|Bid||6.34 x 0|
|Ask||6.38 x 0|
|Day's Range||6.26 - 6.41|
|52 Week Range||2.06 - 6.92|
|Beta (5Y Monthly)||1.73|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
Merger creates the 5th largest global lithium chemicals company with a diversified production base and exciting growth platform, with potential to unlock significant synergies and realise value to be shared by all shareholders. BRISBANE, Australia, April 19, 2021 (GLOBE NEWSWIRE) -- Orocobre Limited (ASX:ORE, TSX:ORL) (Orocobre) and Galaxy Resources Limited (ASX:GXY) (Galaxy) are pleased to announce that they have entered into a binding Merger Implementation Deed (MID) under which the two companies will merge via a Galaxy Scheme of Arrangement (Scheme) pursuant to which Orocobre will acquire 100% of the shares in Galaxy. Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share held at the Scheme record date. Upon implementation of the Scheme, Orocobre shareholders will own 54.2% of the fully diluted share capital of the combined entity and Galaxy shareholders will own the remaining 45.8%. The Scheme is unanimously recommended by the Board of Galaxy and each Galaxy Director intends to vote all the shares that they hold in Galaxy in favour of the Scheme (in both cases, subject to no superior proposal emerging and the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Galaxy shareholders). The Scheme is endorsed and supported by the Board of Orocobre, subject to no proposal for Orocobre emerging. As part of the proposed Scheme, Martin Rowley would become Non-Executive Chairman, Robert Hubbard would become Deputy Chairman, and Martín Pérez de Solay would remain CEO and Managing Director of the group, with a highly experienced and complementary Board and management team drawn from the combined group. A new name for the merged entity will be selected in due course representing the global reach of the new entity, which will have its head office in Buenos Aires, Argentina, a corporate headquarters on the Australian East Coast and an office in Perth. Highlights Summary Creating a Top 5 global lithium chemicals company1Highly complementary portfolio of assets delivering geographical and product diversification across brine, hard rock and vertical integration across the supply chainIndustry leading growth profile with enhanced financial position to optimise and potentially accelerate development with the ability and intent to capture further downstream valueCompelling industrial logic with significant value creation opportunities unique to this mergerHighly experienced and complementary Board and senior management teams to drive growthPotential to generate significant shareholder value with enhanced scale and financial capacity Galaxy Chairman Martin Rowley commented: “This transaction has the potential to be a significant value-creating opportunity for Galaxy and Orocobre shareholders. The Scheme provides shareholders of Galaxy with the opportunity to share in the significant benefits of being part of a larger diversified group and the synergies expected to be available to help enhance and progress our portfolio of world class assets. The merged entity's growth opportunities in both brine and hard rock position it uniquely to take advantage of expected rising EV demand for lithium.” Orocobre Chairman Robert Hubbard commented: “The logic of this merger is compelling. Both Orocobre and Galaxy shareholders, will benefit from the diversification, growth and scale of a top 5 global lithium chemicals company. I take this opportunity to re-iterate the group's ongoing commitment to the principles of delivering the highest level of transparency of our environmental, social and governance performance, the foundations upon which our assets have and will continue to be developed.” Orocobre CEO and Managing Director Martín Pérez de Solay commented: “The merger brings together assets and teams with highly complementary skills and knowledge, with a unique opportunity to create a leading independent lithium company. The merger consolidates the combined group’s position in Argentina and will give us significant operational, technical and financial flexibility to deliver the full value of our combined portfolio.” Galaxy CEO Simon Hay commented: “The merger with Orocobre represents an exciting opportunity for both Orocobre and Galaxy shareholders to consolidate and realise the full potential of our asset portfolios and technical capabilities. The transaction will allow the group to materially accelerate the development of our combined growth projects.” Orocobre and Galaxy will be hosting a joint investor call at 10.30am AEST (8.30am AWST) today, 19 April 2021. Orocobre and Galaxy are announcing their respective quarterly results today. The call can be accessed via the following link: https://services.choruscall.com.au/webcast/ubs-210419.html Transaction Summary Orocobre Limited (ASX:ORE, TSX:ORL) and Galaxy Resources Limited (ASX:GXY) have entered into a binding Merger Implementation Deed (MID) under which the two companies will merge via a Galaxy Scheme. Under the Scheme, Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share held on the record date for the Scheme. Orocobre shareholders will own 54.2% of the fully diluted share capital of the combined entity and Galaxy shareholders will own the remaining 45.8%. The Galaxy Board of Directors unanimously recommends that Galaxy shareholders vote in favour of the Scheme and each Galaxy Director intends to vote all the shares that they hold in Galaxy in favour of the Scheme (in both cases, subject to the Independent Expert opining that the Scheme is in the best interests of Galaxy shareholders and in the absence of a superior proposal). The Orocobre Board endorses