During the quarter the Olaroz Lithium Facility (Olaroz) temporarily stopped production due to Argentine government COVID-19 quarantine restrictions, which in addition to planned maintenance resulted in 21 days of lost production.
Despite lower plant availability, cash cost of sales reduced by 3% quarter on quarter (QoQ). Market conditions and product pricing continued to be challenging, however operational cashflow remained positive. Work continues at the Naraha Lithium Hydroxide Plant (Naraha) while site operations at the Olaroz Stage 2 Expansion have stopped due to quarantine restrictions. In light of current operational conditions and uncertain future demand
OLAROZ LITHIUM FACILITY (ORE 66.5%)2
Production for the quarter of 2,732 tonnes was down 11% on the previous corresponding period (PCP) due to the temporary plant shut down. Brine production and pond management continued throughout the quarter. Following the introduction of a strict bio-security protocol production of lithium carbonate recommenced on
Sales volume for the quarter was down 29% QoQ to 2,518 tonnes while sales revenue was down 32% QoQ to
Cash costs for the quarter (on cost of goods sold basis)4 improved to
Operations remained operating cash flow positive with gross cash margins (excluding export tax) of
LITHIUM GROWTH PROJECTS
Construction of the Stage 2 Olaroz Lithium Facility Expansion reached approximately 35% completion prior to the imposition of COVID-19 quarantine restrictions which halted site activities. Site works will resume once these restrictions are lifted, however completion is now expected to be delayed
Naraha Lithium Hydroxide Plant construction has not been affected by COVID-19 to date with more than 50% of works now completed. The final schedule may be delayed by two months due to late equipment deliveries from overseas.
BORAX
Overall sales volume for the March quarter was 10,690 tonnes, up 24% QoQ and approximately flat on PCP. Operations were temporarily stopped due to COVID-19 restrictions as previously advised; however production has now recommenced with strict bio-security protocols in place
Sales revenue was up 14% QoQ, however the average price received was down 6% QoQ.
CORPORATE
As at
Following the end of the quarter, the acquisition of
SAFETY
Safety is the number one priority of the Company. From early February, awareness programs were conducted with employees and contractors on signs, symptoms and recommendations to minimise risk of exposure to the COVID-19 virus and prevent contagion. International company-related travel was restricted from February, and domestic travel from March. Towards the end of the quarter, detailed bio-security plans were developed for our operations in accordance with established national regulations and best practice approaches within the industry. These will continue to be revised and adapted in response to changing regulations and examples of best practice.
An emergency committee has been established comprising both Sales de Jujuy and Borax Argentina to coordinate operations, enforce the application of a bio-security protocol and review and update it as circumstances change. This committee analyses possible scenarios in order to plan and enable the company to be ahead of the circumstances and works in close coordination with local health authorities. One Lost Time Injury was recorded at Olaroz during the quarter involving one of the Expansion contractors. As at 31 March there were 70 days without a Lost Time Injury (LTI).
To enhance control of the contractors associated with construction activities, the Company has focused this quarter on the implementation of SICOP contractor management system. SICOP serves as a centralised control system which provides real-time visibility of contractor certifications, compliance, and performance in accordance with established standards and regulations. In addition to the Company's ongoing program of work with
Following the end of the quarter and an annual general meeting and special meeting of
The valuation of Advantage based on the exchange ratio of 0.142 shares per the transaction will trigger a non-cash impairment charge of approximately
Contact:
Tel: +61 418 783 701
Email: abarber@orocobre.com
Web: www.orocobre.com
ABOUT
The Olaroz Lithium Facility has a low environmental footprint because of the following aspects of the process: The process is designed to have a high processing recovery of lithium. With its low unit costs, the process results in low lithium cut-off concentration, which maximises resource recovery.
The process has a zero liquid discharge design. Waste products are stored in permanent impoundments (the lined evaporation ponds). At the end of the project life the ponds will be capped and returned to a similar profile following soil placement and planting of original vegetation types.
Brine is extracted from wells with minimum impact on process water resources outside the Salar. Because the lithium is in sedimentary aquifers with relatively low permeability, drawdowns are limited to the Salar itself. This is different from halite hosted deposits such as
Energy used to concentrate the lithium in the brine is solar energy. The carbon footprint is lower than other processes.
In accordance with its Community Policy,
CAUTION REGARDING FORWARD-LOOKING INFORMATION
Forward-looking information may include, but is not limited to, the successful ramp-up of the
Forward-looking statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause the actual results, performances and achievements to differ materially from any expected future results, performances or achievements expressed or implied by such forward-looking statements, including but not limited to, the risk of pandemic, further changes in government regulations, policies or legislation; that further funding may be required, but unavailable, for the ongoing development of the Company's projects; fluctuations or decreases in commodity prices; uncertainty in the estimation, economic viability, recoverability and processing of mineral resources; risks associated with development of the
The Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable. Assumptions have been made regarding, among other things: the timely receipt of required approvals and completion of agreements on reasonable terms and conditions; the ability of the Company to obtain financing as and when required and on reasonable terms and conditions; the prices of lithium, potash and borates; market demand for products and the ability of the Company to operate in a safe, efficient and effective manner. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
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