Bacanora Lithium PLC (LON:BCN) shares jumped higher on Monday morning as the firm announced a five-year off-take contract extension with Hanwa Corporation of Japan, one of the largest battery chemical traders in Asia as it issued a positive update on the Sonora Lithium Project in Mexico.
The AIM-listed firm said Hanwa has agreed to extend their initial lithium off-take partnership for a further 5 years at a rate of 17,500 tonnes per annum (tpa) of lithium carbonate, on the same commercial terms as the initial 5-year off-take.
READ:Bacanora Lithium flags up surge in lithium prices in fiscal third quarter update
The company said: “This additional 5-year agreement will underpin the Company's expansion strategy to bring on a Stage 2 expansion of the project to increase lithium production to 35,000 tpa.”
The agreement comes with Bacanora preparing to commence construction of a fully integrated lithium carbonate operation at Sonora, beginning with Stage 1 construction of a 17,500 tpa plant before upgrading to 35,000 tpa via a planned Stage 2 expansion project.
It said the front-end engineering design of both the roaster/kiln and the crystalliser/evaporation/IX - which account for approximately 75% of the total capital cost of the processing plant - are advancing following the delivery of bulk lithium samples from Sonora to selected vendors, and should be substantially completed by the end of the second quarter of 2018.
The firm said the current timetable is to commission the plant within 20 months subject to project financing.
Exciting times for Bacanora
Peter Secker, CEO of the company, said: "Bacanora is continuing its strategy to become a leading, low-cost producer of battery grade lithium carbonate. To maximise these strong value prospects we are focused on fast-tracking the Project into production with preliminary site access developments underway and the chemical processing plant construction due to commence later this year.”
He added: "These are exciting times for Bacanora and we look forward to sharing further updates on the road to production in due course."
In early morning trading, Bacanora’s shares were up around 3.5% to 89.0p.
Shares in Cadence Minerals Plc (LON:KDNC), which owns approximately 8% of Bacanora's equity, were also strong, up 7.8% at 0.24p.
Cadence also owns 30% of the Mexalit and Megalit joint venture companies. Mexalit is the owner of the El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 mineral concessions, which forms part of the Sonora Lithium Project in Northern Mexico.
-- Adds Cadence Minerals share price, details --
