Orocobre acquires Advantage Lithium in all-share deal

Orocobre (TSX: ORL; ASX: ORL) owns 34.7% of Advantage Lithium‘s (TSXV: AAL; US-OTC: AVLIF) common shares, and the two companies are joint-venture partners on Advantage Lithium’s Cauchari lithium project in northern Argentina’s Jujuy province.

Orocobre owns 25% of the Cauchari project and Advantage Lithium 75%, and the lithium project is just 20 km south of Orocobre’s Olaroz lithium facility, which entered production in 2015.

So it’s not entirely surprising that Orocobre and Advantage Lithium have signed an agreement under which Orocobre will acquire all of the shares in Advantage Lithium it doesn’t already own.

“With Advantage/Cauchari being acquired by Orocobre, the likely path to production is through the Olaroz plant at some time in the future when the lithium market can support more production,” Matthew O’Keefe, a mining analyst at Cantor Fitzgerald commented in a research note to clients, adding that he does not expect a competing bid.

“With this deal Advantage Lithium shareholders are receiving quality paper from an established lithium producer at a time when lithium prices appear to have bottomed, allowing them to maintain exposure to an expected improvement in lithium prices.”

Advantage Lithium's Cauchari lithium property in Argentina. Credit: Advantage Lithium

Advantage Lithium’s Cauchari lithium property in Argentina. Credit: Advantage Lithium

Orocobre’s Olaroz — the newest brine-based global lithium carbonate supplier in more than two decades — has a mine life of more than 40 years based on measured and indicated resources of 6.4 million tonnes of lithium carbonate equivalent contained in the Salar de Olaroz brine, which contains high concentrations of lithium and potash brine.

Under the all-share deal, Advantage Lithium’s shareholders will receive 0.142 common share of Orocobre for each share in Advantage Lithium they own. The offer represents a 24% premium to Advantage Lithium’s closing share price on Feb. 14 and a 35% premium based on the trailing 20-day volume-weighted average price.

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