(Yicai Global) Nov. 11 -- Chinese lithium battery raw material developer Yibin Tianyi Lithium Industry plans to invest AUD14.1 million (USD9.7 million) to acquire a 12 percent stake in Australia's AVZ Minerals and become its largest shareholder to ensure Tianyi's global supply of lithium battery-related mineral resources.

AVZ Minerals and Suzhou TA&A Ultra Clean Technology, the largest shareholder of Yibin, Sichuan province-based Tianyi Lithium, released the news in separate statements today. The world's largest car battery maker Contemporary Amperex Technology also holds a 15 percent stake in Tianyi.

The company will buy 314.3 million newly-issued shares of AVZ at 4.5 Australian cents per, according to a stock subscription agreement the pair penned on Nov. 8.

The target is registered in Perth, Western Australia and listed on the Australian Stock Exchange. Its main business is prospecting for and developing mineral resources in Africa, including lithium, tin and gold. The firm has suffered losses in the past two fiscal years, per the statement.

The funds raised will enable AVZ to complete acquisition of an additional 5 percent project interest from the mine's original owner, Dathomir Mining Resources, and undertake early development works at the Manono site, AVZ said in its statement.

The Manono lithium project is an open-pit mine in the extreme southeast of the Democratic Republic of Congo, close to its border with Zambia. AVZ Minerals owns 60 percent of the mine, La Congolaise d'Exploitation Miniere holds 30 percent and Dathomir retains a 10 percent interest. AVZ holds two exploration permits to expand the project.

One of the prerequisites for the transaction is that AVZ takes control of the board of DRC-based Dathomir within 84 days of the agreement's signing, the statement said, adding Tianyi may not acquire an aggregate of 19.9 percent of AVZ shares for 12 months without its approval.

Tianyi is a joint venture set up by Suzhou TA&A and CATL in July last year. It is currently constructing its Phase 1 lithium chemical plant in Yibin, which it expects to finish by the second quarter. The company's Phase 2 expansion is slated for completion by 2023 or 2024.

Tianyi also inked a long-term supply framework agreement on Nov. 8 with Ningde, Fujian province-based CATL, whose needs Tianyi will prioritize, and for whom it will process and manufacture battery-grade lithium carbonate and hydrogen products according to its product index parameters and will also grant CATL's major customers preferential prices and credits over the next five years.

The Manono mine has an estimated 269 million tons of ore resources, with one study assessing it able to produce 5 million tons of lithium per year. It lies 500 kilometers north of the DRC's second-largest city of Lubumbashi, Sydney-based financial media Proactive Investors Australia reported online. It is deemed the world's largest undrilled lithium resource and one of its highest grading hard rock lithium projects. The area was the site of a tin mine worked out in the last century.

Editor: Ben Armour