and supports the transaction in the absence of a proposal for Orocobre. Under the Scheme, Galaxy Chairman Martin Rowley would become Non-Executive Chairman, Orocobre Chairman Robert Hubbard would become Deputy Chairman, Martín Pérez de Solay would remain CEO of the group and Simon Hay will would become President of International Business reporting to the CEO. The CEO together with the Board will commence an integration process to determine the optimal management team drawing from employees from both companies based on a best fit basis. On implementation of the Scheme, the Board of Directors will comprise four Independent Directors from Orocobre (including Mr Hubbard), four Independent Directors from Galaxy (including Mr Rowley), and the CEO Mr Pérez de Solay. It is agreed that both Mr Rowley and Mr Hubbard will retire from their roles within 12 months of implementation. They will lead a process to ensure that the longer-term Board composition is ideally placed to lead the merged entity going forward. Strategic Rationale Creating a Top 5 global lithium chemicals company Creates the leading ASX lithium company and a top 5 global lithium chemicals company2One of the world’s largest, most geographically diversified producers of lithium chemicalsVertically integrated and able to service multiple markets and customers Highly complementary portfolio of assets delivering diversification of production and vertical integration Diversified across geography, lithium source and end productsCombines two complementary, large scale tier-one assetsVertically integrated product strategy for all key assets Industry leading growth profile with enhanced financial position to optimise and potentially accelerate development with the ability and intent to capture further downstream value Significant portfolio of upstream and downstream growth projectsGrowth pipeline evenly balanced between production optimisation, construction, advanced projects, brownfield expansions and early-stage projectsUnique platform of expertise, capacity and geographic presence to consider further inorganic growth opportunities Compelling industrial logic with potentially significant value creation unique to this merger Ability to apply combined management and technical expertise across the merged group and shared IP to further de-risk Sal de Vida and optimise OlarozPotential for substantial savings in Argentina from expertise sharing, employee and contractor sharing and procurement savingsMarketing synergies expected from expanded customer relationships and a broader product base Highly experienced and complementary Board and senior management teams to drive growth Global team with significant technical expertise to deliver brine projects in ArgentinaProven track record of successfully delivering projects across brine, hard rock, and processingExtensive experience within Argentina shared across the combined board and senior management team Potential to generate significant shareholder value with enhanced scale and financial capacity Combined entity expected to be included in the ASX 200 index and approach ASX 100 index thresholdsSignificantly enhanced liquidity and capital markets profileStrengthened balance sheet with pro forma gross cash of US$487m3 well placed to deliver a world class project pipeline Conditions Key conditions to the implementation of the Scheme include: Galaxy shareholder approval;Approval by the Court;The Independent Expert concluding that the Scheme is in the best interests of Galaxy shareholders and not changing, withdrawing or qualifying that conclusion;No material adverse effect or prescribed event (as each defined in the MID) occurring in relation to either Orocobre or Galaxy (as applicable); andOther conditions customary for a transaction of this nature. The MID includes reciprocal exclusivity arrangements (including “no shop”, “no talk” and “no due diligence” restrictions and notification obligations) in favour of both parties, a matching right regime in favour of Orocobre and break fees in favour of both parties. The exclusivity arrangements are subject to customary exceptions that enable the directors of Galaxy and Orocobre to comply with their respective fiduciary and / or statutory duties. Full details of the terms and conditions are set out in the MID, a copy of which is set out in Annexure A. Timetable and next steps Galaxy shareholders do not need to take any action in relation to the Scheme at this stage. A scheme booklet containing information in relation to the Scheme, including the basis for the Galaxy Board’s unanimous recommendation, an Independent Expert Report and details of the Scheme is expected to be circulated to all Galaxy shareholders in late June 2021. An indicative timetable (which remains subject to change) is set out below: EventEstimated dateFirst Court HearingLate June 2021Dispatch scheme booklet to Galaxy shareholdersLate June 2021Scheme MeetingLate July 2021Second Court hearingLate July – Early August 2021Effective DateLate July – Early August 2021Record DateEarly – Mid August 2021Implementation DateMid August 2021 Advisers Orocobre’s financial adviser is UBS AG, Australia Branch and its legal adviser is Jones Day. Galaxy’s financial adviser is Standard Chartered Bank and its legal adviser is Ashurst. Conference Call Orocobre and Galaxy will host a joint investor call at 10.30am AEST (8.30am AWST) today, 19 April 2021. The call can be accessed via the following link: https://services.choruscall.com.au/webcast/ubs-210419.html This release was authorised by the Board of Galaxy Resources Limited and the Board of Orocobre Limited. Investor Relations Enquiries Andrew BarberOrocobre LimitedM: +61 418 783 701E: email@example.comPhoebe Lee Galaxy