Source: Yicai Global

Chinese civil explosives supplier Yahua Industrial Group(雅华集团)announced plans to acquire a 13.2% stake in Canadian lithium and gold explorer Ultra Lithium with Can$5 million ($4 million), Yicai Global reported.  

The Sichuan province-based Yahua also intends to buy 60 percent of the Ultra Lithium subsidiary with two lithium mining projects in Forgan Lake and Georgia Lake, the company stated on April 18. The deal will be priced after asset valuation and will be paid in cash.

The deal could be major for Vancouver-based Ultra Lithium as the startup is in the initial stages with no revenue, according to the Chinese investor.

Yahua is eyeing two projects located in Ontario, where the local geology makes it possible that both projects have the potential to find super-large spodumene deposits, according to the statement.

Based on information from Yicai Global, the average grade of lithium oxide in the Forgan Lake project is 2.2 percent, with an estimated lithium oxide equivalent of about 140,000 tons. That of the Georgia Lake project is 1.2 percent, with an estimated lithium oxide equivalent of about 65,000 tons.

The joint venture intends to build a local lithium concentrate mining and processing plant with an annual processing capacity of 200,000 tons. The number could even be doubled over a minimum lifespan of 10 years.

Yahua has lately been expanding its overseas assets. Last December, the firm spent A$3.6 million ($2.7 million) to acquire 9.5 percent of EV Resources. It was also authorized to buy all the lithium concentrate from mines controlled by the Australian green technology metals firm.

In late February, Yahua announced another investment of A$2.8 million($2.06 million)to acquire a 3.4 percent stake in Australia-registered Abyssinian Metals and obtain the underwriting right of lithium concentrates from its Kenticha mine in Ethiopia.

The latest acquisition failed to boost Yahua’s shares today. The stock dropped 2.6 percent to close at RMB30.60 ($4.80), Yicai Global said.