingly sought after. 

Lithium is one of the main components in most modern batteries, a market expected to boom with the increase in electric vehicles, storage of renewable energy, and an increase in electronics use.

Read more: Savannah Resources set to take control of Portuguese lithium mine for $12

“It is encouraging to see the company announce a proposed strategic investment from Ganfeng, which could go a long way to de-risking the finance package for the Sonora project. Ganfeng will also provide Bacanora with expertise in developing lithium projects, altogether de-risking the construction phase at Sonora,” analysts at Berenberg said.

“That being said, the proposed strategic investment is only a fraction of the $420m capital expenditure, and additional investment is still required.”