PERTH (miningweekly.com) – The merger between lithium miners Orocobre and Galaxy Resources has been implemented, after all the necessary approvals were obtained.

The two companies in April struck a merger of equals agreement to create the fifth largest global lithium chemicals company.

Under the terms of the proposed A$4-billion merger, Galaxy shareholders would receive 0.569 Orocobre shares for each of their shares held, with Orocobre shareholders to own 54.2% of the fully diluted share capital of the combined entity, while Galaxy shareholders would own the remaining 45.8%.

The merger will create a top five global lithium chemicals company with assets across a diversified geography, lithium sources and end products, and would combine two complementary, large scale tier-one assets in the form of Orocobre’s Olaroz mine, in Argentina, and Galaxy’s Mt Cattlin mine, in Western Australia.

The combined company would also have a significant portfolio of upstream and downstream growth projects, with the growth pipeline evenly balanced between production optimisation, construction, advanced projects, brownfield expansions and early-stage projects.

Dual listed Orocobre said on Wednesday that a  detailed review of the business and reporting structure, cultural integration and communications has been conducted with external advisers, while key operating and corporate leadership positions have been put in place and the reporting structure has been re-aligned around the geographic distribution of assets and personnel.

Work programmes are underway to pool key technical and project development knowledge in order to optimise growth projects.

Debt funding options for Sal de Vida Stage 1 and subsequent stages are being considered to provide further balance sheet flexibility, Orocobre told shareholders.

The company is expected to unveil a detailed strategic plan for growth projects within six months, including development pathways for subsequent stages of Naraha, Olaroz, Sal de Vida and the James Bay project.

“The completion of the merger today brings together assets and teams with highly complementary skills and knowledge. I would like to welcome Galaxy shareholders, employees and other stakeholders to Orocobre, which subject to shareholder approval, we will be rebranding to Allkem Limited and changing the ASX ticker to AKE,” said Orocobre MD and CEO Martin Perez de Solay.

“The name Allkem recognises that together we can deliver more for stakeholders. With the merger we will go further in our commitment to delivering the lithium chemicals that the world increasingly needs to mitigate climate change and carbon emissions.

“The merger consolidates the combined group’s position in Argentina and provides an opportunity to build on a strong platform there and in our other key jurisdictions globally, including Australia, Japan and North America. It will give us significant operational, technical and financial flexibility to deliver the full value of our combined portfolio.

“Our operating strategy retains a focus on safety, quality and productivity, which combined with disciplined cost management, will deliver further improved operating results ensuring we remain a low-cost producer of lithium carbonate,” Perez de Solay said.

Meanwhile, Orocobre on Wednesday also reported a full year net loss after tax of $89.5-million impacted by $74.9-million of Argentine tax rate changes and the effects of inflation and devaluation on deferred tax balances and tax losses.

The net loss after tax for the 2021 financial year compared with a net loss after tax of $67.2-million for the previous corresponding period.

Meanwhile, revenue for the full year was up from $77.1-million to $84.8-million, with earnings before interest, taxes, depreciation, amortisation and exploration expenditure up from a loss of $3.9-million to positive earnings of $2.9-million.

Orocobre has continued to deliver positive operating margins, despite Covid-19 and weaker market conditions throughout the first half of the financial year. This has been achieved through strong sales performance and a focus on costs and operating excellence,” said Perez de Solay.

Total production of 12 611 t of lithium carbonate is up 6% on the previous corresponding period despite Covid-19 disruptions, while battery grade lithium carbonate production reached 66% of total production for the June quarter and 48% for the full year, up from 24% in 2020.