According to a filing to the Shenzhen Stock Exchange, the deal stipulates that Youngy should process at least 1.05 million tonnes a year of spodumene from its Jiajika mine in Sichuan, China's largest deposit of the mineral.

Spodumene is mined for its lithium content and can be converted into lithium carbonate, a key ingredient in lithium batteries for electric vehicles.

Youngy parent Youngy Investment Holding Group has an 8.97% stake in Chinese battery and electric vehicle maker BYD Co, according to Refinitiv Eikon data.

If Youngy fails to reach the agreed processing volume, it will have to make up the shortfall in taxes and fees to the local government, the statement said.

The volume matches the capacity of Jiajika, which only restarted in mid-2019 after being out of production for five years amid an environmental backlash.

Youngy also plans to set up mine waste processing facilities and a lithium engineering technology research institute in the zone, while the Kangding government will provide preferential policies for the fundraising, according to the filing.

It did not give a time frame for the start of construction.

(Reporting by Tom Daly and Min Zhang; Editing by Jan Harvey)