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Orocobre finds highest grade lithium in Argentina

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Orocobre (ASX: ORE), the leading lithium-potash resource developer in the Puna region of Argentina, has announced the further expansion of the Company's lithium-potash project pipeline with two significant discoveries.

Extensive pit sampling at Salinas Grandes has shown the highest average lithium and potassium grades in Argentina.

Grades average 1,409 mg/l lithium and 16,394 mg/l potassium over the Company’s properties on the Salinas Grandes salar nucleus, with a very wow average magnesium to lithium ratio of 2.6.

The values from Salinas Grandes are significantly higher than reported data from other salars in Argentina, and are comparable to the reported brines from the Salar de Atacama - the world‟s largest and lowest cost lithium producer from brines.

The second is the discovery of a high quality potassium target at the Company's Laguna de Guayatoyoc property.

The projects are held by the Company's 85% owned subsidiary, South American Salars Pty Ltd.

Orocobre's managing director, Richard Seville, said "the Salinas Grandes discovery builds on the Company's commanding position in Argentina's Puna Lithium Province.

The Salinas Grandes discovery, along with our Olaroz and the related Cauchari property, provide further evidence that Orocobre?s properties in the Puna Lithium Province appear to represent the brine "sweet spot"of Argentina."

"Salinas Grandes has the potential to become a valuable addition to our long-term portfolio of high quality resources, and cements Orocobre as a lithium development market leader," Seville said.

"Based on our initial findings, Salinas Grandes could become one of the world's premier lithium assets, and its proximity to our other interests provides an opportunity for significant operational synergies."

"Over the remainder of this year, as we complete the Olaroz Definitive Feasibility Study with Toyota Tsusho Corporation, we will conduct further evaluations of the Salinas Grandes discovery to determine whether to develop the deposit as either a stand-alone lithium project or as part of an integrated plan.” he added.

The low Magnesium/Lithium ratio is on a par with the best brines, including from Orocobre's Salar de Olaroz project, and is materially lower than Atacama.

Pit sampling on the Company?s Guayatoyoc properties show potassium grades averaging 4,635 mg/l potassium (K) (ranging from 39 mg/l to 7,464mg/l K) over an area of 33,000 hectares.

The properties are located approximately 70kms east- south east of the Company?s flagship Salar de Olaroz project, which is being developed under an agreement with Toyota Tsusho Corporation, (ASX Announcement: 20 January 2010).

The properties held by Orocobre cover approximately 148,000 hectares in and around Salar de Salinas Grandes and Laguna de Guaytoyoc. This includes approximately 12,500 hectares of salar nucleus in Salinas Grandes, significant additional areas of prospective salar margin and 33,000 hectares covering Guayatoyoc.

The Salinas Grandes and Guayatoyoc properties are owned 100% outright, or with rights to purchase 100%, by South American Salars Pty Ltd, an 85% owned subsidiary of Orocobre.

The majority of the area has been acquired by applications over vacant ground followed by augmentation of a number of smaller properties through acquisitions from local parties.

The company has also acquired a large area of approximately 4,000 heactares of salar nucleus and prospective margin at Salinas Grandes from UK based Red Sea Resources Ltd for a consideration of US$923,500 (US$422,500 in cash and US$500,750 in shares priced at A$1.81/share).

The sampling programmes for the Company's two discoveries were undertaken by digging pits until brines were intersected. The pits were up to 3m deep and dug by hand until free flowing brine was intercepted. The brine was allowed to clear and a 2 litre sample taken from which a 50ml subsample was taken.

Samples were sent to UK-owned, Alec Stuart Laboratories in Mendoza.

Preliminary analysis of the data from the pit sampling indicates high concentrations of lithium and potassium in brines at the south/west of Salar de Salinas Grandes. To the east and to the north, the grades decrease. Further north as one trends to Guayatoyoc, the lithium grades decrease further to sub-economic levels.

The Potassium to Lithium ratio also changes with ratios in the order of 12 in the south/west and ratios of above 60 at Guayatoyoc. The variation in chemistry suggests two different brine sources for the overall salar.

During the second quarter of 2010, Orocobre intends to commence a drilling and sampling programme at Salinas Grandes together with preliminary hydrological studies to further evaluate the project.

Environmental Impact Statement (EIS) approval has been already received for this work in the Salta Province, where the majority of the Salinas Grandes properties are located.

At Olaroz, the Company is advancing the Definitive Feasibility Study investigations. This work is being funded by its project partner, Toyota Tsusho Corporation.

The Company expects to make the decision to move forward with the Olaroz Project later this year, following successful completion of the Definitive Feasibility Study.

Project construction is anticipated to begin in early-2011 and initial lithium production is expected to commence in early-2012.

Added Seville, “Orocobre has a significant field position in the salars that represent the ”sweet-spot” of Argentina's Puna Lithium Province. We are continuing exploration and development work in this emerging area, and are committed to making this region a global force in the production of high quality lithium for use in a growing list of applications.”

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