Orocobre (ASX: ORE, TSX: ORL) is a minerals exploration company focusing on lithium-potassium brine at the Olaroz Project in Argentina. Through its 85%-owned subsidiary, South American Salar Minerals Pty Ltd, the company also has interests in a pipeline of other salar (salt), lithium and potash projects in Argentina.
Orocobre (ASX: ORE, TSX: ORL) is well advanced on the road to becoming the next low cost lithium producer with the granting of development approval by the Jujuy Government, as well as the mining leases, for its Olaroz lithium project in Argentina.
First commercial production is targeted for early 2014 for an operation producing 16,400 tonnes of battery grade lithium carbonate and 10,000 tonnes of potash annually over a minimum 40 year mine life.
The economics are robust for the project with a Definitive Feasibility Study delivering an internal rate of return of 56% and a net present value of US$489 million (7.5% discount rate) after tax, on a capital of US$221 million.
Operating costs are expected to be low at around US$1,512 per tonne of lithium carbonate equivalent, reducing to US$1,230 per tonne with potash credits, against a lithium carbonate price of around US$6,000 per tonne.
The receipt of the mining leases for Olaroz clears the path for Orocobre to finalise the proposed project financing with Mizuho Bank, the associated loan guarantees with Japan Oil, Gas and Metals National Corp (JOGMEC), and the definitive agreements with joint venture partner Toyota Tsusho Corporation.
Orocobre expects to finalise these arrangements before the end of September, with project construction to begin immediately after.
Low cost lithium producer
The Olaroz Project, in the province of Jujuy, is widely recognised as the world's next large scale, low cost lithium-potash brine resource.
The DFS confirms a low operating cost, high margin project profile for Olaroz, which hosts a large JORC/NI 43-101 Resource of 6.4 million tonnes of lithium and 19.3 million tonnes of potash.
Importantly, this Resource has only been defined down to a depth of 200 metres.
Orocobre has joined forces with Toyota Tsusho Corporation to develop Olaroz, and has been producing battery-grade lithium carbonate from the project’s brines since early 2011 at an onsite pilot processing plant.
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