Resources Limited T: +61 8 9215 1700 E: firstname.lastname@example.org Media Enquiries Justin KirkwoodKirkwoodsT: +61 2 9231 5600M: +61 411 251 324E: email@example.comScott Rochfort Cannings Strategic Communications T: +61 435 878 614 E: firstname.lastname@example.org IMPORTANT NOTICES This announcement is a joint announcement by Galaxy Resources Limited ACN 071 976 442 (Galaxy) and Orocobre Limited ACN 112 589 910 (Orocobre). This presentation has been prepared in relation to the proposed merger between Galaxy and Orocobre by way of scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) (Scheme). Under the Scheme, Orocobre would acquire 100% of the fully paid ordinary shares in Galaxy in exchange for the issue of new fully paid ordinary shares in Orocobre. The Scheme is subject to the terms and conditions described in the merger implementation deed entered into between Galaxy and Orocobre on or about the date of this announcement (Merger Implementation Deed). A copy of the Merger Implementation Deed is attached to this announcement and available on the ASX website (at www.asx.com.au). Galaxy and Orocobre have jointly prepared this announcement based on information available to them as at the date of this announcement. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this announcement. To the maximum extent permitted by law, none of Galaxy or Orocobre, their respective directors, employees, agents or advisers, or any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this announcement or its contents or otherwise arising in connection with it. Forward Looking Statements This announcement contains forward looking statements concerning Galaxy, Orocobre and the merged group which are made as at the date of this announcement (unless otherwise indicated), including statements about intentions, beliefs and expectations, plans, strategies and objectives of the directors and management of Galaxy and Orocobre for Galaxy, Orocobre and the merged group, the anticipated timing for and outcome and effects of the Scheme (including expected benefits to shareholders of Galaxy and Orocobre), indications of and guidance on synergies, future earnings or financial position or performance, anticipated production or construction or development commencement dates, costs or production outputs, capital expenditure and future demand for lithium, expectations for the ongoing development and growth potential of the merged group and the future operation of Galaxy and Orocobre. Forward looking statements are not statements of historical fact and actual events and results may differ materially from those contemplated by the forward looking statements as a result of a variety of risks, uncertainties and other factors, many of which are outside the control of Galaxy, Orocobre and the merged group. Such factors may include, among other things, risks relating to funding requirements, lithium and other commodity prices, exploration, development and operating risks (including unexpected capital or operating cost increases), production risks, competition and market risks, regulatory restrictions (including environmental regulations and associated liability, changes in regulatory restrictions or regulatory policy and potential title disputes) and risks associated with general economic conditions. Any forward-looking statements, as well as any other opinions and estimates, provided in this announcement are based on assumptions and contingencies which are subject to change without notice and may prove ultimately to be materially incorrect, as are statements about market and industry trends, which are based on interpretations of current market conditions. There can be no assurance that the Scheme will be implemented or that plans of the directors and management of Galaxy and Orocobre for the merged group will proceed as currently expected or will ultimately be successful. You are strongly cautioned not to place undue reliance on forward looking statements, including in respect of the financial or operating outlook for Galaxy, Orocobre or the merged group (including the realisation of any expected synergies), particularly in light of the current economic climate and the significant volatility, uncertainty and disruption caused by the ongoing COVID-19 pandemic. Except as required by law or the ASX listing rules, Galaxy and Orocobre assume no obligation to provide any additional or updated information or to update any forward looking statements, whether as a result of new information, future events or results, or otherwise. Nothing in this announcement will, under any circumstances (including by reason of this announcement remaining available and not being superseded or replaced by any other presentation or publication with respect to Galaxy, Orocobre or the merged group, or the subject matter of this announcement), create an implication that there has been no change in the affairs of Galaxy or Orocobre since the date of this announcement. Mineral Resources and Ore Reserves reporting (by Galaxy and Orocobre) Any information in this announcement that relates to Sal de Vida Project Mineral Resources and Ore Reserves is extracted from the ASX announcement entitled “Sal de Vida Resource and Reserve Update” dated 14 April 2021 which is available to view on www.gxy.com and www.asx.com.au. Galaxy confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and that all material assumptions and technical parameters underpinning the Mineral Resources and Ore Reserves estimates in the relevant market announcement continue to apply and have not materially changed. Galaxy confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Any information in this announcement that relates to James Bay Mineral Resources