KEY HIGHLIGHTS
OPERATIONS
- Another record quarter at Mt Cattlin with 67,931 dry metric tonnes (dmt) of spodumene concentrate produced in line with customer requirements at a unit cash cost of
US$351 /tonne - 89,640 dmt of product was shipped in the quarter with a realised average price of
US$779 /tonne generating revenue ofUS$69.8 million - Contracting arrangements are well advanced for further shipments of ~38.5kt in the December quarter and ~25kt in early
January 2022 with a target grade of 5.7% Li2O - Average pricing for these shipments is approximately
US$1,650 /tonne CIF for 6% Li2O, almost double that of the September quarter - At Olaroz2, 2,802 tonnes of lithium carbonate were produced, 58% of which was battery grade and exceeded the budgeted target of 50%
- Sales were 2,622 tonnes at a price of
US$9,341 /tonne FOB3 generating revenue ofUS$24.5 million - Expansion works at Olaroz have reached 60% completion
- The lithium carbonate sales price has increased by over 200% in the last year and guidance for the December quarter has been revised upwards to
~US$12,000 /tonne FOB3
DEVELOPMENT PROJECTS
- Construction is virtually complete at the Naraha Plant and pre-commissioning works are well underway
- Early construction and procurement at Sal de Vida advances with the completion of the wellfield drilling program and mobilisation of the earthworks and liner installation contractors to site in anticipation of receiving final permits by year end
- Feasibility study works and basic engineering at
James Bay are in the final stages with results and a maiden reserve scheduled for release during the December quarter
CORPORATE & FINANCIALS
- Merger with Galaxy Resources Limited (Galaxy) successfully implemented via a scheme of arrangement
- At 30 September, the merged entity held cash of
US$423.6 million , of whichUS$140.1 million is being held as collateral until practical completion for the Naraha and Olaroz Expansion debt facilities
SUSTAINABILITY
SAFETY PERFORMANCE
Safety performance of the merged entity continued to improve with a Total Recordable Injury Frequency Rate of 3.4 for the rolling 12 months, a 20% improvement compared to the previous six month period. The quarter closed with two recordable injuries at Mt Cattlin, two at the Olaroz Lithium Facility and one at Borax Argentina. All injuries were of low severity and have since been investigated with corrective action taken to prevent future occurrences.
A number of initiatives were undertaken during the quarter as part of the Company’s continued focus to maintain the highest possible health and safety practices at all operations. This includes a mental health improvement plan and a principal hazard management pilot at Mt Cattlin, a hand care safety program to support expansion activities at the Olaroz Lithium Facility and a comprehensive hazard identification campaign at Sal de Vida.
COVID-19 RESPONSE
All Argentinian operations are adhering to the COVID-19 Bio-Security Protocol and at quarter end vaccination rates had increased significantly. Vaccination rates across these operations are well above the national average with 97% and 88% of the Sal de Vida and Olaroz workforce vaccinated with their first dose, respectively.
The Western Australian (WA) Government has also enforced mandatory full vaccination for all fly-in fly-out and local workers on WA mine sites by
SHARED VALUE PROGRAM AND COMMUNITY
The Shared Value team was established in
In compliance with the COVID-19 Bio-Security Protocol, community engagement and briefings continued throughout the quarter with various development initiatives including the Program to Support Food Independence which is expanding into new communities. Various health and educational initiatives were also undertaken in the communities surrounding the Sal de Vida project. Construction of a first aid facility in Ciénaga Redonda was completed and technical training courses and supplier development programs were held in the various communities of Antofagasta de La Sierra.
