What's boosting the Allkem share price on Monday?

Allkem is making some changes.

| More on:
Rising rocket with dollar signs.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Allkem shares edge 2.66% to $12.73 following the company's decision to offload its Borax asset for a strategic lithium tenement 
  • The deal with Minera Santa Rita S.R.L is expected to be completed towards the backend of this year 
  • Over the last 12 months, the Allkem share price has risen by 33% 

The Allkem Ltd (ASX: AKE) share price is powering up during midday trade.

This comes after the lithium miner announced it will acquire a strategic lithium tenement in exchange for its chemicals company.

At the time of writing, Allkem shares are swapping hands at $12.73, up 2.66%.

Allkem enters contract negotiations

Investors are bidding up the Allkem share price after digesting the company's latest news.

In its release, Allkem advised that it has entered into a binding and conditional Heads of Agreement (HoA) with Minera Santa Rita S.R.L (MSR).

The Argentinian family-owned company, MSR will acquire Borax Argentina S.A from Allkem as well as $14 million in cash.

Located in the Salta Province, Borax includes the Tincalayu and Sijes Mining Operations and processing capacity at Camp Quijano. Acquired in 2012, it's the only boron producer in South America, producing refined products and boron minerals and chemicals.

In return, MSR will transfer ownership of the Maria Victoria lithium tenement, situated just north of the Olaroz Lithium Facility.

The tenement covers about 1,800 hectares of land.

Furthermore, Allkem will retain a portion of the gas capacity that Borax is entitled to and from the Fenix and La Puna gas pipelines. However, this is subject to receipt of necessary third party and regulatory approvals.

The proposed transaction is expected to be wrapped up by the fourth quarter of the 2022 calendar year.

Allkem's managing director and CEO, Martin Perez de Solay commented:

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.

Allkem share price snapshot

Over the past 12 months, the Allkem share price has surged by 33% following favourable pricing for lithium carbonate.

The share touched an all-time high of $14.38 on 30 May and now appears to be moving in a cup and handle pattern.

Allkem commands a market capitalisation of approximately $7.91 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Materials Shares

ASX mining in April 2024: The best stock to buy right now

Analysts at Bell Potter think this mining stock could offer big returns.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

The Core Lithium share is down 27% in March: What's next?

Times have been hard for this lithium miner's shareholders. Will things improve?

Read more »

A female worker in a hard hat smiles in an oil field.
Materials Shares

Why it's a great day to own BHP shares

The Big Australian's shareholders have reason to smile on Thursday.

Read more »

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Materials Shares

Why did this ASX All Ords stock just crash 36%?

Investors have been hitting the sell button on Tuesday.

Read more »

A miner in a hardhat makes a sale on his tablet in the field.
Materials Shares

Lake Resources share price surges on sustainable lithium news

Lake Resources shares are enjoying a welcome lift today.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Materials Shares

Mineral Resources shares fall despite 'exceptional results'

This mining and mining services company has provided an update on its energy business.

Read more »

A man looking at his laptop and thinking.
Materials Shares

Are Pilbara Minerals shares in the buy zone or overvalued?

Here's what Bell Potter is saying about the lithium giant.

Read more »

Three guys in shirts and ties give the thumbs down.
Materials Shares

3 reasons to sell Core Lithium shares

This lithium miner's decline may not be over according to Goldman Sachs.

Read more »