Shares of Bacanora Lithium PLC (LON: BCN) are up 49.8% in October as the company’s stock surges driven by several fundamental factors that have fueled the rally from 24p on September 30, to 35.99p today.
Firstly, the lithium mining company sold a 50% stake in its Zinnwald German mining project to Erris Resources, a Europe-focused mining company in order to generate capital for its Sonora lithium project located in Mexico into production.
Secondly, the rising demand for lithium-ion batteries globally as legacy car manufacturers such as Toyota switch their focus to the development and production of electric vehicles has seen lithium stocks rally higher.
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The fact that demand for lithium is set to outstrip supply over the next two years is also a major driver behind Bacanora’s recent rally given that the metal is also used in solar power systems, whos demand has surged exponentially.
Furthermore, the European Union Commission designated lithium as a critical raw material in early September, which means that there will always be a market for Lithium within the EU.
The company expects to start building production facilities at Sonora in 2021 with the first deliveries of the downstream battery-grade lithium products expected in 2023. Ganfeng Lithium and Hanwa Corp who have partnered with the company on the project are set to be the first clients.
Given the multi-year timeline attached to the Sonora project, it is highly likely that investors who missed the current move will get a better setup with better risk: reward ratio in future.*
*This is not investment advice.
Bacanora share price
Bacanora shares today surged 10.46% to trade at 35.99p having rallied from Tuesday’s closing price of 32.48p.
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