OPERATIONS
MT CATTLIN
SPODUMENE CONCENTRATE | RAVENSTHORPE, |
Due to record production rates achieved, forecast production for CY21 has been revised upwards to 210,000 - 220,000 dmt of spodumene concentrate, from the previous guidance of 195,0000 – 210,000 dmt. As a result, forecast cash costs have been revised down to
Table 1: Mt Cattlin operational/sales performance & CY21 forecast production metrics
Mining | Units | CY21 Forecast Production Metrics | Sep Q | Jun Q | Mar Q |
Total material mined | bcm | 5,400,000 - 5,900,000 | 1,330,080 | 966,920 | 1,007,177 |
Ore mined | bcm | - | 195,285 | 174,358 | 138,132 |
Processing | |||||
Total ore processed | wmt | 1,450,000 - 1,650,000 | 429,395 | 427,587 | 310,741 |
Grade of ore processed | % Li2O | 1.2 - 1.3 | 1.48 | 1.44 | 1.47 |
Mass yield | % | - | 16.1 | 15.1 | 15.3 |
Recovery | % | 58 - 62 | 61.7 | 60.0 | 59.7 |
Concentrate produced | dmt | 210,000 - 220,000 | 67,931 | 63,321 | 46,588 |
Grade of concentrate produced | % Li2O | 5.6 - 5.8 | 5.7 | 5.7 | 5.8 |
Sales | |||||
Concentrate shipped | dmt | - | 89,640 | 48,499 | 29,917 |
Grade of concentrate shipped | % Li2O | - | 5.7 | 5.8 | 5.9 |
Realised price | US$/dmt CIF | 779 | 517 | 348 | |
Revenue | US$ million | 69.8 | 25.1 | 10.4 | |
Production Costs | |||||
Cash cost per tonne produced | US$/t FOB | 390 - 420 | 351 | 328 | 384 |
Production
A consecutive record quarter was achieved with 67,931 dmt of spodumene concentrate produced, up 7% quarter on quarter (QoQ). Product grade of 5.7% Li2O was in line with customer requirements and excellent operational performance was due to favourable head grade and improved processing rates and recoveries.
Mining activities continued to source ore from the 2NE pit and material mined of 1,330,080 bcm is in line with pre-stripping activities and full year guidance. The optical ore sorters continue to make positive contributions to throughput from the stockpiles of low-grade ore and additional ore sorters were commissioned to increase the throughput of low-grade ore.
Sales & financial performance
89,640 dmt of spodumene concentrate was shipped during the quarter at an average grade of 5.7% Li2O, generating revenue of
The FOB unit cash cost of spodumene concentrate produced for the quarter was
Sales outlook and guidance
The Company continues to experience very strong demand for its spodumene concentrate as rising downstream production increases the utilisation of spodumene converters in
OLAROZ LITHIUM FACILITY
LITHIUM CARBONATE | JUJUY PROVINCE, |
Production
Production for the September quarter was 2,802 tonnes, up 19% from 2,352 tonnes in the previous corresponding period (PCP), with 58% of production being battery grade lithium carbonate.
Sales and financial performance
Quarterly product sales were 2,622 tonnes of lithium carbonate, 61% of which were battery grade specifications in line with customer requirements. The sales volume was up 3% QoQ but down 23% from the PCP, reflecting a decision in 2020 to reduce excess inventory at a time of significant market softness and uncertainty related to COVID-19.
Total sales revenue was up 13% QoQ to
December quarter pricing is anticipated to be approximately
Table 2: Olaroz operational, sales and financial performance metrics
Metric | Units | Sep Q | Jun Q | QoQ % | PCP Sep FY20 | PCP % |
Production | tonnes | 2,802 | 3,300 | -15% | 2,352 | 19% |
Sales | tonnes | 2,622 | 2,549 | 3% | 3,393 | -23% |
Average price received | US$/tonne | 9,341 | 8,476 | 10% | 3,102 | 201% |
Cost of sales | US$/tonne | 4,754 | 4,105 | 16% | 3,974 | 20% |
Revenue | US$M | 24.5 | 21.6 | 13% | 10.5 | 133% |
Gross cash margin | US$/tonne | 4,587 | 4,371 | 5% | -872 | n/a |
Gross cash margin | % | 49% | 52% | -5% | -28% | n/a |
Export Tax | US$/tonne | 370 | 407 | -9% | 70 | -9% |
Costs/margins
Cash cost of goods sold for the quarter increased by 20% on the PCP to
Gross cash margin for the quarter increased by 5% to
Expansion
During the September quarter work at Olaroz Stage 2 continued with strong adherence to the COVID-19 Bio-Security Protocol. Overall plant construction has now reached 60% completion.
Additional accommodation facilities are in operation with more than 700 personnel now on site. Most infrastructure is complete, nearly 85% of ponds are built and the soda ash and carbonation plants are 27% and 31% complete respectively.
Stage 2 is expected to be completed during H1 CY22 and to commence production in the following half.
