Shares in Australian-listed Orocobre (ASX: ORE) have reacted strongly to news the company's "highly attractive" Olaroz Project in Argentina had the potential to be a low cost producer of lithium and potash products.
The announcement saw shares in Orocobre to spike 15c, or 13.6%, to $1.25.
In a statement, the company said due to its excellent brine chemistry and other characteristics, the Olaroz Lithium-Potash project could become a very low cost producer of lithium and potash products and competitive with existing lithium brine producers in South America.
The recent work and modelling indicates lower operating costs than in the scoping study with high recoveries of lithium and potash.
In early 2009, Orocobre announced its initial Salar de Olaroz JORC compliant resource statement and related Scoping Study.
The JORC compliant inferred resource was estimated as 350 million kL of brine at 800g/kL lithium and 6,600 g/kL potassium to 55m depth (equivalent to 1.5 million tonnes of Lithium carbonate and 4.4 million tonnes of Potash and within the then existing property boundaries of the company.
The related Scoping Study indicated that Olaroz had the potential to be a highly attractive project with favourable capital costs and operating costs, yielding high investment returns with low processing technical risks. With such positive initial conclusions, the company committed to move forward with a series of technical and business initiatives leading to a DFS with the goal of the commencing construction in late 2010.
The technical activities to date include the commencement of large diameter water bores drilled and long term pump testing and start of resource definition, sampling and testing program; the completion of surface geophysical surveys; evaporation test work six months into 12 month program, while environmental impact study investigations has kicked off.
Subject to regulatory approvals and finance, the company expects development to commence late in 2010 with initial production at the end of 2011.
Orocobre managing director Richard Seville said the project was well advanced compared to other brine exploration projects, having completed a resource estimate and scoping study and now advancing through a DFS.
"Coupled with the high quality of the brines and related technical advantages the Olaroz project has significant time advantages over other projects," Mr Seville said.
He also said the company was in discussions with a number of off-take partners regarding the financing and development of the project, with plans to significantly increase land position and double recent acquisitions to 14,000 hectares.
"These areas, particularly the salar nucleus, are prospective for sub-surface lithium and potassium brines," Mr Seville said.
"The salar nucleus was increased by 35% to 10,000 hectares and 4,000 hectares of salar margins were added and are expected to significantly increase the near surface resource"
Orocobre is aiming to become a single focused Lithium and Potash Company with the de-merger of its hard rock metalliferous assets into Elementos, due to list on the ASX in December 2009.