Proposed A$4B Deal Combines Operations Across The Globe
Orocobre Limited (ASX:ORE, TSX:ORL) and Galaxy Resources Limited (ASX:GXY) have entered into a binding Merger Implementation Deed (MID) under which the two companies will merge via a Scheme of Arrangement under will Orocobre will acquire 100% of the shares in Galaxy.
Orocobre shareholders will own 54.2% of the fully diluted share capital of the combined entity and Galaxy shareholders will own the remaining 45.8%.
The Scheme is unanimously recommended by the Board of Galaxy and each Galaxy Director intends to vote all the shares that they hold in Galaxy in favour of the Scheme (in both cases, subject to no superior proposal emerging and the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Galaxy shareholders).
The Scheme is endorsed and supported by the Board of Orocobre, subject to no proposal for Orocobre emerging.
A new name for the merged entity will be selected in due course representing the global reach of the new entity, which will have its head office in Buenos Aires, Argentina, a corporate headquarters on the Australian East Coast and an office in Perth.
Highlights Summary
- Creating a Top 5 global lithium chemicals company1
- Highly complementary portfolio of assets delivering geographical and product diversification across brine, hard rock and vertical integration across the supply chain
- Industry leading growth profile with enhanced financial position to optimise and potentially accelerate development with the ability and intent to capture further downstream value
- Compelling industrial logic with significant value creation opportunities unique to this merger
- Highly experienced and complementary Board and senior management teams to drive growth
- Potential to generate significant shareholder value with enhanced scale and financial capacity
Galaxy Chairman, Martin Rowley, said the transaction has the potential to be a significant value-creating opportunity for Galaxy and Orocobre shareholders.
“The Scheme provides shareholders of Galaxy with the opportunity to share in the significant benefits of being part of a larger diversified group and the synergies expected to be available to help enhance and progress our portfolio of world class assets.
“The merged entity’s growth opportunities in both brine and hard rock position it uniquely to take advantage of expected rising EV demand for lithium.”
Orocobre Chairman, Robert Hubbard, said the logic of this merger is compelling.
“Both Orocobre and Galaxy shareholders, will benefit from the diversification, growth and scale of a top 5 global lithium chemicals company. I take this opportunity to re-iterate the group’s ongoing commitment to the principles of delivering the highest level of transparency of our environmental, social and governance performance, the foundations upon which our assets have and will continue to be developed.”
Orocobre’s operations include its Olaroz Lithium Facility, a 75% economic interest in the Naraha Lithium Hydroxide Plant, Borax Argentina, an established boron minerals and refined chemicals producer and 34.7% interest in Advantage Lithium.
Galaxy holds a diversified portfolio of lithium projects, at varied stages of development, in Australia, Argentina and Canada.
Galaxy is a proven and experienced producer of lithium concentrate as demonstrated by the success of its Mt Cattlin operation in Western Australia. Stable and reliable production has allowed the Company to establish strong relationships with lithium customers and end users to meet evolving specifications and new demand.
The company is focused on the staged development of its flagship brine project, Sal de Vida in Argentina. The wholly owned project is recognised as a tier 1 asset due to its large scale, high grade and superior brine chemistry. Sal de Vida has excellent potential as a low-cost lithium carbonate production facility.
Definition work at the James Bay spodumene project in Quebec, Canada is being accelerated to a construction ready status. The wholly owned project has a high grade, near surface deposit and is ideally located to supply the rising demand from the North American and European electric vehicle market.
