What ORE brings to the table, page-3

Very quickly, the biggest issues ORE had, from memory, were that:

• They never reached the Olaroz Stage 1 nameplate production capacity of 17,500 tonnes lithium carbonate per annum (and still haven't).
• They produced a lot of technical grade and not enough battery grade through the purification circuit.
• There was an issue discovered that affected the brine concentrations in the ponds that was due to a spreadsheet error - someone else alluded to that here recently.

Joe Lowry was probably right with some of his criticisms a number of years back. But they have mostly been fixed by bringing on board Martin Perez de Solay as the new CEO, who seems to be doing an excellent job and the best thing is he is a local and he can help manage the biggest risks to the company, which are dealing with the Argentinian government and the currency inflation/devaluation issues associated with South America. (As an aside, I lived in Argentina many years ago for one year and experienced the military dictatorship and 300%+ inflation, with prices going up in shops every day. It was quite an eye-opener. Their inflation is much lower these days, but it would still be in the double figures, compared to ours which sits at the 2% to 3% level.)

What does ORE bring to the table? A producing brine asset in Olaroz. Stage 2 expansion is nearing completion. Stage 3 expansion is on the radar. Cauchari is located close to Olaroz. Cauchari was partially sold to Advantage Lithium who did all the drilling and building up the resource and then ORE scooped them back up again in the depths of the low lithium prices, so that is a second site primed for future growth. Toyota Tsusho is an excellent partner at Olaroz, they own a slice of Olaroz Stage 1 - it is 66.5% owned by ORE, Toyota Tsusho owns 25% and the mining investment company owned by the provincial Government of Jujuy, Jujuy Energia y Mineria Sociedad del Estado (JEMSE) owns 8.5% (it's like a local royalty for them). They also have an excellent community engagement program in Olaroz.

The Stage 2 expansion of Olarroz is 25,000 tonne per annum (total 42,500 tonne per annum). The proposed product mix is 17,500 tonne per annum battery grade lithium carbonate (>99.5% Li₂CO₃) from the existing purification circuit, and 25,000 tonne per annum primary grade lithium carbonate (>99.0% Li₂CO₃), of which ~10,000 tonne per annum will be used as feedstock for the Naraha Lithium Hydroxide Plant, currently under construction in Japan and nearing completion. They wanted to expand into lithium hydroxide and they can feed the plant with their technical grade lithium carbonate, so that is the rationale behind that.

They also have some other brine exploration properties for the future, Inchuasi, Antofoalla and Guayatoyoc. No one really talks about these, they are so far off in the future. The ORE website is a little out of date and says they are owned by Advantage but ORE has since acquired 100% of Advantage Lithium.

I assume GXY were staring down the barrel of being a hard rock mining company but needing to design, build and commission a new overseas brine asset, something that hadn't been done for thirty years or so until ORE did it at Olaroz. They must have decided that ORE had all the skills, experience, connections and manpower to do the job, without GXY reinventing the wheel and having to go through a lot of pain scaling up expertise in a foreign country that not only speaks a foreign language but is culturally very different.

One final thing, the gas pipeline that goes to the ORE Borax Tincalayu plant is only 20km from Sal de Vida (Borax Argentina is a legacy, break-even operation, as far as I can tell, so no big deal there.) That will allow the SdV plant to use gas rather than diesel, which will be much cheaper and slightly more environmentally friendly. Gas is very cheap in South America. I assume the gas pipeline was built by the Argentinian govt way back when, so you'd be getting a very expensive asset at the bargain price of a 20km extension. Maybe that's where the talks between the two companies began, but who knows.

No sugar-coating from me above, but I will say that I've held since 2008, through thick and thin, and I think ORE has a bright future and the merged entity probably has an even brighter future.