At the time of writing, the share price of Orocobre Ltd [ASX:ORE] is trading at $3.00, down .66%.
At the recent general meeting, the company announced the full impact of COVID-19 and progression of the Olaroz lithium project.
Source: Optuma
Key points from ORE AGM presentation
The Olaroz lithium project is located in Argentina. According to the company, Stage 1 is expected to recommence ramp up in FY21.
While Stage 2 is expected to commence production in H2 CY22.
By FY22, Orocobre is aiming to produce lithium carbonate and lithium hydroxide for the battery market.
The global market for lithium-ion batteries is rapidly expanding. Expected to grow from US$44.2 billion in 2020 to US$94.4 billion in 2025.
Here are some key points drawn from the presentation:
- ‘Q4 FY20 costs are down by 22% from Q1 FY20, Stage 2 will drive costs even lower, Orocobre to remain in the bottom quartile of global cost curve
- ‘Brine concentration is higher
- ‘Recoveries are higher Product quality is significantly improved
- ‘Reagent usage is lower
- ‘Established management team and Board have delivered outstanding success in controlling COVID-19 infection at operations
- ‘Fully funded with ~US$255 million cash, of which ~US$60 million has been set aside for finance guarantees’
Perhaps most interesting is their lithium market commentary:
Source: Newswire.com
With the company targeting 2022 for Stage 2, ORE could be in the sweet spot from a long-term supply/demand perspective.
ORE share price chart
Looking at the ORE share price chart, the price broke through a long-term downtrend line, usually a positive sign.
Source: Optuma
At the time of writing, the ORE share price hovered just below the resistance level of $3.00.
If it breaks through this, $3.37 may come into focus. If the price tumbles back, then the level of $2.42 may be enough to halt the drop.
If the EV revolution gathers steam, the world will need more lithium — so the market commentary from ORE is particularly interesting.
A supply demand divergence would be a boon for companies like ORE.
If you want our reasoning on why lithium could be due for a strong finish to 2020 (and three lithium companies which could benefit), you can read that report right here.
Regards,
Carl Wittkopp,
For Money Morning
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