(Yicai Global) Feb 28 — Shares in China’s Yahua Industrial Group surged after the battery materials processor announced its unit will spend A$2.8 million (US$2 million) to acquire a stake in Australia’s Abyssinian to acquire metals to secure its supply of raw materials.
Yahua stock price [SHE: 002497] rose up to 7 percent on the day to CNY37.69 (US$6). Shares are up nearly 40 percent this year.
Yahua International Investment Development, a subsidiary of Yahua, will subscribe for 3.7 million shares of the Perth-based mining company, or 3.4 percent of the total, ahead of its IPO, the buyer’s Chengdu-based parent company said in a statement yesterday.
On the same day, the two signed another agreement. Yahua’s entity will become the exclusive purchaser of lithium concentrate produced from Abyssinian’s Kenticha project in southern Ethiopia through 2025. The first phase of the mine is expected to be completed in the second quarter of 2023 with an annual capacity of approximately 30,000 tonnes of lithium carbonate equivalent. The mine life is estimated at 18 years.
The two agreements should help Yahua secure new upstream resources and share excess earnings after Abyssinian’s IPO, the Chinese company said, without giving further details about the expected listing.
This is not Yahua’s first overseas lithium concentrate investment plan. Last December, the company announced it had bought a 9.5 percent stake in Perth-based EV Resources for A$3.6 million to become the sole buyer of lithium concentrate from its mines.
Yahua International will purchase at least 120,000 tons per year of lithium concentrate from Abyssinian. But if the mine’s annual production exceeds that number, Yahua International can buy even more. Prices are negotiated three months before delivery.
Abyssinian owns a 51% interest in the Kenticha Mine, which Yahua says has tremendous potential with proven lithium resources exceeding one million tonnes of lithium oxide equivalent.
Editors: Emmi Laine, Xiao Yi
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