is extracted from the ASX announcement, entitled “James Bay Resource Update” dated 4 December 2017 which is available to view on www.gxy.com and www.asx.com.au. Galaxy confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the Mineral Resources in the relevant market announcement continue to apply and have not materially changed. Galaxy confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Any information in this announcement that relates to Mt Cattlin Mineral Resources and Ore Reserves is extracted from the report entitled “2020 Resource & Reserve Update” dated 17 March 2021 which is available to view on www.gxy.com and www.asx.com.au. Galaxy confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the Mineral Resources and Ore Reserves estimates in the relevant market announcement continue to apply and have not materially changed. Galaxy confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Orocobre is not in possession of any new information or data relating to historical estimates that materially impacts on the reliability of the estimates or Orocobre's ability to verify the historical estimates as mineral resources, in accordance with the JORC Code. The supporting information provided in the initial market announcement on 21/08/12 continues to apply and has not materially changed. Additional information relating to Orocobre's Olaroz Lithium Facility is available on Orocobre's website in “Technical Report – Salar de Olaroz Lithium-Potash Project, Argentina” dated May 13 2011, which was prepared by John Houston, Consulting Hydrogeologist, together with Mr. Michael Gunn, Consulting Processing Engineer, in accordance with NI 43-101. The information in this report that relates to exploration reporting at the Cauchari project has been prepared by Mr. Murray Brooker. Mr. Brooker is a geologist and hydrogeologist and is a Member of the Australian Institute of Geoscientists. Mr. Brooker is an employee of Hydrominex Geoscience Pty Ltd and is independent of Orocobre. Mr. Brooker has sufficient relevant experience to qualify as a competent person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. He is also a “Qualified Person” as defined in NI 43-101. Mr. Brooker consents to the inclusion in this announcement of this information in the form and context in which it appears. Note on synergies Please also refer to the investor presentation (including slides 7, 8, 13, 14 and 15) released by Galaxy and Orocobre to ASX simultaneously with this announcement for further information about the basis and assumptions underlying any statements about expected synergies in this announcement. Not for release or distribution in the United States This announcement has been prepared for publication in Australia and may not be released to U.S. wire services or distributed in the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction, and neither this announcement or anything attached to this announcement shall form the basis of any contract or commitment. Any securities described in this announcement have not been, and will not be, registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States except in transactions registered under the U.S. Securities Act of 1933 or exempt from, or not subject to, the registration of the U.S. Securities Act of 1933 and applicable U.S. state securities laws. TSX matters Orocobre is an “Eligible Interlisted Issuer” for purposes of the TSX and intends to rely on the exemptions set forth in Section 602.1 of the TSX Company Manual in respect of the Scheme. The issuance of shares by Orocobre pursuant to the Scheme is subject to acceptance by the TSX. ___________________ 1 Based on market capitalisation as at ASX market close on 16 April 2021.2 Based on market capitalisation as at ASX market close on 16 April 2021.3 As at 31 March 2021 and includes restricted cash of US$108m.
BRISBANE, Australia, April 19, 2021 (GLOBE NEWSWIRE) -- MARCH QUARTER 2021 KEY HIGHLIGHTS1 Olaroz Lithium Facility (Olaroz) operations increased the Gross Cash Margin more than $1,800/tonne with the sales price up more than 50%. Costs remained near all-time lows despite much a greater proportion of sales being battery grade material which has higher production costs. Market conditions have improved materially and this will be reflected in higher June quarter product pricing. Operations continued under the established Bio-Security Protocol. OLAROZ LITHIUM FACILITY (ORE 66.5%)2 Activities continue to focus on the health and well-being of our staff, contractors and communities while maintaining production and expansion works with no COVID-19 related stoppages during the periodProduction of 3,232 tonnes was the highest achieved in a March quarter and up 18% on the previous corresponding period (PCP). It was down 13% quarter on quarter (QoQ), due mainly to a nine day planned maintenance program undertaken during February and an increase in the proportion of battery grade productSales volume of 3,032 tonnes was up 18% on PCP, but down 30% QoQ after record sales to clear inventory in the December quarterSales revenue was up 7% QoQ to US$17.7 million with the realised average price achieved up 54% to US$5,853/tonne on a free onboard basis (FOB)3 with stronger lithium market conditions. Prices have now increased by nearly 90% over the last six monthsCash costs (on a cost of goods sold basis)4 were down 3% to US$3,867/tonne on PCP excluding the export tax of US$210/tonne. Importantly, costs were only up 7% QoQ despite the proportion of battery grade sales increasing from 34% to 47% QoQGross cash margin was up materially to US$1,986/t, an improvement of US$1,812/t on the December quarter with better pricingAn agreement has been reached with Prime Planet Energy and Solutions (PPES), the automotive battery cell manufacturing joint venture between Toyota (51%) and Panasonic (49%) for supply of battery grade lithium carbonate during Japanese fiscal year 21/22 (JFY21/22). Future annual discussions will determine details for subsequent years leading to supply of 30,000 tonne per annum (ktpa) of lithium carbonate equivalent (LCE) by CY25. Orocobre has commenced dispatching product from Olaroz to a bonded warehouse in Japan in preparation for the first delivery of battery grade lithium carbonate to PPES.Lithium prices continue to recover and Orocobre price guidance has now been raised with Q4 FY21 prices expected to be approximately US$7,400/tonne (FOB)3. Budgeted FY22 production is fully contracted and subject to variable pricing related to benchmarks that will benefit from the expected continued improvement in market conditions ____________________________ 1 All figures presented in this report are unaudited2 All figures 100% Olaroz Project basis3 Orocobre report price as “FOB” (Free On Board) which 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 recognized by SDJ, the joint venture company in Argentina4 Excludes royalties, export tax and corporate costs LITHIUM GROWTH PROJECTS During the March quarter work at Olaroz Stage 2 continued with strong adherence to the COVID-19 bio-security protocol. At the end of March, 70% of contracts had been awarded and a further 8% were at award recommendation stage. Additional accommodation facilities were completed in the quarter and more will become available in the June quarterStage 2 is expected to be complete in H1 CY22 and to commence production the following half. Production will ramp up over two years to full capacity of 25ktpa of primary grade lithium carbonate by H2 CY24Naraha Lithium Hydroxide Plant construction has continued throughout the period and is now approximately 94% complete. Commissioning will be delayed until Q1 CY22 due to COVID-19 related delays of travel to site by international techniciansA scoping study into a further expansion at Olaroz (Stage 3) commenced during the March quarter. The study will investigate options for additional production of 25-50ktpa from Olaroz, Cauchari or a combination of both, leveraging existing Stage 1 and 2 infrastructureDiscussions continue with Toyota Tsusho Corporation (TTC) regarding an expansion of lithium hydroxide production to meet forecast growth in demand BORAX ARGENTINA Overall sales volume for the December quarter was 10,282 tonnes, down 3% QoQ and 4% on PCPSales revenue was up 5% QoQ due to higher average prices that were up 8% QoQ with strong customer demand CORPORATE At 31 March 2021, Orocobre corporate had available cash of ~US$241.6 million of which US$11.1 million and US$85.5 million have been set aside as pre-completion guarantees for the Naraha debt facility and Olaroz Expansion debt facility respectivelyIncluding SDJ and Borax cash and project debt, net group cash at 31 March 2021 was US$97.7 million, down from US$119.8 million at 31 December 2020 OLAROZ LITHIUM FACILITY COVID-19 During the first quarter of CY21 the epidemiological situation in Argentina was under control, with low infections in our areas of operation. The team is planning additional preventive actions to manage any impact from an expected second wave across the country. As vaccination for all employees is not yet an option, our first and most effective barrier remains a strong Bio-security Protocol. Daily monitoring of the workforce health continues throughout 14-21 day rosters that apply to all personnel and include those employees who would normally reside in local communities. Since July 2020, the Company medical service has performed more than 9,500 COVID-19 tests (Serological and PCR). At this point, approximately 35% of our employees have had the disease and have generated high levels of antibodies. Additional accommodation facilities are being installed to enable the growing construction workforce to operate within the COVID-19 bio-security protocol. SAFETY Health and safety remains a key priority for the Company. One Lost Time Injury (LTI) was recorded with a contractor at Olaroz on February 27th after 446 days without an LTI in both the operations and the expansion project. The worker involved was provided immediate medical assistance and is now recovering. In March the ISO 14001 & 9001 & 18001 audit was performed. No major findings were reported and recertification was granted. A new work permit system and hazard analysis tool will be implemented in the next several weeks. The Dupont programs continue to enhance our safety culture and remain a key priority. Orocobre is consolidating all key leading and lagging indicators following the ACSI Future Health and Safety reporting. OPERATIONAL UPDATE QUALITY Brine concentration remains well above prior years supporting excellent plant stability and reliability. The continuing high process capability ratio (CpK) demonstrates the ongoing ability of Olaroz to produce lithium carbonate well within specification limits. Product quality continues to improve with reduced magnetic particles and increased product consistency. PRODUCTION Production for the March quarter was 3,232 tonnes, up 18% from 2,732 tonnes in the PCP with 55% of production being battery grade lithium carbonate. Brine concentration remains at higher levels than in recent years resulting in high daily production rates, higher plant recovery and continued low costs. A nine day plant shutdown was undertaken in February for planned maintenance. SALES AND COMMERCIAL Product sales were 3,032 tonnes of lithium carbonate up 20% on PCP but down 30% QoQ after a strong December quarter. Total sales revenue was up 7% QoQ to US$17.7 million