On Wednesday, shares in Orocobre received a boost, after the global lithium chemicals producer announced its financial results for FY21, as well as the completion of the merger with Galaxy Resources.
Lithium prices, which had tumbled sharply since 2018 amid an influx of supply outpacing demand, have rallied this year, reflecting strong end market and customer demand.
Orocobre reported a 10% increase in annual sales revenue to US$84.8 million for the year to June 30, but posted an after-tax loss of US$89 million, which it partly attributed to a change in the Argentine tax rate.
The company increased total production to 12,611 tonnes of lithium carbonate, up 6% on the previous corresponding period despite COVID-19 disruptions. Battery grade lithium carbonate production reached 66% of total production for the June quarter and 48% for the full year, up from 24% in FY20.
Positive operational improvements from their Olaroz Lithium Facility saw full year costs of US$3,860/t2 down 12% year on year despite a full year of COVID19 related costs and ongoing disruptions. Olaroz remains among the lowest cost producers of lithium chemicals in the world. Significant quality improvements have also resulted in high customer satisfaction ratings. Further improvement due to its Olaroz Stage 2 program will be complete in FY22 and will deliver a significant reduction in cash costs and step up in volumes.
In April 2021 Orocobre announced that it had entered into a merger with Galaxy Resources Ltd. Since then, all necessary approvals have been obtained to complete the merger effective from 25 August 2021. The merger has created a business that has the potential to be a Top 5 global lithium chemicals company with a highly complementary portfolio of assets delivering geographical and product diversification across brine, hard rock and vertical integration across the supply chain.
Orocobre Managing Director and CEO, Mr Martín Pérez de Solay said, “Orocobre has continued to deliver positive operating margins, despite COVID-19 and weaker market conditions throughout the first half of the financial year. This has been achieved through strong sales performance and a focus on costs and operating excellence. The completion of the merger today brings together assets and teams with highly complementary skills and knowledge.”