Eco Investor March 2017

Pre-Dividend Securities

Orocobre Makes Maiden Profit

Eco Investor has upgraded Orocobre to a pre-dividend security as the company made a maiden profit in the December half year of US$7.3 million. Its loss for the December 2015 half was US$20.4 million.

However, Orocobre is still a growth company and a long way from paying a dividend as it has expansion projects underway and under planning that will require capital.

Orocobre's sales revenue from borax was US$8.4 million, just under the December 2015 half of US$8.8 million. The profit came from a maiden contribution from lithium carbonate sales. The joint venture made revenue of US$60.5 million and Orocobre's share of the profit was US$9.7 million. Its previous interim share was minus US$20.3 million.

The joint venture sold 6,588 tonnes of lithium carbonate at an average price of US$9,185 per tonne. The gross operating margin was 62 per cent as lithium production costs were US$3,525 per tonne excluding royalties and corporate costs. Orocobre said this makes it one of the lowest cost producers.

Production guidance for 2016-17 has been revised to 12,000 to 12,500 tonnes of lithium carbonate, but Orocobre plans to expand and double annual production at Olaroz to 35,000 tonnes. (ASX: ORE)

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