PERTH (miningweekly.com) – Lithium miner Orocobre on Friday announced a capital raise of A$126-million as the company swung to a net loss for the half-year ended June.

Orocobre announced the net loss of $67.1-million for the six months under review, compared with a net profit of $65.4-million for the previous corresponding period, as revenue halved from $144.6-million to $77.1-million, despite lithium production being down only 5% in the same period, at 11 922 t.

Earnings before interest, taxes, depreciation and amortisation declined from $54.1-million in the first half of 2019, to a loss of $3.9-million.

“Orocobre has continued to deliver positive operating margins, despite Covid-19 restrictions and weaker market conditions. In the second half of the year, management of Covid-19 has been paramount and we have been successful in preventing transmission of the virus within our operations,” said Orocobre MD and CEO Martin Perez de Solay.

“Our expansion plans continue to be delayed due to restrictions on personnel movement and we are working to mitigate the impact where possible. Our operating strategy retains a focus on safety, quality and productivity, which combined with disciplined cost management, is delivering improved operating results to ensure we remain a low-cost producer of lithium carbonate.”

Orocobre on Friday announced plans to raise A$126-million to fully fund the Stage 2 expansion of the Olaroz project, and to deliver the ramp-up of the Stage 1 project through a range of operating, Covid-19 and pricing environments, as well as capital for future growth initiatives.

Orocobre will issue 50-million fully paid ordinary shares, representing 18.1% of the company’s existing shares on issue, priced at A$2.52 a share. The offer price represents a 13.1% discount to the company’s last closing price on August 27.

The shares will be issued under the company’s existing placement capacity, and will not require shareholder approval.

Following the share placement, Orocobre would also undertake a share purchase plan, allowing Australian and New Zealand shareholders to subscribe for up to A$30 000 worth of new shares, with the company aiming to raise a further A$30-million.

The Stage 2 expansion is currently estimated to cost some $295-million, and will increase total expected lithium carbonate production to around 42 500 t/y, with part of this industrial grade lithium carbonate to be used as feedstock for the proposed Naraha lithium hydroxide plant.

Meanwhile, Orocobre on Friday also announced that it had entered into a non-binding memorandum (MoU) with Prime Planet Energy & Solutions, which is a joint venture between Toyota and Panasonic, which specialises in the production of automotive battery cells.

The MoU would see Orocobre supply up to 30 000 t/y of lithium carbonate equivalent by 2025, with initial deliveries to start from 2021.

It is anticipated that the majority of the lithium carbonate equivalent will be in the form of lithium hydroxide from the existing Naraha plant, and a further expansion of lithium hydroxide production capacity.

The pricing framework will be finalised with a binding supply agreement, which is expected to take 12 months to complete.

“The MoU is a major development for Orocobre and will underpin the current expansion of the Olaroz lithium facility. Having such a large volume of production under set pricing structures will also remove volatility of product pricing and is expected to deliver improved results,” said Perez de Solay.