A $26.4 million investment and sales deal with one of China’s fastest-growing battery companies has prompted a buying frenzy in Argosy Minerals on the Aussie bourse.

The stock (ASX:AGY) skyrocketed to a near ten-year high of 12c yesterday, up 4.2c, with some 35 million shares changing hands on news of a strategic alliance with Qingdao Qianyun High-Tech New Material.

Qingdao will come onboard as a strategic shareholder with 19.9 per cent of Argosy. The share placement will raise $16.9 million at 8.5c per share.

A further $9.55 million upfront payment will take place over a quantity of battery-grade lithium during first-year of production at the company’s flagship Rincon lithium project in Argentina.

The Rincon project lies within the world-renowned Lithium Triangle in Argentina — host to the world’s largest lithium resources.

If the $26.4 million deal is finalised, Argosy will have more than enough funds to complete Stage 2 development at Rincon.

Argosy’s managing director Jerko Zuvela said the binding deal was a “company-transforming” transaction.

“We are confident that it provides a strategy for unlocking the immediate value of our strong position in Argentina via fast-tracked development of the Rincon lithium project,” he said.

Mr Zuvela said post-transaction, Argosy would have significant funding, plus a strategic shareholder and customer in Qingdao to fully develop and maximise the potential of Rincon.

A separate five-year sales agreement has been signed between Argosy and Qingdao for 1000 tonnes per year of potential stage 2 product from Rincon.

Meanwhile, Argosy and Qingdao have entered a joint venture to pursue lithium opportunities in China over the next two years.

Under the deal, Qingdao chairman Sun Qi will be appointed to Argosy’s board as a non-executive director.

The deal is subject to due diligence by Qingdao and regulatory approvals from Chinese authorities.

The company is aiming for 2018 production target from Rincon of battery-grade lithium carbonate equivalent (LCE) product.