OROCOBRE (ASX:ORE) will divest a number of lithium brine exploration projects to a Canadian resource company to pursue a bigger fish.
The Brisbane-based miner will sell the assets held through its Argentine subsidiary South American Salars SA (SAS) to Toronto Stock Exchange-listed Advantage Lithium Corp.
Advantage Lithium will issue more than 40 million shares valued at US$37 million to Orocobre as part of the acquisition.
The SAS exploration projects span 85,000 hectares in Argentina's lithium triangle of provinces Jujuy, Salta and Catamarca.
Orocobre and Advantage Lithium will enter a 50/50 joint venture for the 'more advanced' Cauchari Project, south of Olaroz in Argentina. The resource hosts about 470,000 tonnes lithium carbonate equivalent.
Orocobre will retain a 1 per cent gross royalty on production from the Cauchari properties, and will have rights of first refusal on future brine production.
Orocobre CEO and managing director Richard Seville says the partnership will fast-track exploration projects without the expense.
"By partnering with Advantage Lithium this transaction will enable the high potential assets in our exploration portfolio to be developed and advanced without the need for any further input of capital or management time by Orocobre while allowing us to maintain our focus on our current production and expansion plans at Olaroz and Borax Argentina," Seville says.
"Our decision to partner with Advantage Lithium attests to the high regard with which we hold the Advantage Lithium team at both the board and technical level and we look forward to working closely with them."
Advantage Lithium is required to complete an equity financing of between US$15 million and US$25 million at an issue price of C$1 each.
Orocobre's shareholding in Advantage Lithium will represent between 31.1 per cent and 34.6 per cent after the raise. The company will not participate in the equity financing.
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