(Yicai Global) Dec. 9 -- Shares of Tianqi Lithium jumped after the debt-laden Chinese firm said that it will sell a stake in its unit to a subsidiary of Australian nickel-gold miner IGO for USD1.4 billion amid postponed loan repayment.

Tianqi's stock price SHE:002466] surged by 10 percent to CNY32.51 (USD5) this morning, the highest since March.

IGO Lithium will invest USD1.4 billion in Tianqi Lithium Energy Australia to have a 49 percent stake, the target firm said in a statement yesterday. But the parties have laid out preconditions so the deal is uncertain, it added.

The proceeds will be used to repay a syndicated loan of USD1.2 billion, TLEA added. The remainder is considered working capital.

Chengdu-based Tianqi said on the same day that its USD1.9 billion syndicated loan repayment has been extended by one year to November 2021. Moreover, that deadline may further be postponed.

Tianqi has been struggling with its debts after the firm bought a second-largest stake in Chilean lithium miner SQM for USD4.1 billion in 2018. It penned an agreement with a group of lenders, including China Citic Bank, to borrow most of the money.

The latest investment is pointing at Australia. Tianqi spent about USD3.9 billion via TLEA to buy a 51 percent stake in Talison Lithium Australia in 2012. Talison produces lithium minerals at Greenbushes, an area that contains the world’s highest grade and largest hard rock deposit of spodumene, according to the firm's website.

IGO Lithium intends to use equity and debt financing, as well as cash of about USD100 million to complete the transfer.

Editor: Emmi Laine