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Orocobre (ASX:ORE) shares hit all-time high as lithium prices soar
Source: Orocobre
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  • Orocobre (ORE) reaches an all-time high share price after strong lithium prices pave the way for a rise in quarterly revenue
  • The ASX 200-lister says lithium prices have improved 45 per cent quarter-on-quarter and 170 per cent over the past nine months
  • This has led to increased sales revenue from its flagship Olaroz project in Argentina, even as sales volume took a slight dip
  • Today's quarterly report comes ahead of a planned merger between Orocobre and WA-based lithium miner Galaxy Resources (GXY)
  • Shares in Orocobre are up 11.42 per cent and trading at $7.76 each, while Galaxy Resources (GXY) shares are up 9.75 per cent at $4.39 at 2:55 pm AEST

Lithium and boron miner Orocobre (ORE) shares have reached an all-time high share price after strong lithium prices paved the way for a rise in quarterly revenue.

The ASX 200-lister tabled a 22 per cent increase in quarter-on-quarter sales revenue from its Olaroz Lithium Facility in Argentina to US$21.6 million (A$29.3 million) for the quarter.

This comes even as Orocobre's sales volume takes a slight dip to 2549 tonnes compared to the 3032 tonnes sold over the March quarter. The company blamed global shipping delays and the need to hold extra stock in Japan for a contract with Prime Planet Energy and Solutions (PPES) for the lower sales volume.

Regardless, the increase in the price of lithium over the quarter more than made up for the lower volume, with Orocobre's realised average price up 45 per cent on the previous quarter to US$8476 per tonne (A$11,510 per tonne) free on board (FOB).

Lithium prices have increased almost 170 per cent over the past nine months, according to ORE.

More than this, the company managed to boost production by 2 per cent to 3300 tonnes compared to last quarter, even while increasing the proportion of its battery-grade production from 55 per cent to 66 per cent. This is a production increase of 31 per cent on the June quarter of 2020.

Looking ahead, Orocobre said the improved market conditions in the second half of 2021 will be somewhat offset by sales contracts signed in December 2020, when lithium prices weren't so high.

Even with the portion of lower prices, however, Orocobre said it expects average pricing for the second half of the year to be around US$9000 per tonne (A$12,221 per tonne) FOB.

Borax sales slightly lower

Unlike lithium, the average price of Orocobre's borax sales from Argentine was 13 per cent lower over the June quarter this year than the March quarter.

The company said lower sales of chemicals and higher sales of lower-priced mineral products led to the decline in average price, though sales volume improve quarter-on-quarter.

Orocobre sold 11,188 tonnes of borax product over the June quarter compared to 10,282 tonnes over the March quarter. Even so, sales revenue was down by 5 per cent thanks to the lower prices.

For reference, Orocobre sold 12,278 tonnes of borax product over the June quarter last year.

Joining forces with Galaxy

Today's quarterly report comes ahead of a planned merger between Orocobre and WA-based lithium miner Galaxy Resources (GXY).

The merger was first announced in April, with the all-scrip deal offering GXY shareholder 0.569 ORE shares for each Galaxy share held as part of the takeover.

This would result in ORE shareholders owning 54.3 per cent of the new combined entity, and GXY shareholders owning the remaining 45.7 per cent.

A meeting for shareholders to vote on the deal is slated for August 6 and, if approved, the merger will come into effect on August 25.

Orocobre said it has around US$248.3 million (A$323.6 million) in available cash at the end of June, though US$120.6 million (A$163.77 million) of this is set aside for some development and expansion work at its Naraha and Olaroz sites.

Shares in Orocobre were up 11.42 per cent and trading at $7.76 each, while Galaxy Resources (GXY) shares were up 9.75 per cent at $4.39 at 2:55 pm AEST. The company has a $2.67 billion market cap.

ORE by the numbers
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