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%.
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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.
