Ganfeng Lithium to Acquire 100 Percent of Bacanora’s Shares

Ganfeng Lithium (Ganfeng) has issued an offer to acquire the shares of Bacanora Lithium (Bacanora) for US$264 million, company which is developing the first lithium mine in Mexico. The two companies have discussed the attractive offer that would increase Ganfeng's 50 percent stake in the Sonora Lithium project to 100 percent by acquiring the remaining shares.

The Sonora Lithium project is the first massive lithium extraction project in the country, and it is set to begin operations in 2023. The US$420 million project covers a massive 100,000 ha in the northeast corner of the state of Sonora, and it has “a Measured plus Indicated Mineral Resource estimate of over 5Mt of lithium carbonate equivalent and an additional Inferred Mineral Resource of 3.7Mt of LCE,” reported MBN. According to the company’s feasibility study, the Sonora project has “8.8 million tons of lithium carbonate equivalent resources, with a resource life of nearly 250 years.”

At the beginning of the year, Bacanora announced it had begun initial site activities at its Sonora Lithium project. Peter Secker, CEO of Bacanora, said that "this milestone cements Bacanora's transition into a mine-development company as it looks to fulfil its ambition of becoming a lithium producer in 2023. I look forward to updating the market with further positive progress reports as we build the Project in conjunction with our strategic investor and project partner, Ganfeng."

This new offer is presented in a market environment where lithium prices have risen due to demand for electric vehicles, which have triggered a new wave of deals to develop lithium projects. Secker told MBN that demand for lithium will continue to grow 15-20 percent until 2025. After that year, renewables will start to play a larger role in demand as their market presence continues to grow. As a result, the world will need large lithium batteries for grid storage.

¿Meanwhile MORENA, the party of President López Obrador, wants to nationalize Mexico's lithium production, arguing that the metal is essential for the country's development. This legislative measure, if passed, would require legal reforms. The initiative has raised questions about the technical and economic viability of lithium, reported MBN.

Bacanora announced the offer is EUR$67.5 (US $ 95.39) per share and still requires the approval of the regulatory authorities and the boards of directors of both companies. Bacanora added  that the offer is very attractive because it would strengthen the project, since they will have more financing, making it more viable and less risky.