Orocobre (ASX: ORE; TSX: ORI) has finished a program of long-term pump testing on five test-production wells at the Cangrejillos/Salinas Grandes Potash Lithium Project in north-west Argentina.
Lithium is growing in importance as a dominant product used in batteries for electric cars and smart phones / tablets.
Importantly the testing at Salinas identified that brine volumes can be extracted from the shallow resources at potentially commercial rates and with stable grades that could allow for modest annual production of potassium and lithium.
Where the 85% owned Salinas Grandes fits in to the Orocobre potassium-lithium strategy, is that it is located 140 kilometres by road from the the company's flagship Olaroz project which is currently under construction and fully-funded to commercial production, and Salinas Grandes could augment Olaroz.
Orocobre said that at Salinas Grandes brine grades stabilised during the pumping tests with some variation in average grade between holes, with test work since 2010 suggesting the attractive brine chemistry; with a low Mg/Li ratio, high K/Li ratio and low sulphate and calcium levels; will result in high recoveries of potassium and lithium.
Salinas Grandes has an inferred resource, to a depth of 13.3 metres, estimated to contain 56.5 million cubic metres of brine at 795 mg/L lithium and 9,550 mg/L potassium.
This is equivalent to 239,200 tonnes of lithium carbonate and 1.03 million tonnes of potash (potassium chloride) based on 5.32 tonnes of lithium carbonate being equivalent to 1 tonne of lithium and 1.91 tonnes of potash being equivalent to one tonne of potassium.
Internal studies are underway to develop the strategy for further project advancement.
Olaroz lithium project under construction
Olaroz is a massive salt lake containing lithium, and the potential for the project's resource is high considering the under-explored nature of it.
The project is fully-funded to commercial production, with stage 1 production of 17,500tpa to commence in the June quarter 2014.
The differentiating factor of Olaroz over other projects is the low operating cost and high margins, with forecast annual EBITDA of around US$70 million for stage 1 lithium carbonate production rate.
Olaroz has a large world-class JORC/NI 43-101 resource (6.4mt LCE, 19.3mt KCL, 1.85Mt B) with significant expansion potential, as a Feasibility Study considered 40 years with only 15% resources extracted.
Battery grade lithium carbonate has been produced at the Olaroz pilot plant for more than 2 years, with Orocobre having key partnerships with Toyota Tsusho Corporation and Jujuy provincial government mining company.
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