DECEMBER QUARTER 2018 KEY HIGHLIGHTS[1]
OLAROZ LITHIUM FACILITY (ORE 66.5%)[2]
December quarter
-- Production was up 65% quarter on quarter (QoQ) to 3,782 tonnes of
lithium carbonate, the second best quarter of production at Olaroz
achieved to date with sales up 41% to 3,019 tonnes. Quarterly sales
revenue was US$32 million, down 20% on the previous corresponding
period (PCP) with a realised average price achieved of US$10,587/tonne
on a free on board basis (FOB)[3]
-- Cash costs for the quarter (on cost of goods sold basis)[4] were
US$3,974/tonne, down 14% QoQ and marginally up on PCP excluding the
recently announced export tax of US$882/t
-- Gross cash margins (excluding export tax) of US$6,613/tonne were down
34% QoQ and down 13% on PCP due to the lower average price received
-- Orocobre signed three pivotal agreements with joint venture partner
Toyota Tsusho Corporation (TTC) - a new Olaroz Shareholders Agreement,
Sales and Marketing Agreement and Orocobre Management Agreement (for
management of the Olaroz Joint Venture).
LITHIUM GROWTH PROJECTS
-- Orocobre, TTC and JV boards have given approval to the Final Investment
Decision (FID) for the Stage 2 Expansion of the Olaroz Lithium
Facility. The Stage 2 Expansion will increase lithium carbonate
production capacity by approximately 25,000 tonnes per annum (tpa)
bringing total Olaroz production capacity to approximately 42,500 tpa.
Stage 2 will produce technical grade (>99.0% Li2CO3) lithium carbonate,
part of which will be utilised as feedstock for the proposed Naraha
Lithium Hydroxide Plant to be built in Japan
-- Construction of key items for the Stage 2 Expansion such as ponds,
roads and camp upgrades commenced in Q4 FY18 and is advancing
-- Negotiations on the EPC contract for the proposed Naraha Lithium
Hydroxide Plant are advancing rapidly between TTC as operator and
Veolia the preferred EPC contractor. Several key issues remain
outstanding including capital expenditure revision, operation cost
revision, final construction schedule and final EPC terms. The EPC
contract and FID is expected to be finalised during this quarter with
commissioning of the plant expected in 2H CY20.
BORAX ARGENTINA
-- Overall sales volume in the December quarter was up 14% on the
September quarter to 10,741 tonnes with sales revenue up by a slightly
lower amount as the average price per tonne achieved was marginally
below the September quarter due to a change in sales/product mix
-- Market conditions have not changed significantly over the quarter
-- The Tincalayu Expansion Project feasibility study is under internal
review.
CORPORATE
-- Orocobre corporate had available cash of US$284 million after
expenditure mainly related to expansion activities, Naraha Lithium
Hydroxide Plant basic engineering, corporate expenses and Cauchari JV
expenditure being partially offset by interest income. Including SDJ
and Borax cash and project debt, net group cash is US$216.7 million
-- Mr Martin Perez de Solay will formally commence his duties as Managing
Director and Chief Executive Officer (CEO) on 18 January 2018 following
the retirement of Richard Seville from the position. Richard Seville
will continue with Orocobre as a non-executive Director
-- The Orocobre 2018 Annual General Meeting was held on Friday 23 November
with all resolutions successfully passed as ordinary resolutions
following a poll at the meeting.
CAUCHARI JOINT VENTURE
(ADVANTAGE LITHIUM OPERATOR 75% / OROCOBRE 25%)
-- During the December quarter the joint venture partners released a Phase
3 drilling program update regarding the completion of brine sampling of
diamond core holes CAU28, CAU29 in the NW Sector and CAU19, CAU22,
CAU25 and CAU27 in the SE Sector of the Cauchari JV property. The Phase
3 infill drilling and resource conversion program aims to deliver an
estimate of Measured and Indicated Resources during this quarter
-- GHD was selected as the successful engineering firm to undertake a
Feasibility Study for all aspects of the Cauchari project. The
Feasibility Study will provide an appropriate engineering design to
produce a Class 3 cost estimate consistent with American Association of
Cost Engineers (AACE) principles to build a standalone lithium plant
producing 20 thousand tonnes per annum (ktpa) of Lithium Carbonate
Equivalent
-- The Feasibility Study is planned for completion in Q2 CY19.
OLAROZ LITHIUM FACILITY
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