and up 46% on PCP. The average price received was up 54% QoQ to US$5,853/tonne on an FOB3 basis and up 22% on PCP with stronger pricing relative to a year ago. Approximately half the sales in the March quarter reflect contracts that were agreed in late November and early December prior to significant movement in lithium prices. More than 50% of forecast sales for the June 2021 quarter are expected to be allocated to long term battery grade contracts as Olaroz commences delivering product to PPES. Such percentage of battery grade product sales is expected to increase into FY22. Several customers have recently expressed an interest in increasing their volume offtake allocation for FY22 as they struggle to secure volumes with other vendors suggesting that the market is now in a deficit position. Budgeted production at Olaroz for FY22 is fully sold and additional volumes will only become available when Olaroz Stage 2 commences production in the second half of CY22. The estimated average price for the June 2021 quarter is expected to be approximately US$7,400/tonne FOB3, subject to shipping schedules. PPES MOU An agreement has been reached with Prime Planet Energy and Solutions (PPES), the automotive battery cell manufacturing joint venture between Toyota (51%) and Panasonic (49%) for supply of battery grade lithium carbonate during Japanese fiscal year 21/22 (JFY21/22). Future annual discussions will determine details for subsequent years leading to supply of 30,000 tonne per annum (tpa) of lithium carbonate equivalent (LCE) by CY25. Orocobre has commenced dispatching product from Olaroz to a bonded warehouse in Japan in preparation for the first delivery of battery grade lithium carbonate to PPES. COSTS/MARGINS Cash cost of goods sold for the quarter (including COVID-19 related costs) decreased by 3% on PCP remaining near all-time lows at US$3,867/tonne4. This excludes export duties for the quarter of US$210/tonne. Importantly, costs increased by only 7% QoQ, while the proportion of battery grade sales increased from 34% to 47% QoQ. Total cost of sales has been maintained at low levels demonstrating the significant focus and reduction of fixed costs within the operating business. Lower reagent usage due to improved process efficiency and an increase in the export incentive refund with higher product prices have also contributed to the strong cost performance. Gross cash margins for the quarter returned to being strongly positive at US$1986/tonne, this is expected to further improve with better pricing in Q4 FY21. STAGE 2 EXPANSION AT OLAROZ ACHIEVED MILESTONES Commissioned and partially operating the brine handling system for Stage 28 out of 9 harvestable ponds are in service and 5 out 22 evaporation ponds are in serviceLime plant #2 has been operating since FebruaryTK1100, a new brine collection pond has been in operation since January4 new wells are in service and four additional wells in the final stages of completion FUTURE MILESTONES Work in H2 CY21 will focus on the delivery of additional gas fired power generators, completion of pond construction and construction of lime plant #3. In the first half of CY22 all new wells, the soda ash facilities and carbonation plant will be completed. PROJECT STATUS During the March quarter work at Olaroz Stage 2 continued with strong adherence the COVID-19 bio-security protocol. At the end of March, 70% of contracts had been awarded and a further 8% were at award recommendation stage. Additional accommodation facilities were completed in the quarter and more will become available in the June quarter. Stage 2 is expected to be complete in H1 CY22 and to commence production the following half. Production will ramp up over two years to full capacity of 25ktpa of primary grade lithium carbonate by H2 CY24. INFRASTRUCTUREConstruction camp expansion works continue with 250 additional beds available in March. It is expected another 200 beds will become available in April. Further beds will be available in May to cater for the rapidly growing construction workforce which currently is ~500 personnel. The camp mess has also been completed and further sewage treatment facilities are being planned. A variety of medium voltage lines and other electrical works are in progress. Overall infrastructure works are now 75% complete. WELLS AND BRINE GATHERINGBrine extraction works are now 58% complete. Six wells are currently at various stages of completion. Five drill rigs are currently in operation. Brine gathering networks are progressively being installed with the TK1100 facility operating since January. PONDSPonds construction is well progressed with approximately three quarters of work completed. Geomembranes continue to be installed as ponds are completed. Civil and electrical work is underway at six ponds. A total of 13 harvestable and non-harvestable ponds have now been completed, a further 17 are under various stages of construction. CARBONATION, LIME AND SODA ASH FACILITIESCarbonate plant construction commenced in February along with soda ash handling facilities. Earthworks are advancing with foundations being established. All of the steel structure for the carbonation and soda ash plants has now arrived at site including cladding, roofing and overhead cranes. Planning for lime plant #3 is well underway and contracts are likely to be awarded by the end of April. This additional liming capacity is expected to be available by the end of the year. NARAHA LITHIUM HYDROXIDE PLANT PROGRESS TO DATE The Naraha Plant, the first of its kind to be built in Japan, is designed to convert primary grade lithium carbonate feedstock into battery grade lithium hydroxide. Feedstock for the 10,000 tpa Naraha Plant will be sourced from the