ASX listed Orocobre Limited (ASX:ORE) has dismissed the recent lithium market volatility, committing to a $285 million Stage 2 expansion at its Olaroz mine in Argentina. Once completed, the expansion will see the operation increase its production capability to 42 500 tonnes per annum.
The market has reacted positively to Orocobre, with the share price increasing 3% this week on the release of its full year record profits of US1.9 million and cash of US316.7 million. The company also reported record production at the Olaroz facility of 12 470 tonnes of lithium carbonate for the 2018 financial year. The total revenue for Orocobre rose 24% to $US120.1 million, an exciting prospect for investors as lithium prices are expected to increase further.
Some analysts have voiced concern over the market volatility caused by China’s change in policy, however Orocobre’s CEO – Richard Seville told Fairfax that the company was positioned well to meet the long term demand for lithium, despite the short term volatility.
“We’ve had record production, we’ve had record prices, we’ve had record profits and we’ve established ourselves as a high margin, low cost lithium chemicals producer. And we did some transformative funding for our expansion project at Olaroz and our lithium hydroxide plant.
“So we’re in a great position to be expanding our production to feed the rapidly growing demand in the sector,” he said.
“So there’s a very good long term thematic there for our business, and of course you’re going to get short term (market) volatility,” At the time of writing, ASX:ORE was trading at $4.26 AUD, up 26% from last year.