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easy hold...might grab some more of this cash machine at these...

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Panda7

10,461 Posts.

286

06/07/19

09:20

Post #: 39401585
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Originally posted by Sjlasx: ↑

So as the SP takes another dive, here's a brief look at the operations of Orocobre and current expansion.

Orocobre cash at end of March 2019 quarter was approx AUD380m. Group net cash approx AUD275m.
Current market cap AUD720m
In 3 years it likely will be producing 42500tpa LCE (including 10000tpa BG LiOH) with continued gross margins >50%.

Olaroz Lithium Brine facility

25000tpa LCE Stage 2 Olaroz expansion to add to 17500tpa S1 is well underway with large scale pond expansions, improvements to infrastructure and facilities etc. This will expand pond size from 4 km2 to 13 km2. Due to the timing of S2 capex construction, Stage 1 production will benefit from the increased pond sizes prior to the S2 plant coming online ie increased flow through of brine and liming capabilities.
When S1 and S2 are complete, S1 17500tpa will run through the purification circuit to produce BG Li2CO3. The 25000tpa S2 expansion will produce non BG primary grade 99.0% Li2CO3 with 9500tpa destined to Naraha LiOH JV in Fukushima and the remainder to industrial consumers.
Olaroz Stage 2 is fully funded with terms of a US$180m loan facility agreed (not yet signed) at similar rates to the current Olaroz financing (~4.5%) with a 7 year repayment schedule. It is assumed debt funding will come from Japanese entities. These terms are much friendlier than the banks provided to Australian spodumene start ups.

Nahara Lithium Hydroxide JV

Will be the first Japanese Lithium Hydroxide plant to convert prime grade (not BG) Olaroz Lithium Carbonate and is soon to break ground (within 3 months). FID approved. Fukushima site approved. Contractors approved.
US$91m capex funded:
Term loan of US$55m financed at rates <1%pa
Subsidy bridging loan of US$27m financed <1%pa
Japanese government subsidy of US$27m (upon mechanical completion)
Toyota Tsusho contribution US$2.3m
TTC economic interest 25% (will operate facility due to Japanese subsidies conditions
Orocobre contribution US$6.9m
Orocobre economic interest in Naraha LiOH plant 75% in return for payment of 7.6% of capex.
Where else can you pick up a 75% stake in a LiOH plant with only a US$6.9m commitment?
Orocobre will supply 9500tpa prime grade lithium concentrate to Naraha (not battery grade)
Olaroz prime Lithium Carbonate cash cost of production ~ US$4000. Naraha estimated conversion cost US$1500pt.
10ktpa LiOH requires 9500tpa Li2CO3 therefore cost of EV BG grade = ~ US$5300pt.
EV Grade LiOH is expected to stabalized around US$14000pt.
Also note, if EV BG Hydroxide pricing falls below EV BG Carbonate the JV will maintain a cost advantage over EV BG Carbonate from brine due to the gap in prime vs BG Carbonate costs of production from Olaroz.
This is lower than the majority of Spodumene to Hydroxide production costs. Many pundits apply the costs of 99.5% or higher EV BG Li2CO3 to argue for more economical comparative production costs of EV BG LiOH using Spodumene as the raw material - This is not the case as ORE is not planning to send BG material to Naraha.

Cauchari AAL / ORE JV

Advantage Lithium is pushing ahead with an expected PFS H2 2019. They are aiming for a 20000tpa LCE facility. Orocobre has a 25% interest in the Cauchari project adjacent to the Olaroz facility and a 33.5% stake in Advantage lithium. This provides Orocobre with an economic interest >50% in the project which is being operated by Advantage Lithium. The project has M & I resources of 4.5mt LCE at 476ppm lithium and low levels of magnesium ~2.5 mg/L.
The Cauchari project adjoins the Ganfeng Lithium Americas proposed development

I won't go into detail about Borax Argentina.

AIMHO
DYOR

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easy hold...might grab some more of this cash machine at these sub $3 levels

ORE Price at posting: $2.75 Sentiment: Hold Disclosure: Held
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