Orocobre Limited Commences Construction of 17,500 Tonnes Per Annum Olaroz Lithium Carbonate Project
November 21 2012 - 7:54PM
Marketwired
Orocobre Limited (TSX:ORL)(ASX:ORE) ("the Company") is pleased to
announce the commencement of construction at its fully-funded
Olaroz Lithium Project in northwest Argentina. A groundbreaking
celebration was held to celebrate the event. On completion of
construction of the US$229 million lithium project in early 2014,
it will be the world's first large-scale, low cost "greenfield"
brine lithium operation to have been built in nearly 20 years and
will have a first-phase design production rate of 17,500 tonnes per
annum of battery grade lithium carbonate.
The start of construction marks the completion of the various
corporate structuring aspects of the Toyota Tsusho Corporation
("TTC") joint venture, TTC's subscription for its 25% equity in the
joint venture, and the issue of an 8.5% equity interest in the
project to Jujuy Energia y Mineria Sociedad del Estado ("JEMSE").
Following the previously announced completion of the detailed
engineering and governmental approvals process, the project now
moves into full-scale construction.
Over the next few weeks, in the normal course of post equity
completion, Orocobre expects that the final project debt financing
documentation will be executed by the partners on the same
attractive terms as previously reported.
Background on Funding
On 17 October, 2012 the Company announced the formation of a
joint venture, with TTC becoming a 25% equity participant having
facilitated Mizuho Corporate Bank and JOGMEC to provide a
comprehensive debt and equity funding package for construction of
the Olaroz project. The cornerstones of the financing are an equity
investment by TTC of approximately US$55 million and up to US$192
million of low-cost project debt. As part of this process, Orocobre
entered into an agreement with JEMSE, the mining investment company
owned by the provincial Government of Jujuy, whereby JEMSE holds an
8.5% equity interest in the project.
To fund an approximate US$12 million equity shortfall, and to
provide a strong balance sheet to fund its Borax Argentina
initiatives and working capital, on 5 November, 2012, Orocobre
completed an oversubscribed A$21 million institutional placement
through the issuance of 12.35 million ordinary shares to investors
in Australia, Hong Kong, the United Kingdom and the United States
at an issue price of A$1.70 per share. In addition, in order to
provide its existing non-institutional investors an opportunity to
participate in the share offering on the same terms, the Company is
undertaking a Shareholder Purchase Plan capped at A$5.0
million.
Construction
With the subscription for equity by TTC and the issue of shares
to JEMSE, the project construction can commence in earnest. Over
the last year, detailed engineering has been completed and the
procurement process is well advanced with most construction
contracts tendered. The project will be implemented using an EPCM
methodology with a high degree of local content.
The first stage of construction involves establishment of water
supply, camp construction and associated infrastructure plus
production bores, brine pipeline and evaporation ponds. The company
will keep shareholders regularly updated as construction
progresses.
Managing Director and CEO, Richard Seville commented: "I'm very
pleased that we have commenced full-scale construction activity at
Olaroz. In an environment where so many projects are facing
difficulties, reaching the fully funded construction stage is a
major achievement that puts Orocobre on its way to establishing
itself as a significant and low operating cost battery grade
lithium carbonate supplier to the world. Our commitment to the
people and environment of Jujuy will strengthen the community and
provide important long-term benefits. Our joint venture partners,
Toyota Tsusho and JEMSE, have been instrumental in helping Orocobre
reach this important milestone."
Mr. Seville added, "Thanks to our team's advanced preparations,
we are able to immediately commence construction. We now turn our
full attention to the methodical execution of the construction and
commissioning of our operations."
Orocobre's Chairman, James D. Calaway, stated: "The start of
construction activity is a major accomplishment for everyone
involved with the project. Our valued relationship with Toyota
Tsusho began in early 2010, and since then we have worked as
genuine partners to ensure that we meet our commitments to the
people of Jujuy and to construct a long-term sustainable operation.
To be at a point where we are now under construction is very
satisfying to all project stakeholders."
About Orocobre Limited
Orocobre Limited is listed on the Australian Securities Exchange
and Toronto Stock Exchange (TSX:ORL)(ASX:ORE), and is building a
substantial Argentinian-based industrial minerals company through
the construction and operation of its portfolio of lithium, potash
and boron projects and facilities in the Puna region of northern
Argentina. The Company is building in partnership with Toyota
Tsusho Corporation and JEMSE, the first large-scale, "greenfield"
brine based lithium plant in nearly 20 years at the Salar de
Olaroz. This high-margin project has a planned production rate
after ramp up of 17,500 tonnes per annum of battery grade lithium
carbonate scheduled to commence in Q2 2014. The Company also
wholly-owns Borax Argentina, an important regional borate producer.
Orocobre has recently been included in the S&P/ASX 300 Index
and was named 2012 Mining Company of the Year by Argentine mining
magazine Panorama Minero and the Fundacion para el desarrollo de le
Mineria Argentina ("Fundamin" or Foundation for Development of
Argentina Mining). For further information, please visit
www.orocobre.com.
Caution Regarding Forward-Looking Information
This news release contains "forward-looking information" within
the meaning of applicable securities legislation. Forward-looking
information contained in this release includes, but is not limited
to, the financing of the Olaroz Project, the completion of
definitive lending documentation with Mizuho and JOGMEC the
provision of required guarantees by TTC and JOGMEC, the
commencement and completion of construction at the Olaroz Project
and the timing thereof, the commencement of commercial production
at the Olaroz Project and the timing thereof, the estimated capital
cost of the Olaroz Project, the design production rate for lithium
carbonate and potash at the Olaroz Project, the expected brine
grade at the Olaroz Project, the expected operating costs at the
Olaroz Project and the comparison of such expected costs to
expected global operating costs, and the ongoing working
relationship between Orocobre and the Province of Jujuy.
Such forward-looking information is subject to known and unknown
risks, uncertainties and other factors that may cause actual
results to be materially different from those expressed or implied
by such forward-looking information, including but not limited to
the risk of further changes in government regulations, policies or
legislation; the possibility that required concessions may not be
obtained, or may be obtained only on terms and conditions that are
materially worse than anticipated; the risk that required
guarantees will not be provided or that the project financing will
otherwise not be completed with Mizuho Corporate Bank and JOGMEC;
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 weather patterns and impact on
production rate; risks associated with construction and development
of the Olaroz Project; unexpected capital or operating cost
increases; uncertainty of meeting anticipated program milestones at
the Olaroz Project; general risks associated with the feasibility
and development of the Olaroz Project; as well as those factors
disclosed in the Company's Annual Information Form for the year
ended June 30, 2012 filed at www.sedar.com.
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 and potash; 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.
ABN 31 112 589 910
Contacts: Australia and Asia: Orocobre Limited Richard Seville
Managing Director +61 7 3871 3985 or M +61 419 916 338 North
America: Orocobre Limited Bruce Rose VP, Corporate Development 1
604 377 1423brose@orocobre.com www.orocobre.com