Orocobre 2019 half-year financial results

Press release by Orocobre. Access the full document here

22 February 2019

Orocobre Limited reports first half net profit after tax of US$24 million1

Orocobre Limited (ASX: ORE, TSX: ORL) ("Orocobre" or "the Company"), a dynamic global lithium chemicals supplier, today released its financial results for the half-year ended 31 December 2018 ("H1 FY19").

Highlights:

• H1 FY19 profit of US$24 million including a tax benefit of US$15.2 million and a foreign exchange charge of US$7.9 million. This is up from US$8.2 million in the previous corresponding period ("PCP") 1

• Total production of 6,075 tonnes of lithium carbonate

• Strong results from the Olaroz Lithium Facility:

- revenue of US$63.5 million, on sales of 5,163 tonnes of lithium carbonate

- EBITDAIX2 of US$36.6 million, after deducting export tax of US$2.9 million

- average price received of US$12,295/tonne, up from US$11,415/tonne in PCP

- gross operating margins of 65% with lithium production costs at US$4,251/tonne, excluding royalties and corporate costs making Olaroz one of the lowest cost producers of lithium chemicals in the world - gross cash margin of US$8,044/tonne, up from US$7,079/tonne in PCP

• As of 31 December 2018, Orocobre corporate had available cash of US$284 million. Including SDJ and Borax cash and project debt, net group cash is US$207.7 million

• Final Investment Decision ("FID") approval for Stage 2 Expansion of the Olaroz Lithium Facility given by Orocobre, Toyota Tsusho Corporation ("TTC") and JV boards

• Further to the soft lithium carbonate pricing experience in the December quarter, Orocobre expects the average sales price for the March 2019 quarter to be approximately US$9,000 per tonne (FOB).

Orocobre Managing Director and CEO, Mr Martín Pérez de Solay said, "Orocobre has continued to bolster its position as a mainstream, profitable, low cost producer of lithium carbonate.

"During Q4 FY18 Orocobre signed three pivotal agreements with our joint venture partner TTC - a new Olaroz Shareholders Agreement, Sales and Marketing Agreement and Orocobre Management Agreement (see ASX Release dated 28 November 2018). Orocobre, TTC and JV boards also gave their approval to the FID for the Stage 2 Expansion of the Olaroz Lithium Facility.

"Construction activities for our Stage 2 Expansion are progressing well with development of key items such as production boreholes, a secondary liming plant, evaporation/harvest ponds, roads and camp upgrades" he said.

Outlook, Guidance and Data

Subject to market and operating conditions Orocobre provides the following guidance:

Olaroz Lithium Facility

• Orocobre expects full year production (FY19) will be approximately the same as achieved in FY18.

Borax Argentina

• Production forecast of 35,000 - 40,000 tonnes for FY19

• Capital expenditure of ~US$1-2 million for FY19.

Corporate

• Corporate costs of ~US$7-8 million for FY19.

Proforma Financials 1,2

The Orocobre Group achieved a net profit after tax of US$24.0 million (31 December 2018: US$8.2 million profit), which included its share of net gains/(losses) of the SDJ joint venture of US$24.8 million (31 December 2017: US$13.1 million profit).

Sales de Jujuy PTE and hence the Olaroz Lithium Facility, recorded positive EBITDAIX of US$36.6 million for the six months to 31 December 2018. Borax Argentina recorded EBITDAIX of US$0.6 million which represents an increased profit US$1.6 million compared to PCP, the operations and expansion studies remain under internal review.