A Chinese-based leading lithium-ion battery manufacturer has signed a deal to secure a 10% stake in lithium explorer MetalsTech (ASX: MTC) for A$3 million.
The binding agreement, announced on Wednesday, entails a wholly-owned subsidiary of Shenzhen Stock Exchange-listed Guangdong Dynavolt Renewable Energy Technology Co Ltd (Dynavolt) subscribing for 10 million MetalsTech shares at $0.30 each.
Dynavolt is one of the largest battery manufacturers in the world, with a market capitalisation of more than 10 billion Chinese Yen (equivalent to about A$117.5 million at today’s currency rates). It supplies electric car and motorcycle batteries for companies including BMW, Ducati, Suzuki and Kawasaki.
“[Dynavolt] recently invested more than 3 billion Chinese Yen in building a high-end lithium battery division and we are excited at the opportunity of working closely with them as we seek to position ourselves as a valuable source of raw and refined lithium materials,” MetalsTech executive chairman Russell Moran said.
Under the agreement, Dynavolt can choose to increase its shareholding to 12.5% and earn the right to participate in share placements for 12 months to maintain its ownership position, as well as match any project-level investment by a third party up to a 10% project-level stake.
If Dynavolt elects to raise its share ownership to 15%, it will earn a seat on the MetalsTech board.
Focused on exploring lithium and cobalt in Canada, MetalsTech expects funding from the deal to accelerate both its Cancet project in Quebec, and Bay Lake in Ontario.
Last month, the company confirmed strong spodumene values from a diamond drilling program at its wholly-owned Cancet lithium project. It is now planning to launch a phase three drilling campaign in January.
MetalsTech’s larger strategy is to develop a lithium carbonate/hydroxide beneficiation facility in Quebec to process spodumene concentrate from its projects.
This latest deal is in addition to the announcement that Chinese-based hi-tech fine chemicals manufacturer Wuxi Baichuan Chemical Industry Co Ltd had bought a 10% stake in MetalsTech for A$1.8 million in October.
MetalsTech shares rose more than 20% on the news by midday trade.