Olaroz Lithium Facility’s Stage 2 Expansion that will produce primary grade (>99.0% Li2CO3) lithium carbonate. Since construction commenced at the Naraha Plant there have been no LTIs recorded with nearly 100,000 hours worked on the project. An earthquake occurred on 13 February which caused only minor damage to the office building, no defects have been found in the plant. A further earthquake occurred in March with no damage or injury to personnel or the site. At 31 March, approximately US$50 million has been spent on engineering, civil works, electrical, instrumentation, fabrication and procurement at the Naraha Plant. Capex spend has remained relatively static due to the agreed payment schedule with Veolia, the EPC contractor. Site operations have continued throughout the period with construction now approximately 94% complete. Commissioning will be delayed until Q1 CY22 due to COVID-19 related delays of travel to site by Veolia’s international commissioning engineers and technicians. SHARED VALUE PROGRAM AND COMMUNITY The Shared Value team built on their knowledge of local communities and sustainability with a combination of remote work and a number of visits to communities that are directly and indirectly influenced by the company’s operations. Key actions during the quarter included: Community Relations Management of work rosters within COVID-19 limitations: Communication with Community Coordinators, local government contacts and local suppliers to manage and confirm the date and location of PCR sample collection (COVID-19 tests) and the transfer schedules for rostered employeesIdentification of risks and opportunities for the social development of communities within the COVID-19 environment. COVID-19 has presented new challenges for the management of interaction and implementation of programs within local communitiesOngoing engagement and field visits with community leaders and community members to respond to their queries related to development programsThe expansion project director and team made presentations to local communities on plans and opportunities for local suppliers and future employee needs Community development programs Program to Support Food Independence: Family Food Production Units UPAFA program to encourage independent food supply in local communities continued during the quarter. In Coranzuli families are finishing the harvesting stage with excellent results for vegetables and fruit such as chard, lettuce, tomatoes, beans, strawberries and raspberries. In Olaroz the community continued with construction of greenhouses that are now 70% complete. Plans and materials are being arranged for a planting of winter crops which is expected in May. Sustainable Management of Vicuñas at Olaroz ChicoParticipants in the Vicuna management program at Olaroz Chico were supported in the development of a conservation and management plan. Family Farming program technicians from the National Institute of Technology (Jujuy) and community members have been planning and obtaining approval for construction of additional infrastructure for management of the Vicuna herd. MARKET The lithium market continued recovering during the March 2021 quarter. Average global prices for lithium carbonate increased by more than 50% from the December 2020 quarter as demand from cathode manufacturers continued to increase production in response to the Electric Vehicle (EV) driven demand. DEMAND Demand for Electric Vehicles (EVs) continues to accelerate with global sales during January and February 2021 more than double those of January and February 2020 as sales were constrained by COVID-19 in China. EV models with lithium carbonate dominant chemistry batteries continue to be the preference in China where the battery grade lithium carbonate spot prices increased approximately 90% during the March quarter as cathode manufacturers rushed to secure supply. Prices in Asia-ex China increased by approximately 25% during the quarter. Support from national governments towards EVs strengthened during the March 2021 quarter particularly in North America with the Biden administration committing US$174 billion investment in EVs through a mix of subsidies to individuals and the private sector, as well as replacing the government’s vehicle fleet with EVs. Longer- term EV demand outlook has been revised upwards by a range of market analysts in recent months, suggesting that estimated global sales will increase from 3.2 million units in 2020 to approximately 14 million units by 2025. Demand for lithium chemicals is expected to increase to approximately 1 million tonnes by 2025 following recent investment commitments on battery giga factories by the private sector. SUPPLY Lithium chemicals production continued at reduced capacity in China during March 2021 which was impacted by the spring holiday as well as restricted feedstock supply from Chinese brines due to cold weather conditions and reduced production capacity from Australian spodumene producers. Such market dynamics coupled with increased demand from cathode manufacturers led to further inventory reductions in the region and pricing increases for spodumene and lithium chemicals in the spot market. In response to the favourable market conditions, Australian spodumene producers and Chinese convertors are expected to increase production/conversion capacity throughout the rest of CY2021. Additional lithium chemicals production is also anticipated from South American producers towards late 2021. However, it’s estimated that global lithium chemicals production will not be able to catch up with growth in demand in the short term. BORAX ARGENTINA S.A. SAFETY Borax has improved safety performance and the team have worked hard to restore