BORAX
BORON MINERALS | SALTA-JUJUY PROVINCE, |
Sales update
September quarter sales of 13,083 tonnes of boron minerals and refined products represents a quarterly increase of 17% and an approximate increase of 46% from the PCP (Table 3). Total sales revenue was up 13% QoQ due to a 32% increase in the average realised price with an increase in refined product sales and a decrease in sales of mineral products.
Table 3: Combined product sales volume by quarter
Metric | Units | 2021 | QoQ % | 2020 | PCP % |
September | tonnes | 13,083 | 17% | 8,964 | 46% |
June | tonnes | 11,188 | 9% | 12,278 | -9% |
March | tonnes | 10,282 | 24% | 10,690 | -4% |
DEVELOPMENT PROJECTS
NARAHA PLANT
LITHIUM HYDROXIDE | NARAHA, |
The Naraha Plant, the first of its kind to be built in
Progress to date
Since construction commenced at the Naraha Plant there have been no Lost Time Injuries recorded with more than 310,000 hours worked on the project.
At 30 September, approximately
Site training and limited operations have continued throughout the period with construction now virtually complete and pre-commissioning works underway. Commissioning is anticipated to occur during Q1 CY22.
LITHIUM CARBONATE | CATAMARCA PROVINCE, |
Engineering & procurement
Procurement of the wells to ponds package is nearly complete. The majority of liners for the evaporation ponds have been delivered to site and the earthworks and liner contractor has mobilised to site in anticipation of final permits which have been delayed by COVID-19 and are now expected by year end. The wells and brine distribution contract is also expected to be awarded before year end.
Engineering for the process plant and non-process infrastructure is almost complete. Procurement for long lead items is also well advanced.
Early construction & wellfield drilling
All eight production wells have been completed for Stage 1 brine production. Pump testing has been performed by the hydrogeological team on the majority of the wells and results are in line with operating assumptions and expectations. A revised Resource & Reserve estimate is planned after completion of the drilling program and final assessment of the results. General infrastructure and early works also progressed onsite during the quarter.
Process development & piloting
The onsite piloting program continues to deliver exceptional results, with the most recent run achieving targeted results and all battery grade parameters, in line with current designs for commercial operations.
Approximately 1 tonne of lithium carbonate was produced and 85% of this product met battery grade quality specifications, compared to the feasibility study assumption of 80%. The battery grade product achieved a 99.95% lithium carbonate purity with Ca and Mg levels of 10 ppm each. These results are displayed in Table 4 below and demonstrate improved results against prior runs and typical battery grade specifications. Piloting will continue throughout the remainder of CY21 to support operational readiness for Stage 1 production.
Table 4: Battery grade specifications and piloting results
Detail | Lithium carbonate purity | Impurity species (ppm) | |||||
Ca | Mg | K | B | SO4 | Na | ||
Typical battery grade specification | > 99.5% | < 50 | < 50 | < 30 | < 50 | < 375 | < 180 |
Pilot run – 2020 | 99.8% | 125 | 165 | 26 | 36 | 135 | 103 |
Pilot run (with IX) – 2021 | 99.9% | 14 | <10 | 20 | <25 | 58 | 132 |
Pilot run (with IX) – | 99.95% | 10 | 10 | 12 | 25 | 30 | 72 |
SPODUMENE CONCENTRATE |
James Bay’s design basis is a 330ktpa spodumene operation utilising conventional open pit mining methods and a process flowsheet and plant configuration similar to Mt Cattlin.
Basic Engineering commenced during the quarter with mobilisation of key consultants led by G-Mining Services. Engineering, procurement and construction permit preparation is advancing while continuing to detail the Project Execution Plan and contracting strategy.
The NI 43-101 report and Reserve update are scheduled for release in the December quarter. Ongoing downstream studies continue, examining options regarding value adding to James Bay’s spodumene concentrate.
Additional site investigation works are planned for early CY22 with respect to sterilisation drilling (for final plant and infrastructure location) and further definition of the ore body.
The Environmental and Social Impact Assessment was re-submitted to authorities in
MARKET
DEMAND
Demand for lithium chemicals and spodumene concentrate increased materially during the quarter in all key geographies responding to sustained high production of lithium-ion battery materials and batteries.
Electric Vehicle (EV) sales of ~3.7 million units between January and
Demand for lithium carbonate in
Prices for lithium chemicals outside
Consistent with the high demand trend for lithium chemicals and pricing, spodumene concentrate spot sales during the September quarter exceeded
Lithium chemicals and spodumene concentrate are largely sold under long term contracts with a mixture of yearly negotiated prices and formula adjustments based off price indices. Reported spot prices only reflect marginal volumes rather than prices in the high-volume contract market. As such, spot prices may be considered leading indicators for the trend of future contract prices.
