The Orocobre Limited (ASX: ORE) share price has fallen 1% in early trade after a weaker than expected quarterly update from the Aussie lithium miner.
What were the highlights from Orocobre's update?
In relation to the group's Olaroz lithium facility, in which Orocobre holds a 66.5% stake, Q4 FY19 production came in at 3,455 tonnes – down 4% on the previous corresponding period (PCP) .
This was largely due to a strategy of managing brine quality, new pond preparation and slightly lower than average evaporation rates. Production for the year was up marginally from FY18 to a new record of 12,605 tonnes.
Quarterly sales revenue was US$27.8 million, down 17% quarter on quarter (QoQ), with a realised average price achieved of US$8,220 per tonne on a free on board basis (FOB).
Management reported that June quarter product pricing was below that of the March quarter due to current market softness. Sales volume for the quarter was down 4% QoQ to 3,387 tonnes.
Gross cash margins (excluding export tax) of US$3,727 per tonne were down 29% QoQ mainly due to the lower average price received, however, the gross cash margin remains at a very strong 45% of revenue
Orocobre's lithium growth projects continue to develop with construction of the Naraha Lithium Hydroxide Plant expected to commence early H2 2019 with commissioning to commence during H1 2021.
Orocobre's Orax operations in Argentina posted overall sales volume for the June quarter of 11,758 tonnes, up 10% QoQ after deducting 2,312 tonnes of low value mineral sales in the March quarter.
The company's sales revenue was up 12% QoQ and the average price received was up 3% QoQ (excluding the low value mineral sales) in a positive sign for the lithium group.
Overall, production for the June quarter was 3,455 tonnes down from 3,596 tonnes in the previous corresponding period.
This was up 12% from 3,075 tonnes in the March quarter, which was affected by rainfall that exceeded the same period in 2017 and 2018 and resulted in the dilution of brine feedstock.
Sales were 3,387 tonnes of lithium carbonate with a realised average price of US$8,220 per tonne on an FOB basis and total sales revenue of US$27.8 million. The average price received during the quarter was down 13% QoQ.
According to Orocobre management, prices achieved in the seaborne market remained under pressure by Chinese exporters throughout the most recent quarter.
