Bacanora Minerals enters into a strategic partnership to supply lithium carbonate

Bacanora Minerals has entered into a strategic partnership with Japan’s Hanwa Co, one of the larger traders of battery chemicals in Asia, which comprises of a 10% equity investment and an off-take agreement for up to 100% of the battery grade lithium carbonate produced at its Sonora project in Mexico.

AIM-listed Bacanora is aiming to produce 17,500 tonnes of lithium carbonate per year starting in 2019 and after two years of producing at this level, it plans to lift production to 35,000 tonnes per year.

Hanwa will buy 70-100% of lithium carbonate produced the first stage at market pricing, with the final pricing to be settled before strart of production in 2019, and will have the option to increase the off-take tonnage by up to 100% at the second stage.

Hanwa to will also buy an initial 10% stake in Bacanora for about £10.17m from the issue of 12.33m shares at a price of 82.5p, and elect a director to the board. It will also have the option to increase its interest in Bacanora to 19.9%.

Bacanora said this deal provides a funding platform for the project as Hanwa represents a cornerstone investor and will aid in the procurement of long term project debt funding, and also validates the quality of the battery grade lithium carbonate product and its production process.

Hanwa has already received numerous samples of the battery grade product and has distributed samples to a number of their customers.

Bacanora chairman Mark Hohnen said that the new relationship with Hanwa “provides Bacanora with a further aligned cornerstone investor ahead of project financing and establishes a mantel from which we hope to leverage towards project debt financing out of Japan to contribute towards the construction of a significant lithium carbonate operation in Mexico”.

Shares in Bacanora Minerals were up 9.04% to 90.50p at 0859 BST.