Orocobre Limited Quarterly Activities and Cashflow Report - Mar

 
FSC / Press Release 
Orocobre Limited Quarterly Activities and Cashflow Report - March 2014 
Brisbane, Australia, April 30, 2014 /FSC/ -Orocobre Limited (ASX:ORE) (TSX:ORL)
(OTCMKTS:OROCF) provides the quarterly activities and cashflow report for period
ending March 2014. 
Highlights 
Olaroz Lithium-Potash-Boron Project: 
- Project construction is approximately 85% physically complete with significant
milestones achieved. 
- A total of approximately US$194 m has been spent or committed via executed
contracts on the construction project to date. 
- Construction is projected to be completed on budget with first production at
the end of August 2014. 
Borax Argentina 
- Projected to finish the year on or above budget. 
- The project to relocate the borax chemical plant from its current location in
Campo Quijano (close to the city of Salta) to the Tincalayu mine continues to
progress and is expected to be completed on schedule and within budget. The
relocation and commissioning was planned to be completed by the end of June 2014
but may now be completed ahead of schedule. 
- The Porvenir Historical Estimate has been upgraded to a Measured and Indicated
JORC compliant resource. A Measured and Indicated resource of 6.9 million tonnes
of 14.9 % B2O3 is estimated at a 9% B2O3 cut-off, the economic cut-off for
processing of the mineralisation at a potential new boric acid plant at
Olacapato. 
- A prefeasibility study into the construction of a boric acid plant at
Olacapato in Salta Province, Argentina with a production capacity of 25,000
tonnes per annum of boric acid has been completed. The Project has strong
fundamentals with a healthy after tax internal rate of return of 24% based on
modeled project life of 20 years underpinned by a resource base of 1.02 million
tonnes B2O3. 
Corporate 
- Cash Position of A$28.7m at the end of the quarter excluding funds in Olaroz
Lithium Project companies. 
- SAP has been implemented at Borax Argentina. 
Olaroz Lithium-Potash-Boron Project 
The Olaroz Project is Orocobre's flagship project located in Jujuy province of
Argentina. Together with partners, Toyota Tsusho Corporation ("TTC") and Jujuy
Energia y Mineria Sociedad del Estado ("JEMSE"), Orocobre is building the first
large scale "green fields" lithium brine project in approximately 20 years at a
capital cost of US$229.1m and will have a design capacity of 17,500tpa of
battery grade lithium carbonate. The Olaroz Project joint venture is operated
through Argentine subsidiary Sales de Jujuy SA (SDJ SA). The effective Olaroz
Project equity interest is Orocobre 66.5%, TTC 25.0% and JEMSE 8.5%. 
Construction Update 
The construction of the project continues to proceed on time and within budget
and a total of approximately $194m has been spent or committed via executed
contracts in the construction project. In terms of physical progress the
construction program is approximately 85% complete. 
Since the last quarterly report, the Company announced the commissioning of the
liming plant which allowed the removal of magnesium from the brine to commence
as brine is transferred from pond 4B to 4A. The gas pipeline was completed and
was awaiting the branch line connection by Gas Atacama which has now been
completed. The southern bore field brine duct was commissioned in February which
delivers brine directly from the southern field into pond 4B from the southern
field. This replaced the temporary trench system which was moving brine to the
northern field intermediate pump station. Replacement transfer pumps in the
southern borefield are due to be installed in May which will allow the steady
state production pumping rate of approximately 180l/s to be ramped up to a peak
rate of approximately 220l/s for pond filling purposes in May. 
As part of the bore field development one bore was drilled to 304m, the deepest
hole to date by the company in Olaroz. Pumping tests have confirmed good
hydrogeological properties and a high brine grade, averaging 770 mg/l. Previous
geophysical surveys by Orocobre have suggested the Olaroz salar deposits may
extend to 600m.
Construction works continue on the lithium processing plant, finished goods
warehouse and the soda ash warehouse. 
The project implementation is through EPCM (Engineering, Procurement and
Construction Management) with a high proportion of local involvement through
construction and supply contracts and local employment. The unique community and
shared value policy continues as a key success factor, training local people
under the supervision of high quality experienced professionals. 
