Bacanora Lithium PLC (LON: BCN) have announced that they have raised close to £8 million from one of its headline investors M&G PLC (LON: MNG) which has caused shares to rally.
Bacanora Lithium is a AIM listed lithium development company which holds its main operations in Mexico.
Shares of Bacanora rallied 6.8% to 27p on Monday morning. 25/11/19 12:27BST.
M&G has increased its stake in Bacanora to around 20%, after taking 30.9 million new shares at a price of 25 pence each, raising £7.7 million in total.
Bacanora will use these funds to develop pre-construction work at the flagship Sonora Lithium project in Mexico.
Bulk earthworks are due to start in the first half of 2020, as well as an upgrade to the main access road. Bacanora will also use the funding to place initial orders for some of the longest lead-time items required for the plant at Sonora.
Mark Hohnen, Bacanora’s Chair, said: “Today’s placing, following an inbound request from one of our long-standing institutional investors, M&G, represents in our view an endorsement of Sonora’s potential to become a leading supplier of high-value lithium products to fast-growing industries such as electric vehicles and energy storage.
“It also further de-risks the required funding for the project, that continues to be progressed by our brokers, Canaccord and Citi, and which we are aiming to complete in first half 2020. With our highly supportive strategic partner and leading global lithium company, Ganfeng, undertaking a technical review of the project, we are working hard to ensure we hit the ground running as soon as this work has been completed.”
“By allowing long lead-time items to be ordered and earthworks to commence, the funds raised will enable us to maintain the momentum behind our flagship project,” Hohnen added.
M&G was recently spun off from FTSE100 (INDEXFTSE: UKX) listed insurance company Prudential plc (LON: PRU).
In the minerals and mining sector, Hochschild Mining (LON: HOC) have seen their shares crash following cuts in their annual production guidance.