Updated Cauchari resource estimate – 3.0 Mt Lithium Carbonate Equivalent

Orocobre Limited (ASX: ORE, TSX: ORL) (“Orocobre” or “the Company”) is pleased to announce an updated resource estimate for the Company’s Cauchari Joint Venture Project in Jujuy, Argentina based on the Phase II drilling results. The update, prepared by FloSolutions S.A.C, has increased the Inferred Resource to a volume of approximately 1,200 million cubic metres of brine at average grades of 450 mg/l lithium and 4,028 mg/l potassium for 3.0 Mt of Lithium Carbonate Equivalent (LCE) and will be the basis for a Scoping Study/Preliminary Economic Assessment (PEA) scheduled for completion in this quarter.

The exploration program is being managed by JV partner Advantage Lithium Corp. (“Advantage Lithium”) (TSX Venture: AAL) (OTCQX: AVLIF) who hold 75% of Cauchari. Orocobre owns 29% of Advantage Lithium’s issued capital and 25% directly in the joint venture.


— +6-fold increase of the inferred resource to 3.0 Mt LCE at Cauchari at
450 mg/l Lithium
— The updated resource covers a significantly larger area and extends to
greater depths in the NW and SE Sectors
— Significant potential for additional resource expansion at depth
— The brine has excellent chemistry for processing and the Mg/Li ratio
averages 2.5, very similar to Orocobre’s Olaroz project
— Phase III drilling is underway to upgrade this inferred resource and
underlying brine to measured and indicated resources for the definitive
feasibility study (DFS) scheduled for completion in Q2 2019

Advantage Lithium intends to submit a full technical report within 45 days of this filing, in accordance with the requirements of National Instrument 43-101 (NI 43-101) to support the conclusions presented here.

Richard Seville, Managing Director and Chief Executive Officer commented “We are very pleased with the results from the programme so far which has delivered a six times increase on the prior resource estimate. Three million tonnes LCE provides a solid basis for a Scoping Study/PEA and there is a significant exploration target from which we will build our resource base further. We will be completing the Scoping Study/PEA during this quarter and then will progress to a definitive Feasibility Study for a potential 20,000 tonnes per annum of Lithium Carbonate. I commend our partner and JV manager Advantage Lithium and its dedicated management team for delivering this quality programme in such a short period of time and we look forward to continue working with them on the Scoping Study/PEA.”

Updated Cauchari Resource

Based on the results of the 2017/2018 drilling programme, the resource at Cauchari has been increased. As advised by independent consultants FloSolutions S.A.C. there is now an Inferred Resource of 1,200 million cubic metres of brine at 450 mg/l lithium and 4,028 mg/l potassium. This is equivalent to 3.0 Mt Lithium Carbonate Equivalent (LCE) (based on 5.32 tonnes of lithium carbonate is equivalent to 1 tonne of lithium) and 9.5 Mt of potassium chloride (based on 1 tonne potassium chloride is equivalent to 1.91 tonnes of potassium). The resource estimate includes both the NW and SE Sectors. This is an expansion of six times the previous estimate of 0.47 Mt of Lithium Carbonate Equivalent. The average grade of the entire resource has increased to 450 mg/l Li and 4,028 mg/l K. Locally higher grades were encountered in the NW Sector in areas such as production hole CAU07 (601 mg/l during 48 hr pumping test) and in the Deep Sand unit in CAU11 (515 mg/l during 48 hr pumping test). The results of the estimation are summarized in Table 1 below.

The brine resource is calculated over the NW and SE Sectors of the Cauchari project and covers an area of 92.6 km2. The brine resource in the NW Sector extends from the brine level below the Archibarca fan to a depth of up to 300 m. The brine resources in the SE Sector extend from the phreatic brine level to a constant depth of 300 m and continue locally as a separate resource volume in the Deep Sand unit between approximately 400 m and 480 m depth (as defined by Deep Sand drilling intercepts in holes CAU11, CAU12 and CAU13). None of the boreholes completed to date have intercepted bedrock (basement) and the resource remains open at depth. A significant exploration target has been defined below the current inferred resources as further discussed below (Table 3).

Table 1: Cauchari Project Lithium and Potassium Resource Estimate; May 22, 2018
Inferred Resources (lithium cut-off of 300 mg/l)
Parameter NW Sector SE Sector Total
Resource area (km2) 35.2 57.4 92.6
Aquifer volume (km3) 6.5 13.9 20.4
Mean specific yield (Sy) 9% 4% 6%
Brine volume (km3) 0.6 0.6 1.2
Element Li K Li K Li K
Mean concentration
(mg/l) 465 3,920 443 4,078 450 4,028
Mean grade (g/m3) 44 373 20 184 28 244
Total Resource
(tonnes) 288,000 2,420,000 280,000 2,560,000 568,000 4,980,000
Lithium Carbonate
(tonnes) 1,530,000 1,490,000 3,020,000
Potash (tonnes) 4,600,000 4,900,000 9,500,000

1. JORC definitions were followed for mineral resources.
2. The Competent Person for this Mineral Resource estimate is
Frits Reidel, CPG.
3. A lithium cut-off concentration of 300 mg/L has been applied to the
resource estimate.
4. Lithium is converted to lithium carbonate (Li2CO3) with a conversion factor
of 5.32.
5. Potassium is converted to potash with a conversion factor of 1.91
4. Numbers may not add due to rounding.

