Integration of Advantage's Cauchari with Orocobre's Olaroz enables the lithium producer to optimise basin management and maximise its long-term productive capacity.

Cauchari is a joint venture between Advantage Lithium (75%) and Orocobre (25%). It has 4.8 million tonnes of measured and indicated resources of lithium carbonate equivalent and 1.5Mt of inferred resources.

Orocobre managing director and CEO Martin Perez de Solay said the transaction represented an exciting opportunity for both sets of shareholders.

"For Advantage shareholders, they can now be part of something bigger without the challenges junior companies face when moving from exploration to development and onto production," he said.

"For Orocobre shareholders, we will consolidate our position in the Olaroz/Cauchari basin which will give us significant flexibility as we deliver additional growth to our existing business."

Under the terms of the agreement, Advantage shareholders will receive 0.142 Orocobre shares per Advantage share, which equates to a value of C42c per Advantage share. It will see Orocobre issue about 15.1 million shares which will increase its issued shares by 5.8%.

Orocobre currently holds 34.7% of Advantage.

Shares in Advantage jumped 13% to 38c, valuing the company at $63 million.

Shares in Orocobre dropped 0.9% to A$3.26 in morning trade.