Seeking Alpha - Strong Buy, page-25

Hmmm - songo - I see you fell for Richard Seville's sleight of tongue. When he said they are fast-tracking phase 2 what he was actually advising us was that there was yet another delay of at least 3 to 6 months in making a final investment decision on phase 2 and the LiOH plant. This delay comes after a series of delays: if Orocobre had stuck to their original timetable phase 2 would be up and running already. What Mr Seville actually announced was yet another delay but with a promise of an attempt to catch up on some of the lost time (phase 1 was supposed to be operating at nameplate by 2015 so how much weight you give to that promise is up to you).

If the markets do crash then the decision by Orocobre and Toyota Tsusho to pump $300m into Orocobre and for Toyota Tsusho to take a blocking stake in Orocobre will be seen as brilliant in hindsight. Orocobre will not have to go back to the market at a time when ORE could be much lower than it is now, it is not over its head in net debt (bankers tend to pull credit lines in a market crash) and Orocobre does not have to worry about a predator taking advantage of a depressed ORE price to mount a takeover bid for Orocobre because Toyota Tsusho holds that 15% blocking stake. I am not suggesting that the timing of the cap raising was bad, I just cannot understand it seeing that Orocobre is in a holding pattern for the foreseeable future.

Also niu, in Olaroz Orocobre already has a tier one project which (from memory) even if phase 1 runs for 40 years will have 85% of its resources still in place. If Orocobre wants to rapidly ramp up production it does not need to rely on Advantage to increase its (indirect) resource base. One advantage of Advantage is that it spreads the risk a bit wider for Orocobre.