Borax Argentina 
Borax Argentina has extensive operations and has a fifty year production history
producing borax chemicals, boric acid and boron minerals. The production
currently comes from three principal mines at Tincalayu, Sijes and Porvenir with
concentrators at the first two locations and a chemicals plant at Campo Quijano
producing refined products. The borax circuit at the chemicals plant is in the
process of being relocated to the Tincalayu mine where the mineral for borax
production, tincal, is mined. 
Operations 
Approximately 9,027 tonnes of combined products were sold during the quarter.
This is in line with the March quarter last year and follows two quarters of
record growth. The March quarter is normally a lower quarter impacted by
Brazilian Carnival but sales were also impacted by inventory management required
during the relocation of the Borax plant. There are signs that demand is
improving with the second half of 2014 expected to show both positive demand
trends and improving market prices. In spite of the challenging market
conditions and the inventory management required during the plant relocation,
Borax Argentina is on track to achieve or even exceed the budget for the
financial year. 
Combined product sales volume by quarter: 
-***- 
----------------------------
Quarter     Combined Product 
Sales (tonnes)
----------------------------
September 2012         9,161
December 2012         10,007
March 2013             9,182
June 2013              9,562
September 2013        10,103
December 2013         11,410
March 2014             9,027
---------------------------- 
-****- 
Boric Acid Plant Pre-Feasibility Study 
In April the Company advised of the completion of a prefeasibility study into
the construction of a new Boric Acid plant at Olacapato in Salta province,
Argentina. The key findings are detailed below: 
-***- 
---------------------------------------------------------
Production Rate                    25,000 tpa Boric Acid 
Capital Cost                       US$ 18.2 million plus 
$2.6m in working capital 
and commissioning costs.
Payback                            4.9 years
Cash Operating Cost at 25,000 tpa  484 US$/ton
After Tax NPV (10%)                $17.7 million
After Tax IRR%                     24%
Modelled Project Life              20 years
Measured and Indicated Resources   1.02 Million tonnes B2O3
----------------------------------------------------------- 
-****- 
The plant flow sheet will be designed to allow treatment of lower "run-of-mine"
grade
ores than are currently being processed and with the aim of obtaining higher
recoveries and reduced operating costs. Currently, ore is mined at less than 20%
B2O3 and upgraded by hand methods and screening to 26% for cartage to Campo
Quijano. 
Given the positive outcome of the prefeasibility study, the project will be
advanced to the next stage with Feasibility Study level studies in mining
engineering to produce an ore reserve and life of mine plan and detailed
engineering level on the plant as the previous level of work had already been
within a +/- 15% accuracy. This will occur at the same time as permitting and
will allow an investment decision to be made towards the end of 2014. 
Currently, Borax Argentina produces boric acid from a 9,000 tonnes per annum
plant at Campo Quijano near Salta city, processing ulexite mineralisation mined
from Porvenir which is located 300kms away. The plant is designed to treat a
high grade feed of ulexite mineralisation which has been selectively mined and
then upgraded by drying and hand sorting. 
There are potential advantages to the construction of a new and larger facility
at Olacapato. In particular, by being able to process lower grade "run-of-mine"
ore the costly and time consuming process of drying and hand sorting would be
eliminated and the mining and processing recovery of mineralisation increased.
In addition, the long cartage by road transport would be eliminated and the
increased production rate would provide economies of scale compared to current
operations. 
Boric acid is used in a wide variety of applications including glass, ceramics,
fertilisers and wood preservatives. The market has a growth profile above world
GDP growth. For standard and agricultural grade boric acid, pricing has ranged
approximately between US$750/t to $1,250/t CIF over the past 5 years. 
Borax Plant Relocation 
The Company is nearing completion of the project to relocate the borax chemical
plant from Campo Quijano to the Tincalayu mine where the mineral, tincal, used
to make borax is mined. The Borax Argentina chemical plant produces borax
decahydrate, borax pentahydrate and anhydrous borax. 
The relocation of the borax plant to the Tincalyu mine site will have
significant benefits through both the reduction of operating unit costs and also
increasing overall mineral recovery from the mine. 
The Company provided an update on the project's progress in March. Currently,
the project is running on schedule and within budget. The target completion date
for the project was forecast to be June 2014. It appears it may possibly be
completed ahead of schedule. The Company considers this project an exciting
development which will position the Borax Argentina business well for the
future. 
