Orocobre to acquire Advantage Lithium

Australia’s Orocobre Ltd. [ORE-ASX] said Monday February 18 that it has struck a definitive deal to acquire 100% of the issued and outstanding shares of Advantage Lithium Corp. [AAL-TSXV, AVLIF-OTCQX] that it does not already own.

Orocobre is not only Advantage Lithium’s partner at its flagship Cauchari lithium project in northern Argentina, it also owns a 33.3% interest in Advantage.

Orocobre’s producing Olaroz lithium facility lies only 20 km from Cauchari.

The Olaroz Lithium Facility is situated at an altitude of 3,900 metres above sea level and produces lithium carbonate from the Salar de Olaroz brine resource, which contains high concentrations of lithium and potash brine.

In 2016, Orocobre divested several of its lithium brine exploration projects to Advantage in exchange for shares in Advantage. Additionally, Orocobre and Advantage entered into a joint venture agreement to develop the Cauchari Project, which is owned 25% by the Australian company. The other 75% is held by Advantage.

Cauchari contains 4.8 million tonnes of Measured and Indicated lithium carbonate equivalent resource. On top of that is an inferred LCE resource of 1.5 million tonnes, plus a Measured and Indicated potash resource of 14.9 million tonnes.

On Monday Advantage shares jumped 13.4% or $0.045 to 38 cents on volume of almost 1.3 million. The shares are trading in a 52-week range of 14 cents and 63 cents.

Under the terms of the agreement with Orocobre, Advantage shareholders will receive 0.142 shares of Orocobre for each Advantage share. Based on the closing price of Orocobre shares on the ASX of A$3.29, this equates to a value of approximately 42 cents per Advantage share.

The transaction will allow Orocobre to continue to develop the Olaroz/Cauchari basin in a cost-effective manner that will optimize extraction of the resource to the benefit of shareholders, local communities, the Provincial and National governments of Argentina and other stakeholders, Orocobre said in a press release.

“The transaction further consolidates Orocobre’s leading position within the region as a low-cost producer of lithium chemicals,” the company said.

In addition, Orocobre will acquire Advantage’s other lithium exploration properties in Argentina, including the Antofalla and Incahuasi projects.

Brines (in salt ponds) and spodumene (hard rock) represent the two main sources of commercial lithium production.

Investor interest in this sector is tied to the fact that lithium is a key ingredient in the production lithium-ion batteries used to manufacture electric vehicles.

Integration of Cauchari with Olaroz enables Orocobre to deliver optimal basin management and maximizes the long-term productive capacity of the Olaroz/Cauchari basin, Orocobre said. “The development of Cauchari will be considered within future plans for the Olaroz Lithium Facility,” the company added.