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$4bn lithium merger between Orocobre (ASX: ORE) and Galaxy Resources (ASX: GXY)

Updated: Sep 12, 2021

The merger came into effect on 25 August 2021 after being approved by the board and shareholders of Galaxy Resources. The proposed name for the combined company is ‘Allkem’, however this remains subject to shareholder approval.

The transaction has the potential to be a significant value creating opportunity for both Orocobre and Galaxy Resources shareholders, with their combined lithium mining and processing facilities spanning across Australia, Argentina, Canada and Japan. The merger is beneficial in the sense that both companies portfolio of assets complement one another through geographical and product diversification across brine, hard rock and vertical integration across the supply chain. The merger will propel the company to become the fifth most valuable lithium company in the world.

What does this mean for you?

If you were a Galaxy shareholder, your trading account will have been automatically updated on 25 August 2021 and you will have been issued 0.569 Orocobre shares for every Galaxy share held.

Outlook for Lithium

Lithium prices are rapidly increasing which reflects strong end market and consumer demand. Fast Markets reports that lithium production must quadruple between 2020 and 2030 to meet growing demand. This suggests that there may be room for continued growth for Orocobre (ASX: ORE), as well as other Australian lithium producers such as Pilbara Minerals (ASX: PLS) and Novonix Ltd (ASX: NVX).

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