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Tawana Resources has secured $25 million from a lithium industry specialist to start production at its Bald Hill lithium mine in Western Australia.

Investors welcomed the news with the stock (ASX: TAW) trading 11 per cent higher at 40c on the back of the funding news, before settling back to 39c in lunchtime Friday trading.

Funding will include $20 million equity and $5 million debt from a German subsidiary of Shenzhen Stock Exchange-listed Jiangte Special Electric Motor.

Tawana is earning a 50 per cent interest in Bald Hill. This package completes Tawana’s share of development and construction costs.

The lithium processing facility is currently in construction with first shipment and product sales to begin from the mine in first quarter next year.

Tawana managing director Mark Calderwood said the company was well placed to benefit from long-term demand for lithium needed for electric car batteries.

“Raw materials required for Li-ion and other next generation batteries have become a critical focus for the global automotive sector who wish to secure these materials from high quality, clean, reliable and low-risk supply chains,” he said.

Tawana will also use funds to continue exploration at the project. Canaccord Genuity acted as lead manager on the funding package.

The company already has offtake agreement with Hong Kong-listed Burwill Holdings, with $12.5m prepayment received for capital and operational works at Bald Hill.

Bald Hill consists of four mining leases, 16 exploration/prospecting licences and five applications over 791 square kilometres.