Orocobre Limited (ASX: ORE) has announced an update on recent weather conditions at the Olaroz Lithium Facility after completing an internal review of the expected production for the rest of the remaining financial year. The company announced that the recent rainfall exceeded by which it occurred in 2017 and 2018. The company further asserted that there were no material production stoppages, and there was no disruption to the import of supplies or the export of the finished product. However, the production was low due to dilution of brine feedstock. The company further expects the production of FY2019 to be approximately the same as that was achieved in FY18. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]
Orocobre’s Olaroz lithium project facility began as a joint venture with Toyota Tsusho Corporation,a Japanese trading giant (TTC) and a mining investment company Jujuy Energia y Mineria Sociedad Del Estado (JEMSE), owned by the provincial Government of Jujuy.
The Partnership between ORE and TTC commenced in 2010, through the execution of a joint venture agreement and 25% equity stake partnership of TTC in the project level to develop the Olaroz Lithium Project.
JEMSE came on board and became a project partner with ORE in June 2012 through an 8.5% equity stake at the project level, which in turn provided the provincial government with a direct interest in the development of the Olaroz Lithium Facility.
December quarter Highlights
Olaroz Lithium facility: Production, sales, and cost
The production in the facility increased by 65% on a quarter-on-quarter (QoQ) basis to 3,782 tonnes of lithium carbonate from 2,293 tonnes in the September quarter. The December quarter till date is believed to be the second-best quarter of production at ORE.
The sales went up by 41% to 3,019 tonnes and led to the recognition of US$ 32 million as revenue with an average price of US$ 10,587/tonne on Free-on-board basis.
Cash cost for the quarter (on Cost of goods sold basis) decreased by 14% on a QoQ basis to US$3,974/tonne and marginally up on the previous corresponding period excluding the export tax of US$882/tonne. However, the gross cash margin (excluding export tax) went down by 34% on a quarter-on-quarter basis.
The improvement in costs was mainly due to the lower consumption rates of reagents (Carbon Dioxide) which was mainly due to the installation and commissioning of the carbon dioxide recovery circuit built by ASCO. The total carbon dioxide recovery estimated at 55% from the recovery circuit.
On December 13th, 2018, the company announced that it had signed three crucial agreements with Joint Venture partner TTC including a new Olaroz Shareholders Agreement, Sales and marketing Agreement and Orocobre Management agreement.
The company took a 30-day constant rate pumping test at Cauchari JV property which was completed in mid-January and announced the outcome for the same on 1st February 2019.
The share price of the company closed at AU$2.980 (as on 19th February) down by 2.932% from its previous close.
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