Results of the brine chemistry analysis carried out to date indicate that the Cauchari brine is similar in composition to the brine in the adjacent Olaroz Salar from which Orocobre is successfully producing lithium carbonate using conventional lithium processing technology. Table 2 provides a summary of the Cauchari brine characteristics. The lower average lithium concentration of the total inferred resource compared to that of drill holes such as CAU07, CAU11 (and other results released during the Phase II drilling program) reflects the presence of lower concentration brine near surface in the SE Sector such as around holes CAU12, 13 and 14. The brine characteristics and hydraulic characteristics in the upper SE Sector are distinct from those in the NW Sector and the Deep Sand unit. Pumping tests from the NW Sector and Deep Sand have produced excellent flows with lithium concentration >500 mg/l lithium, as reported by the company on the 7th of February and 6th of March 2018. There is a reasonable prospect that the Cauchari brine from these areas could be successfully processed using similar technology to the Olaroz plant.

Table 2: Cauchari brine chemistry characteristics
Samples Ratio NW Sector & Deep Sand Upper SE Sector
Mg/Li 2.7 2.5
SO4/Li 29.4 69.6

Resource Estimation Methodology

The updated lithium resource estimate for the Cauchari Project is based on the results of seven diamond holes and five rotary holes drilled during the Phase II campaign in 2017/8 and results of four diamond drill holes of the Phase I campaign in 2011. Figure 1 shows a location map of the boreholes completed during the 2011 and 2017/8 drilling campaigns. Brine sample collection during the 2017/8 program consisted of bailed and packer samples in the diamond holes, and packer and pumped samples in the rotary holes. A total of 449 brine samples (including 164 QA/QC samples) were analyzed by Norlabs (JuJuy, Argentina) as the primary laboratory and by Alex Steward Assayers (Mendoza, Argentina) and the University of Antofagasta (Chile) as secondary QA/QC laboratories. Additional brine QA/QC analyses were carried out on centrifuged samples collected by Corelabs in Houston, TX.

HQ core was retrieved during the diamond core drilling from which some 172 primary undisturbed samples were prepared for laboratory drainable porosity and other physical parameter determinations by Geo Systems Analaysis (GSA) in Tucson, AZ. Laboratory QA/QC porosity analyses are being undertaken by Corelabs.

The lithium resource was estimated using SGEMs software with ordinary kriging and applying a 300 mg/l lithium concentration cut-off. The resource estimate was prepared in accordance with the guidelines of National Instrument 43-101 and uses best practice methods specific to brine resources, including a reliance on core drilling and sampling methods that yield depth-specific chemistry and drainable porosity measurements. The resource estimation was completed by independent qualified person Mr. Frits Reidel of Santiago based hydrogeology firm FloSolutions with extensive experience in the estimation of lithium brine resources in Argentina.

Geological Exploration Target

The geological exploration target is estimated to range between 1,430,000 and 3,000,000 t LCE, primarily in the SE Sector beneath the current inferred resource area in the Deep Sand unit to a depth of 600 m. Table 3 provides the details of the geological exploration potential. The upper and lower ranges of the geological potential were bounded by two times the standard deviation around the calculated average lithium concentration of the overlying inferred resources. The Deep Sand unit in the SE Sector was intersected below 360 m in CAU11, CAU12 and CAU13. A preliminary 48 hour pumping test in CAU11 at a pumping rate of 19 l/s indicated that the Deep Sand unit has excellent hydraulic characteristics. The geology of the Cauchari basin suggests there is good potential to convert brine within the exploration target to resources. Similar sand units have been intersected in the neighboring Olaroz project.

Table 3: Cauchari Project – Geological Potential
Geological Potential – Lower range (X-2SD)
Parameter NW Sector SE Sector Total
Resource area (km2) 35.2 57.4 92.6
Aquifer volume (km3) 2.6 12.8 15.4
Mean specific
yield (Sy) 11% 5% 6%
Brine volume (km3) 0.3 0.6 0.9
Element Li K Li K Li K
Mean concentration
(mg/l) 281 2,320 281 2,320 281 2,320
Mean grade (g/m3) 31 258 15 122 23 190
Total Resource
(tonnes) 80,000 670,000 190,000 1,550,000 270,000 2,220,000
Lithium Carbonate
(tonnes) 430,000 1,000,000 1,430,000
Potash (tonnes) 1,300,000 2,900,000 4,200,000

Geological Potential – Upper range (X+2SD)
Parameter NW Sector SE Sector Total
Resource area (km2) 35.2 57.4 92.6
Aquifer volume (km3) 2.6 12.8 15.4
Mean specific yield (Sy) 11% 5% 6%
Brine volume (km3) 0.3 0.6 0.9
Element Li K Li K Li K
Mean concentration
(mg/l) 594 5,735 594 5,735 594 5,735
Mean grade (g/m3) 66 638 31 301 49 473
Total Resource
(tonnes) 170,000 1,650,000 400,000 3,840,000 570,000 5,490,000
Lithium Carbonate
(tonnes) 900,000 2,100,000 3,000,000
Potash 3,100,000 7,300,000 10,400,000

The potential quantity and grade of the exploration target is conceptual in nature, and there has been insufficient exploration to define a Mineral Resource in the volume where the Exploration Target is outlined. It is uncertain if further exploration drilling will result in the determination of a Mineral Resource in this volume. The exploration target is where, based on the available geological evidence, there is the possibility of defining a mineral resource. Importantly the exploration target is not to be considered a resource or reserve. It must be stressed the exploration target is based on a series of assumptions and future drilling is required to determine the brine grade and formation drainable porosity values to establish whether a resource can be defined.

Phase III Drilling and Further Resource Expansion

The Phase III resource definition drilling program is currently underway at the Cauchari project site. The Phase III program will include additional diamond holes in the NW and SE Sectors to upgrade the resource classification by Q2 2019 to support the Project’s Definitive Feasibility Study. The Phase III drilling program is designed to provide a combined borehole density sufficient to upgrade the current inferred resources to the Indicated and Measured categories. The Phase III drilling is also aimed at further defining resources in the Deep Sand unit. —


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