Chinese lithium producer Ganfeng Lithium previously owned a 22.5% stake in Bacanora’s Sonora lithium project in the Sonora state of Mexico.

The completion of Ganfeng Lithium's investment in the Sonora lithium project remains subject to regulatory approval in China.

The final outstanding approval is needed from the Chinese State Administration of Foreign Exchange, which is expected in the coming weeks.

Once the approval process is complete, Bacanora Lithium will received £21,883,485 ($29,841,600) from Ganfeng in exchange for 73,955,680 new ordinary shares that will be issued to Ganfeng.

“[Ganfeng] investment further de-risks the project and reduces equity demands on Bacanora’s own shareholders to fund Phase 1 of the project. 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," Bacanora chief executive officer Peter Secker said.

First production at the Sonora lithium project is slated to start in 2023. Stage 1 production is expected to deliver 17,500 tonnes per year of lithium carbonate, according to the company’s website.

Lithium is a key raw material used for manufacturing batteries that power electric vehicles and energy storage systems.

Domestic lithium battery-grade prices in China started to post sharp increases at the beginning of the fourth quarter of 2020 and accelerated at the beginning of 2021, with suppliers saying most of their stock at hand had been booked previously and they have limited spot supply for the remainder of the first quarter.

Fastmarkets’ weekly price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 65,000-70,000 yuan ($10,046-10,819) per tonne on Thursday February 4, up 40.6% from 45,000-51,000 yuan per tonne on February 6, 2020.