Global supplier of high grade, high-value lithium chemicals, Orocobre Limited (ASX: ORE) provided its operations report for the December quarter today (17 January 2019). In the 2018 December quarter, the company produced 3,782 tonnes of lithium carbonate from Olaroz Lithium Facility. The December quarter production was 65% higher than 2018 September quarter, but when compared to the same period in 2017, production is down by 4 percent. Following this news, the company’s shares traded flat at $3.250 as on 17 January 2019.
The company reported a quarterly sales revenue of US$32mn which was 20 percent less than the previous corresponding period with a realized average price achieved of US$10,587 per tonne on a free-on-board basis.
The company incurred cash cost US$3,974/tonne in the December quarter which was 14 percent less than the previous quarter. The gross cash margins of the company decreased by 34% to US$6,613 per tonne due to the lower average price received. During the December quarter, the product pricing was impacted by the soft market conditions in China.
Along with the other Joint Ventures partners, the company has approved the Final Investment Decision (FID) for the Stage II Expansion of the Company’s Olaroz Lithium Facility which is located in the Jujuy province of Argentina. The expansion of the facility will significantly increase the overall production.
After achieving the full production rates, the product distribution after Stage II expansion is expected to be:
- 5k tonnes per annum of battery grade lithium carbonate.
- 5k tonnes per annum of technical grade lithium carbonate, and
- 5k tonnes per annum of technical grade lithium carbonate.
The company has also advanced its negotiations on the EPC contract with regards to the proposed Naraha Lithium Hydroxide Plant, and it is expected that the EPC contract along with the Final Investment Decision will be finalized in the January quarter of 2019. The company’s Boric acid plant in Argentina reported record production levels during the December quarter. As per the new joint marketing arrangements with Toyota Tsusho Corporation (TTC), the company is planning to increase the number of long-term contract arrangements.
During the December quarter, the company received VAT refunds of around US$0.6mn and the company is expecting further returns (~US$2.1mn) in 2019 January quarter. At the end of December quarter, Orocobre Limited had cash of US$284mn. In FY 2019, the company is expecting its full-year guidance to be more than what was achieved in FY 2018.
In the past six months, the share price of the company decreased by 39.37 percent as on 16 January 2019. ORE’s shares traded at $3.250 with a market capitalization of circa $849.98 million as on 17 January 2019. It has a 52-week high price of $7.440 and a 52-week low of $2.910, with an average volume of 1,177,247.