Orocobre to buy JV partner Advantage Lithium

Orocobre (TSE: ORL) announced Wednesday it has entered into a definitive agreement to acquire all of the issued and outstanding shares of Advantage Lithium that it does not already own. Orocobre is currently the largest shareholder in Advantage Lithium with a 34.7% interest in the Canadian lithium explorer.

Under the terms of the agreement, Advantage Lithium shareholders will receive 0.142 Orocobre shares for every Advantage Lithium share, valuing the takeover target’s shares at C$0.42 each based on Orocobre’s last closing price of A$3.29 per share.

If approved, the takeover offer would see Orocobre issue 15.1 million of its own shares, increasing its total issued share count by 5.8%. These shares would be issued under its existing placement capacity, meaning that shareholder approval would not be required to complete the transaction.

The acquisition of Advantage Lithium would allow Orocobre to continue to develop the Olaroz/Cauchari basin in a cost-effective manner, the company said.

Orocobre would gain exposure to the 4.8 million tonnes of measured and indicated resources and the 1.5 million tonnes of inferred resources at the Cauchari development in Argentina, where it currently holds a 25% interest, with Advantage holding the balance.

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

The board of Advantage Lithium has approved the transaction and urged its shareholders to vote in favour of the agreement.