Figure 1: ORE P&L summary

Source: Company, BTIG

FY18 results – headline numbers. When compared to the previous corresponding period (pcp):
1. Revenue reached record half-year levels of US$148.9m (up +24%) on the back of increased sales volume of 11,837 tonnes in Olaroz.
2. Olaroz sales price jumped +28.8% to US$12,578/tonne FOB (from US$9,763).
3. Cost of sales was US$4,194/tonne, resulting in a record gross cash margin of US$8,384/tonne (up +38.5% from US$6,053/tonne).
4. EBITDAIX of US$94.6m was up +33% on pcp.
5. Underlying NPAT increased to US$25.7m.
6. Cash balance of US$316.7m with net cash of US$229m.

Lithium hydroxide plant update. ORE and TTC continue to progress on the 10,000tpa Lithium Hydroxide plant, which would further enhance ORE’s margins. The estimated capital cost for the plant is in the range of US$60-70m (pre-subsidies and financing). Management has revised the previous estimates of operating costs of US$2,500/tonne and now expect operating costs to be ~US$1,500/tonne. Management noted that subsidies of US$27m have been secured from Japanese government and ORE and TTC are targeting commissioning in 1H20.

Stage 2 expansion underway in Olaroz. ORE is fully funded to develop Stage 2 at Olaroz for total capex of US$285m (excluding VAT of US$42m), which would increase lithium carbonate production to 42,500tpa. ORE has committed US$40m from operating cash flow prior to FID (expected shortly) with pond and related infrastructure and procession plant construction approval obtained and early works commenced. Run rate operating costs for the second stage is expected to be less than stage 1 as no purification circuit would be required. Management expects construction to be completed during 2H19 and commissioning from 1H20.

Figure 2: ORE Financial Summary 

Source: BTIG, Company, Bloomberg