Orocobre’s Share Price Continues to Lift after Lithium Plant Approval

In an announcement last week, Orocobre Ltd [ASX:ORE], Toyota Tsusho Corporation (TTC), as well as the Joint venture (JV) board all approved the Final Investment Decision (FID) for the Naraha Lithium Hydroxide Plant to be built in Japan.

ORE holds 75% economic interest in the project.

Orocobre’s share price is trading slightly higher at $3.55 apiece, up 2.90% after a small dip in previous trading.

The lithium exploration company is also gearing up to release its quarterly report Wednesday 17 April 2019.

Related: Why you should wait to buy lithium stocks in 2019.

Orocobre plants itself as global lithium producer

According to ORE’s recent announcement (12 April 2019), the cost of the lithium plant will be funded by a mixture of US$82.1 million of term/bridging loans, as well as US$9 million in share equity.

The joint venture has access to a government subsidy of US$27 million, which will slash capital costs by US$50 million. But this amount will need to be repaid out of the company’s operating cash flow.

It seems as the week goes on since the approval, investors are seeing more upside potential, as Orocobre’s share price initially dipped on Friday before climbing higher today.

Orocobre’s Managing Director and CEO, Mr Martin Pérez de Solay, commented on the plants approval:

We are excited to announce the approval of the Naraha project. The construction of the Naraha Lithium Hydroxide Plant will further cement Orocobre’s position as a global lithium chemicals producer operating at the bottom quartile of the lithium cost curve. This new hydroxide plant will be the first of its kind in japan and provides Orocobre product Diversification suitable for different battery techniques and the potential for significant margin growth on our primary lithium carbonate being converted to battery grade lithium hydroxide.

Orocobre’s 2019 share price outlook

2019 is set to have a lot in store for Orocobre. With green energy sweeping the market, investors could expect continued upside potential for Orocobre’s share price.

From 31 December 2018, ORE has had US$248 million available in cash for funding equity contributions to its Naraha lithium plant, Olarox Stage 2 Expansion, and any other growth projects.

More to come.


Ryan Clarkson-Ledward,
For Money Morning

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