Historical Estimate for JORC Compliant Resource Conversion Programme 
Porvenir 
In April, the Company announced the upgrade of a historical estimate to a
Measured and Indicated Resource for the Porvenir borate deposit in Jujuy
Province, Argentina. 
The highlights are: 
- Measured and Indicated Resource of 2.3 million tonnes at 20.4% B2O3 is
estimated at the current 16% B2O3 mining cut-off grade. 
- Resource estimate in line with superseded historical estimate at the same
cut-off. 
- The resource extends to a maximum depth of approximately 3 m and is easily
exploited by low cost strip mining. 
- A Measured and Indicated resource of 6.9 million tonnes of 14.9 % B2O3 is
estimated at a 9% B2O3 cut-off, a value appropriate for processing of the
mineralisation at a potential new boric acid plant at Olacapato. 
The Measured and Indicated Resources are detailed in the table below: 
-***- 
-----------------------------------------------------
Classification    Cut-off           Grade    Tonnes 
grade    Tonnes  % B2O3    B2O3
-----------------------------------------------------
Measured          16%    1,474,341   20.0    295,117
Indicated         16%      804,595   21.0    168,776
Measured
& Indicated*      16%    2,278,937   20.4    463,992
----------------------------------------------------- 
-----------------------------------------------------
Classification    Cut-off           Grade    Tonnes 
grade    Tonnes  % B2O3    B2O3
-----------------------------------------------------
Measured          9%    4,907,877    14.5    710,672
Indicated         9%    1,942,433    16.0    310,517
Measured
& Indicated       9%     6,850,000  14.9   1,020,000
----------------------------------------------------- 
-****- 
This compares to a superseded historical estimate of 2,417,099 tonnes at 20.2%
B2O3 calculated
at a cut-off between 14% and 19% B2O3, depending on the mineralisation style.
The superseded historical estimate was originally reported on the 21st of August
2012, at the time of the announcement of the Company's purchase of Borax
Argentina. The majority of the ulexite is hosted within a sand matrix, which is
easily separated from the ulexite by screening after drying. The screened
ulexite from this mining operation is then available for processing into boric
acid. 
Other deposits 
The company is in the process of upgrading the historical estimates of the
different Borax Argentina mining properties to JORC/NI43-101 compliant mineral
resources. The Porvenir resource estimate, calculated in accordance with the
requirements of JORC 2012, is the first re-evaluation of the Company's borate
resource base. Geological interpretation and re-estimation of the resources at
the Diablillos and Tincalayu projects is currently underway. Once completed, the
focus will move to the tertiary Sijes hydroboracite deposit. The historical
estimate (now superseded) of the Porvenir deposit was only a small part (14% of
contained B2O3) of the overall quantum of the historical estimates of the
mineralisation on Borax Argentina properties. For more information on Borax
Argentina 
Corporate and Administration 
SAP Implementation 
An SAP ERP system has been implemented at Sales de Jujuy SA and at Borax
Argentina SA. System refinements are now in progress. 
Cash Position 
At the end of the quarter, the company had a cash position of A$28.7m excluding
funds in Olaroz Lithium Project companies. 
To view figures, tables and diagrams, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-ORE-795119.pdf 
inShare 
About Orocobre Limited 
Orocobre Limited is listed on the Australian Securities Exchange and Toronto
Stock Exchange (ASX:ORE, TSX:ORL), 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 the first large-scale, "greenfield" brine based
lithium project in 20 years at its flagship Salar de Olaroz resource, with
projected production of 17,500 tonnes per annum of low-cost battery grade
lithium carbonate scheduled to commence at the end of Q2, 2014. The Company also
wholly-owns Borax Argentina, an important regional borate producer. Orocobre is
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 la Mineria Argentina ("Fundamin" or Foundation for Development of
Argentina Mining). 
ContactDavid Hall
Business Development Manager
Orocobre Limited
M: + 61-407-845-052
E: dhall@orocobre.com 
James Calaway
Chairman
Orocobre Limited
M: + 1-713-818-1457
E: jcalaway@orocobre.com 
To view the press release as a PDF, please click on the following link:
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-0- May/01/2014  1:25 GMT
 
 
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