SUPPLY
Estimated lithium chemical production in
Whilst China’s power restrictions did not have a significant effect on lithium chemical supply during the September quarter, it affected production volumes of battery materials in certain Provinces. If these conditions were to persist during the December quarter, domestic production rates for the lithium-ion battery supply chain may be reduced.
The supply from lithium brine and spodumene producers is estimated to be at least 3% less than the projected demand volumes in 2021. This supply deficit is forecast to increase to over 20% over the next five-year period according to Benchmark Minerals.
Concerns for securing upstream supply from lithium resources across the battery supply chain has resulted in further consolidation with recent upstream acquisitions at higher multiples during the September quarter. It’s anticipated that lithium-ion battery producers and EV manufacturers will continue to play a more active role in sourcing lithium chemicals and spodumene concentrate in coming years under long term purchase agreements.
CORPORATE & FINANCIALS
MERGER WITH GALAXY RESOURCES
The scheme of arrangement (Scheme) in relation to the merger of
The merged entity is proposing a name change to
Mr
Implementation of the merger is proceeding as planned with the new Board holding its first virtual meeting in early October.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on Tuesday
FINANCIAL POSITION
At
Corporate cash of the merged entity decreased by
Net group cash at
Table 5: Total corporate cash and total proportional net group cash as at
US$ Million | |
ORE Corporate Cash | 283.3 |
ORE Restricted Cash LiOH | 9.8 |
ORE Restricted Cash Expansion | 130.3 |
AAL | 0.2 |
Total ORE Corporate Cash | 423.6 |
0.5 | |
TLC Naraha cash @ 75% | 6.1 |
SDJ Cash @ 66.5% | 6.5 |
SDJ Restricted cash @ 66.5% | 10.9 |
TLC Project Loan @ 75% | (54.4) |
SDJ External Debt @ 66.5% | (10.1) |
Mizuho Stage 1 @ 66.5% | (38.2) |
Mizuho Stage 2 @ 66.5% | (119.7) |
Total Proportional Net Group Cash | 225.2 |
A
The official foreign exchange rate depreciated by ~3.2% in the September quarter from AR$95.72 at
September inflation was 3.5% with an aggregate of ~9.3% in the quarter. Inflation for the 12 month period from
This release was authorised by Mr
For more information | |
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IMPORTANT NOTICES
This investor ASX/TSX release (Release) has been prepared by
This Release does not take into account the financial situation, investment objectives, tax situation or particular needs of any person and nothing contained in this Release constitutes investment, legal, tax, accounting or other advice, nor does it contain all the information which would be required in a disclosure document or prospectus prepared in accordance with the requirements of the Corporations Act 2001 (Cth) (Corporations Act). Readers or recipients of this Release should, before making any decisions in relation to their investment or potential investment in the Company, consider the appropriateness of the information having regard to their own individual investment objectives and financial situation and seek their own professional investment, legal, taxation and accounting advice appropriate to their particular circumstances.
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Past performance information given in this Release is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.
Forward-looking statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause the actual results, performances and achievements to differ materially from any expected future results, performances or achievements expressed or implied by such forward-looking statements, including but not limited to, the risk of further changes in government regulations, policies or legislation; the risks associated with the continued implementation of the merger between the Company and Galaxy Resources Ltd (the Merger), risks that further funding may be required, but unavailable, for the ongoing development of the Company’s projects including those projects acquired in the Merger; fluctuations or decreases in commodity prices; uncertainty in the estimation, economic viability, recoverability and processing of mineral resources; risks associated with development of the Company Projects including those projects acquired by the Company as a result of the Merger; unexpected capital or operating cost increases; uncertainty of meeting anticipated program milestones at the
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1 All figures presented in this report are unaudited
2 All figures 100%
3 “FOB” (Free On Board) excludes insurance and freight charges included in “CIF” (Cost, Insurance, Freight) pricing. Therefore, the Company’s reported prices are net of freight (shipping), insurance and sales commission. FOB prices are reported by the Company to provide clarity on the sales revenue that is recognised by SDJ, the joint venture company in
4 Excludes royalties, export tax and corporate costs
Source:
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