the safety commitment and accountability at all levels of the operating business. Subsequent to the safety review last year, there have not been any LTI or Environmental incidents at the three operational Borax sites. As at 31st March, Sijes recorded 274 days free of accidents, Tincalayu achieved 258 days and Campo Quijano has had 217 days without an LTI. This quarter Borax successfully finished the annual shutdown in Sijes and in Tincalayu without any Safety or Environmental incidents. A Monthly Safety Committee was developed. Initiatives that will be implemented over the rest of the year include the development of a local emergency response team, improvement of the work permit safety system and the use of Intelex workflows to report, investigate and track corrective actions of adverse events. The Management team is setting objectives for the next financial year to fully implement leading and lagging indicators. Some of the Dupont initiatives implemented in SDJ are being considered for implementation at Borax. PRODUCTION, SALES AND OPERATIONAL UPDATE The March quarter achieved sales of 10,282 tonnes, down 3% QoQ and down approximately 4% from the PCP. Total sales revenue was up 5% QoQ with the average price received up 8% QoQ. Operations have continued under the Orocobre Bio-security Protocol. COMBINED PRODUCT SALES VOLUME BY QUARTER CORPORATE AND ADMINISTRATION FINANCE CASH BALANCE At 31 March 2021, Orocobre corporate had available cash of ~US$241.6 million of which US$11.1 million and US$85.5 million have been set aside as pre-completion guarantees for the Naraha debt facility and Olaroz Expansion debt facility respectively. The US$5.2 million corporate net cash reduction from the previous quarter was the result of US$3.8 million advanced to SDJ Joint Venture as a shareholder loan to largely fund finance payments, US$1.5 million corporate costs and US$0.2 million other project payments partially offset by US$ 0.3 million of interest income. Including SDJ and Borax cash and project debt, net group cash at 31 March 2021 was US$97.7 million, down from US$119.8 million at 31 December 2020 as calculated below and after including Naraha facilities: ARGENTINA ECONOMIC CONDITIONS Currency: The official foreign exchange rate depreciated by 9.3% in the March quarter from AR$84.15 at 31 December 2020, to AR$92 at 31 March 2021. The accumulated 12-month period from 1 April 2020 to 31 March 2021 resulted in a ~43% devaluation of the AR$ against the US$. Inflation: March inflation was 4.8% and accumulated ~13% in the quarter. The accumulated 12-month period from 1 April 2020 to 31 March 2021 resulted in inflation of approximately ~43%. Authorised by: Rick AnthonJoint Company Secretary FOR FURTHER INFORMATION PLEASE CONTACT: Andrew BarberChief Investor Relations OfficerOrocobre Limited P: +61 7 3720 9088 M: +61 418 783 701 E: email@example.comW: www.orocobre.com
BRISBANE, Australia, April 13, 2021 (GLOBE NEWSWIRE) -- Orocobre Limited (ASX: ORE, TSX: ORL) (“Orocobre” or “the Company”) advises that following a successful sales campaign and strong market demand for Olaroz lithium carbonate during the March 2021 quarter, sales were 3,032 tonnes at US$5,853/tonne FOB1, with pricing up more than 50% on the December 2020 quarter. Lithium prices received by Olaroz are now up nearly 90% in the last six months. Orocobre also advises that prices for the June 2021 quarter are expected to be approximately US$7,400/tonne FOB1, subject to shipping schedules. This pricing will be the highest pricing received since June 2019 and is expected to result in H2 FY21 pricing being approximately 20% higher than prior guidance. Forward sales enquiries for all grades of Olaroz lithium carbonate remain strong and all budgeted FY22 production is fully sold and subject to variable pricing that will benefit from the expected continued improvement in market conditions. Additional production will become available when Olaroz Stage 2 commences production in the second half of CY22. Full details of March quarter performance will be released in the production report on 21 April 2021 with a management briefing at 11.15am AEST (Sydney, Melbourne, Brisbane) via a webcast available at www.orocobre.com. Written questions may be submitted via the webcast. An archive copy of the briefing and Q&A session will subsequently be made available on the Company website. Authorised by: Richard S. AnthonJoint Company Secretary __________________________________1 Orocobre report price as “FOB” (Free On Board) which 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 recognized by SDJ, the joint venture company in Argentina. For more information please contact: Andrew BarberChief Investor Relations Officer Orocobre Limited T: +61 7 3871 3985 M: +61 418 783 701 E: firstname.lastname@example.orgW: www.orocobre.com Twitter: https://twitter.com/OrocobreLimitedLinkedIn: https://www.linkedin.com/company/orocobre-limitedFacebook: https://www.facebook.com/OrocobreLimited/Instagram: https://www.instagram.com/orocobre/YouTube: https://www.youtube.com/OrocobreLimited Click here to subscribe to the Orocobre e-Newsletter About Orocobre Limited Orocobre Limited (Orocobre) is a dynamic global lithium carbonate producer and an established producer of boron. Orocobre is dual listed on the Australia and Toronto Stock Exchanges (ASX: ORE), (TSX: ORL). Orocobre’s interests include its Olaroz Lithium Facility in Northern Argentina, a material JORC Resource in the adjacent Cauchari Basin and Borax Argentina, an established boron minerals and refined chemicals producer. The Company has commenced an expansion at Olaroz and construction of the Naraha Lithium Hydroxide Plant in Japan. For further information, please visit www.orocobre.com.