China's Tianqi Lithium Corp said on Monday it had signed a renewal letter with a syndicate of banks to extend the maturity date on $1.884 billion of loans that were due for repayment at the end of this month.

Tianqi, one of the world's top producers of lithium chemicals used in electric-vehicle batteries, had repeatedly said its output and operations could be severely impacted if it did not repay the money, which was used to acquire a 23.8% stake in Chilean miner SQM in 2018, by the due date.

The last-minute signing gives the heavily-indebted company and its lenders, led by China Citic Bank, until Dec. 28 to reach agreement on the terms of an extension, Tianqi said in a Shenzhen Stock Exchange filing. Otherwise, Tianqi will have to pay back the money by that date.

"The company and the syndicate are further actively negotiating the key terms," it said, without specifying what length of extension was under discussion.

If the terms cannot be met, the loan will not be extended, triggering a default, the filing said, adding that Tianqi should also repay the outstanding interest due on the loans by Dec. 10.

China Citic Bank did not immediately respond to a request for comment outside normal business hours.

Tianqi's shares hit the 10% limit up on Monday before closing up 7.2% on 27.83 yuan ($4.23). They are still down more than 45% since May 2018, when Tianqi agreed to pay $4.1 billion for the SQM stake, later taking on a total $3.5 billion of debt to finance the acquisition.

But lithium carbonate prices in China have plunged around 70% since then amid oversupply, exacerbated by the demand shock caused by the coronavirus outbreak this year, leaving Tianqi deep in the red and unable to pay back its borrowings.