Galaxy Resources has announced that it will merge with Canadian lithium and potash company Lithium One.
The agreement, worth approximately CAD$112 million, will see Galaxy acquire 100% of Lithium one.
Galaxy managing director Iggy Tan said the merger is an opportunity for the miner to boost its lithium resource base.
"Galaxy has spent the last 18 months searching the world for a high quality, underdeveloped lithium brine deposit and we believe (Lithium One’s) Sal de Vida fits that criterion," Tan said.
He added that the operation is adjacent to FMC Lithium’s El Finex operation, which has been running for the last 15 years.
Tan went on to say "Galaxy will require more lithium resources over the next few years, and Sal De Vida along with James Bay will significantly add to our existing Australian resource inventory and give us ample resources to continue to growth the lithium business. The merger is not only a good strategic fit for Galaxy, it also represents an opportunity for Lithium One shareholders to become part of a lithium producing company with hard rock and brine assets around the world".
Galaxy will look to fast track production at the operation.
Lithium One chairman Martin Rowley said this was a great opportunity for the company.
"We look forward to joining the Galaxy team….the merger is unanimously supported by the Lithium One board of directors."
Galaxy will carry out an equity raising of $50 million to strengthen the merged company’s balance sheet.
If the merger does not go through, Galaxy says it will continue to pursue other lithium acquisitions.
The merged company will have a combined resource base of 1.2 million tonnes of lithium carbonate equivalent (LCE) in hard rock projects and 7.2 million tonnes of LCE in brine projects, with a potential production capacity of 42 000 tonnes of lithium carbonate once Sal de Vida is brought online.
The closing date for the merger is 31 May.