(Kitco News) - Lithium producer Allkem (TSX: AKE) announced today it has entered into a binding and conditional Heads of Agreement to transfer Borax Argentina to Minera Santa Rita (MSR) and to acquire the María Victoria lithium tenement from MSR in return.
The company said that under the proposed transaction, Allkem will transfer to MSR all of the issued shares in the two Borax holding companies and US$14 million cash.
In return, MSR will transfer to Allkem (or its nominee) 100% ownership of the Maria Victoria Tenement. All employees of Borax will continue to be employed by MSR, the company added.
Conditions precedent to completion of the proposed transaction include transfer of certain lithium tenements and royalties from Borax to Allkem in return for borate extraction rights (usufructs) in favour of MSR, completion of due diligence by Allkem on the Maria Victoria Tenement and receipt of required internal and third party approvals.
Allkem added it will, subject to receipt of necessary third party and regulatory approvals, also retain a portion of the gas capacity that Borax is entitled to from the Fenix and La Puna gas pipelines to be available for its Sal de Vida project.
Managing Director and CEO Martin Perez de Solay stated, "The acquisition of the Maria Victoria tenement complements Allkem's existing extensive lithium brine holdings in the region and will allow more efficient development of the Olaroz salar. The exchange of Borax which is a non-core asset allows Allkem to remain focussed on its key aim of delivering growth plans of increasing lithium production threefold by 2026 and maintaining 10% of global market share in the longer term."
The Maria Victoria Tenement covers approximately 1,800 ha and is located in the northern part of the Salar de Olaroz, approximately 10km from Allkem's Olaroz Lithium Facility in the Jujuy Province of Argentina.
Borax is located in the Salta Province of Argentina and includes the Tincalayu and Sijes Mining Operations and processing capacity at Camp Quijano. It was acquired by Allkem from Rio Tinto PLC in 2012 and is the only boron producer in South America, producing a wide range of refined products and relatively unique boron minerals and chemicals.
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