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Bacanora announces takeover approach from Chinese lithium major

Ganfeng already owns significant stakes in lithium hopeful and its Sonora project in Mexico
May 6, 2021
  • 67.5p offer price a 50 per cent premium on Wednesday's close
  • Ganfeng will soon be a 29 per cent shareholder of Bacanora 

London’s most promising lithium company Bacanora Lithium (BCN) could be taken private by its largest shareholder Ganfeng Lithium. The two companies have agreed a price of 67.5p, although Ganfeng has not yet made a formal offer. 

The Chinese company already owns half of the Sonora lithium project in Mexico and 17 per cent of Bacanora, although this will rise to 29 per cent once a previously-announced share issue takes place, after being approved by the Chinese government. 

Bacanora’s other major shareholder is M&G Investment Funds, with 16 per cent, while Japanese trading company Hanwa holds 3.7 per cent and has the rights to half of the mine’s production for its first 10 years. The mine is expected to start producing in 2023. 

The company’s share price climbed from 44p at open on Thursday to 60p after the announcement, but then dipped again. 

An International Energy Agency (IEA) report from Wednesday recommended governments should start battery material stockpiles, and said lithium demand could increase 40-fold in the next 20 years. IEA executive director Fatih Birol said this would become an “energy security” issue. China dominates lithium processing, while mine supply largely comes from Chile and Australia. 

Ganfeng and Bacanora have been partners for several years. The Chinese company stepped in and bought up a stake in the project itself after the lithium price collapse in 2018 ruined Bacanora’s solo financing plans for the $420m project. 

Bacanora chief executive Peter Secker told Investors’ Chronicle in February that the relationship with Ganfeng was extremely close. “The nice thing about Ganfeng is that they're a shareholder and they're the technology provider and they're a customer,” he said.