Ann: Orocobre Signs Agreement With Toyota Tsusho , page-17

Hi Thesi,

a lot going on in that post... a few thoughts in response

You were right that there are pre-emptive rights. - Those with those rights would be that of TTC and JEMSE right?
I think you will find that they are reciprocal rights of pre-emption between TTC and ORE over their respective holdings in SDJ PTE. No rights to JEMSE whose interest is at the SDJ SA level.


At the moment I am taking my time to do some research on ORE so that I can understand what kind of an arrangement may eventuate for GXY.
A reasonable guess would be that the local provincial mining company (equivalent to JEMSE) will need to be involved and given the benchmark set by the SDJ SA and Minera Exar deals during less red hot times, I would expect a similar level of involvement as a minimum. I would have thought an obvious potential JV and technical partner was sitting next door at FMC - maybe it is too obvious...


I noticed mention regarding a spreadsheet error that has resulted in the recent adjustment in forecasting for the Sales De Jujuy operation.

• Has there been any mention of how long this has been going on?
• Has anyone claimed responsibility for it?

The formula error has apparently been in their production inventory model since the outset of operations and compounded over time. The anomaly has only recently been discovered. They have been completely candid with their explanation in the conference call.

Recently there have been some assertions that the reason all lithium stocks are suffering is a results of the sins of ORE and resulting in all lithium stocks paying for it.
A little harsh to blame the woes of the lithium world on one company. Plenty of other places to look -
- commercial/technical failures at RB Energy, Mt Cattlin Mk1 and Jiangsu (no disrespect intended),
- years of going no where at Enirgi, LAC, and countless others.
And that is before stating the obvious. When the lithium juniors bull market plateaued, the herd began its migration to the next hot thing. I think you will have seen a lot of discussion around cobalt stocks...



If Orocobre's production guidance is lower for FY17 that is likely to increase lithium prices and benefit all lithium stocks. - Even the ones that will never send a single shipment, but are just a part of the bubble stock grouping.

• So whilst lithium supply retracts a little, the price would likely rise so it might in fact turn out to be a bit on a non-issue if managed effectively?

A reasonable view, I think. Certainly, ORE is seeing stronger pricing flowing through, just as they had signalled some time ago.



I have been wondering why would Joe -who is generally so measured and cool be a great deal more assertive with his commentary of Orocobre?
Better that you ask Joe that. I would only observe that he makes a disproportionate amount of comment on ORE.



Wasn't it only recently that the company advised the market that Olaroz was operating at name plate of 17,500 tonnes per annum? - Then only a few months later we see a pull back of around 5,000 tonnes or roughly 30% of output.
No, they have not advised the market that Olaroz was at nameplate - you would have heard cheers going up all round these threads if that had been the case. They have, however, outlined their next, and hopefully final steps towards achieving nameplate.



But it does seem to be the common theme that he has doubts about the operation and the information that has been presented and as some here have pointed out he has got it right time and time again.
He is not infallible. He jumped to the conclusion that I was Richard, and persisted in referring to me as Richard's "Hot Copper Alias" even after I had tried to put him straight on that - he got himself moderated for his efforts. Clinging to a view when the evidence points to the contrary is not a great look.


Except the last tweet where Richard is still there. - Though maybe there is something brewing? Something needs to give when the leader has been in the job and 5 years after construction the plant is still not performing.
Construction didn't finish until around November 2014 so 2 1/2 years after construction is closer to the mark. Their original timeline gave themselves a ramp up of around a year with nameplate to be achieved in the following year. So, yes, behind schedule, but not five years... and (being a glass 70% full kind of person) the plant is performing but not yet as intended.

• Does Orocobre have something to sell in order to get out of their debt?
• Would a capital raising still be plausible even though the share price has gone down from its heights of around $5.

You seem to think that SDJ's debt is a problem - it is if they cannot service the finance costs, but otherwise gearing improves the financial return, especially so when the debt is at just 4.5% pa. SDJ SA is paying its own way and covering finance costs very easily now.
You should also consider the 30.7m USD cash held on ORE's balance sheet.

• Or will the company finally get Olaroz on track?

It is getting there. There is a clear enough path forward from the current good cash flow to the very good cash flows that will fund stage 2.

• Maybe TTC will make an offer to acquire more ownership in the JV whilst the opportunity is there?
• Could Joe be right and its time for a change?

I don't think you would find any appetite from ORE share holders on either of those suggestions. There is no need to sell the golden egg, nor is there any need to change the leadership. Personally I think that would be quite damaging to shareholder interests.