Salar de Olaroz is located in the elevated and arid Puna region of Argentina's north-west province of Jujuy. The operation consists of 63,000 hectares of tenements over a salar (salt lake) which contains high values of lithium and potash in brine. The Facility is supported by favourable conditions in terms of both the operating environment and local infrastructure. Very limited rainfall combined with dry, windy conditions enhances the brine-evaporation process. The Facility is also serviced by gas pipelines, high voltage electricity, and paved highways. Three major seaports, Buenos Aires in Argentina and Antofagasta and Iquique in Chile are serviced by international carriers and are easily accessible by road and/or rail.
Partnerships and Project Beginnings
The Olaroz Lithium Facility began as a joint venture project built in partnership with Japanese trading giant Toyota Tsusho Corporation ("TTC") and the mining investment company owned by the provincial Government of Jujuy, Jujuy Energia y Mineria Sociedad del Estado ("JEMSE").
The partnership with TTC began in October 2012, through the execution of a definitive joint venture agreement to develop the Olaroz Lithium Project. This agreement provided a comprehensive financing plan structured to secure TTC's direct participation in, and support for, funding the planned developments at Olaroz. In turn, TTC's participation in the project was through a 25% equity stake at project level. In a business where product quality is paramount, TTC's investment provided a strong endorsement of the quality of the Olaroz resource and the high purity battery grade product produced at the Olaroz Facility.
JEMSE's became a project partner in June 2012, shortly before Orocobre received final government approval to commence construction on the project. JEMSE's partnership not only provided the initial crucial support during the project development phase but is also imperative in providing ongoing assistance with navigating government and regulatory approvals within Argentina. JEMSE's participation in the project is held through an 8.5% equity stake at project level.
The Olaroz Lithium Project Joint Venture is operated through Orocobre's Argentine subsidiary, Sales de Jujuy S.A., the ownership of which is held in a Singaporean company, Sales de Jujuy Pte Ltd, that is the joint venture company with partner Toyota Tsusho and JEMSE. The effective Olaroz Project equity interest will
be Orocobre 66.5%, TTC 25.0% and JEMSE 8.5%.
The structure is shown below.
As part of their obligations under the January 2010 agreement ,TTC successfully procured a substantial and low cost project debt facility that was finalized in December 2012. The debt financing was provided by Mizuho Corporate Bank Ltd, with a maximum facility amount of US$192 million as detailed below:
For additional information on the project funding, please read the funding summary document.
Long Life, Expandable and Sustainable Resource
Salar de Olaroz is a long life and high quality resource which is capable of sustaining continuous production for forty-plus years with only 15% of the defined resource extracted. The original design of the Olaroz Lithium Facility allows for future developments and/or expansion plans to occur in line with market demand. A second phase lithium carbonate expansion at Olaroz can occur at a 40% discount per tonne of capacity when compared to the original capital cost.
The estimated measured and indicated resource of 1,752 million cubic metres of brine at 690 mg/L Lithium, 5,730 mg/L Potassium and 1,050 mg/L Boron at the Olaroz Facility equates to 6.4 million tonnes of lithium carbonate and 19.3 million tonnes of potash (potassium chloride) based on 5.32 tonnes of lithium carbonate being equivalent to 1 tonne of lithium and 1.91 tonnes of potash being equivalent to one tonne of potassium. Subsequent independent modelling has indicated improved lithium brine grades of 825 mg/l, which allowed for an increase in annual lithium carbonate production. For comparative purposes, an average lithium grade of 800 mg/L is similar to FMC's Hombre Muerto operation and approximately double the grade of both the Silver Peak, Nevada and Rincon, Argentina operations. The Olaroz Facility's Mg:Li ratio is also low (which is desirable for processing) at around 2.4, compared to Atacama, Rincon and Uyuni at 6.4, 8.6 and 19 respectively. Only Silver Peak and Hombre Muerto are lower at 1.4.
In the second quarter of 2014 Orocobre began testing the exploration potential beneath the current Olaroz resource. The Company intended to not only test the depth of the resource but also the peak flow rates achievable. The results of the borefield drill testing suggested there was significant upside potential to the current resource in terms of additional high chemistry brine available as well as an increase in the potential pumping rate which in turn correlates to a lower capital cost for future expansion plans at Olaroz.
For more information on the resource and geology of Olaroz view the DFS and geology summary page.
Production and Processing
The processing method at Olaroz is based on existing brine treatment operations with modifications tailored to suit the brine chemistry and climatic conditions at Olaroz. Lithium brine operations typically have a much lower cost of production than hard-rock lithium deposits. The modelled cash operating cost of approximately US$2,000/t (excluding any production or boron credits) relevant for Orocobre positions the Company as being one of the lowest cost lithium producers globally.
The processing method begins with the extraction of lithium-rich brine from borefields drilled on the salar. The brine is then transferred to a series of evaporation ponds which utilise solar radiation for concentration and a preciptation process to remove impurities. The concentrated brine is then fed into the lithium carbonate plant which precipitates, micronizes and dries the finished high-quality lithium carbonate product.
The Olaroz Lithium Facility has a low environmental footprint because of the following aspects of the process:
- The process is designed to have a high processing recovery of lithium. With its low unit costs, the process will result in low cut-off grades, which will maximise resource recovery.
- The process route is designed with a zero liquid discharge design. All waste products are stored in permanent impoundments (the lined evaporation ponds). At the end of the project life the ponds will be capped and returned to a similar profile following soil placement and planting of original vegetation types.
- Brine is extracted from wells with minimum impact on freshwater resources outside the salar. Because the lithium is in sedimentary aquifers with relatively low permeability, drawdowns are limited to the salar itself. This is different from halite hosted deposits such as Salar de Atacama, Salar de Hombre Muerto and Salar de Rincon where the halite bodies have very high near surface permeability and the drawdown cones can impact on water resources around the Salar affecting the local environment.
- Energy used to concentrate the lithium in the brine is solar energy. The carbon footprint is lower than other processes.
- The technology developed has a very low maximum fresh water consumption of <20 l/s, which is low by industry standards.
- Sales de Jujuy S.A. is also committed to the ten principles of the sustainable development framework as developed by The International Council on Mining and Metals. The company has an active and well-funded "Shared Value" program aimed at the long term development of the local people.
Orocobre has received expressions of interest from a variety of parties regarding the Phase II expansion of the long-life Olaroz project. Orocobre views this interest as validating the enhanced potential of the Olaroz resource and the projected growth profile of the lithium market. Orocobre will assess all possibilities when considering the potential Phase II expansion over the next year. Orocobre is continuing to progress studies on possible expansion at both Olaroz and the development of its other Argentinian lithium assets. The Board of Orocobre will only pursue those opportunities which add shareholder value in a capital efficient manner.
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