Quarterly Activities & Cashflow Report - June 2014
For The Period Ended 30 June 2014
Olaroz Lithium-Potash-Boron Project:
- Project construction is approximately 93% physically complete with significant milestones achieved.
- A total of approximately US$214 m has been spent or committed via executed contracts on the construction project to date.
- Construction is projected to be completed on budget with the primary lithium carbonate plant start-up/commissioning scheduled to commence at the end of August 2014.
- Completed the year on budget.
- Borax plant relocated within the original budget of US$3.7m from Campo Quijano (close to the city of Salta) to the Tincalayu mine with production commencing on 5 July 2014.
- Cash position of A$25.8m at the end of the quarter excluding funds in Olaroz Lithium Project companies.
- Corporate videos produced and available on the Company website.
Olaroz Lithium-Potash-Boron Project
The Olaroz Project is Orocobre's flagship project located in Jujuy province of Argentina. Together with partners, Toyota Tsusho Corporation ("TTC") and Jujuy Energia y Mineria Sociedad del Estado ("JEMSE"), Orocobre is building the first large scale "green fields" lithium brine project in approximately 20 years at a capital cost of US$229m and will have a design capacity of 17,500tpa of battery grade lithium carbonate. The Olaroz Project joint venture is operated through Argentine subsidiary Sales de Jujuy SA (SDJ SA). The effective Olaroz Project equity interest is: Orocobre 66.5%, TTC 25.0% and JEMSE 8.5%.
The construction of the project continues to proceed within budget and a total of approximately $214m has been spent or committed via executed contracts in the construction project (refer Construction Update on the Olaroz Lithium Project, 2 July, 2014). In terms of physical progress, the construction program is approximately 93% complete.
During the quarter, import licences were received by the Company for its purchase of the remaining directly imported equipment required for the Olaroz project. Primary lithium carbonate plant start- up/commissioning is scheduled to commence at the end of August 2014, with commissioning/start up of the micronizing and drying circuit to follow in mid September. Full automated control operations are scheduled to be introduced during October (refer Construction Update on the Olaroz Lithium Project dated 2 July, 2014). The project implementation is through EPCM (Engineering, Procurement and Construction Management) with a high proportion of local involvement through construction and supply contracts and local employment. The community and shared value policy "Jujuy First" continues as a key success factor, training local people under the supervision of high quality experienced professionals.
Borax Argentina has extensive operations and a fifty year production history producing borax chemicals, boric acid and boron minerals. The production currently comes from three principal mines at Tincalayu, Sijes and Porvenir with concentrators at the first two locations and a chemicals plant at Campo Quijano producing refined products. The borax circuit at the chemicals plant has been relocated to the Tincalayu mine where the mineral for borax production, tincal, is mined.
Approximately 9,558 tonnes of combined products were sold during the quarter. This is in line with the June quarter last year but lower than budget. Sales were negatively impacted by insufficient stocks caused by the relocation of the borax plant. Demand for borax chemical products was higher than anticipated in the original inventory planning. The company expects to recover the sales momentum during the coming quarters as production ramps up at the borax plant. This is against a backdrop of improving market conditions for borax products. In spite of the challenging market conditions during the year and a dip in borax sales during the past quarter, Borax Argentina achieved its budget for the financial year.
*Combined product sales volume by quarter:
-------------------------------- Quarter Combined Product Sales (tonnes) -------------------------------- September 2012 9,161 December 2012 10,007 March 2013 9,182 June 2013 9,562 September 2013 10,103 December 2013 11,410 March 2014 9,027 June 2014 9,558 --------------------------------*Combined product sales volumes include borax chemicals, boric acid and boron minerals
Borax Plant Relocation
During the quarter, the relocation of the borax decahydrate plant from Campo Quijano to the Tincalayu mine was completed with production commencing on 5 July 2014 (for more detail refer Borax Plant Relocation Completed).
The relocated plant will produce 100tpd of borax decahydrate at full capacity and the project has been completed within the original budget of US$3.7m net of existing plant and equipment.
As a result of the borax plant relocation significant benefits are expected to be achieved in both the reduction of operating unit costs and an increase in overall mineral recovery from the mine. Previously, run-of-mine ore at 17% B2O3 was concentrated at Tincalayu using dry magnetic separation at about 60% recovery to produce a 21% B2O3 grade, which was then transported 350 kms to Campo Quijano for further production into borax chemicals. Relocating the borax plant to the Tincalayu mine site allows for the direct processing of run-of-mine ore at a 15% B2O3 head grade without the need for magnetic separation and associated mineral losses plus it improves transport efficiency and cost by carting a 37% B2O3 refined product rather than the 21% B2O3 grade concentrate.
The Company considers this project an exciting development which will position the Borax Argentina business well for the future.
Historical Estimates to JORC Compliant Resource Conversion Programme
The company is in the process of upgrading the historical estimates of the different Borax Argentina mining properties to JORC/NI43-101 compliant mineral resources.
The Porvenir resource estimate, calculated in accordance with the requirements of JORC 2012 was the first re-evaluation of the Company's borate resource base (refer Amended Porvenir Resource Announcement, 29 April 2014). Geological interpretation and re-estimation of the resources at the Diablillos and Tincalayu projects is currently underway. The new resource estimate and exploration review reports for Tincalayu are expected to be completed by the end of the quarter and will shortly after lead into the development of a Life of Mine Plan (LOMP).
Once the geological interpretation and re-estimation of the resources at the Diablillos and Tincalayu projects are completed, the focus will move to the tertiary Sijes hydroboracite deposit.
Corporate and Administration
At the end of the quarter, the company had a cash position of A$25.8m excluding funds in Olaroz Lithium Project companies.
The Company has produced a corporate video package comprising three separate films, "Orocobre Corporate", "Salar de Olaroz Lithium Project" and "Borax Argentina". The links to these films are posted on the Orocobre home page.
To view all diagrams and photographs, please visit:
About Orocobre Limited
Orocobre Limited is listed on the Australian Securities Exchange and Toronto Stock Exchange (ASX:ORE) (TSE:ORL) (OTCMKTS:OROCF), and is building a substantial Argentine based industrial chemicals company through its portfolio of lithium, potash and boron assets. In partnership with Toyota Tsusho Corporation (TTC) and JEMSE, Orocobre has built and is now operating the world's first commercial, brine-based lithium operation constructed in approximately 20 years.
In 2018 Orocobre announced the Stage 2 Expansion of its flagship Olaroz Lithium Facility in Argentina. The Stage 2 Expansion will add 25,000 tpa of lithium carbonate production capacity, taking full production and capacity to 42,500 tpa of lithium carbonate for sale to industrial, technical and battery markets, positioning Orocobre as one of the world's largest and lowest cost lithium chemicals producers.
Additionally, Orocobre and Toyota Tsusho Corporation have commenced construction of the 10,000 tpa lithium hydroxide plant in Naraha, Japan. The construction of the Naraha Lithium Hydroxide Plant will further cement Orocobre's position as a global lithium chemicals producer operating at the bottom quartile of the lithium cost curve. This new hydroxide plant will be the first of its kind in Japan and will provide Orocobre product diversification suitable for different battery technologies and the potential for significant margin growth on our primary lithium carbonate being converted to battery grade lithium hydroxide.