August 23, 2019 / 12:38 AM / a month ago

UPDATE 1-Australia's Orocobre finalises funding for expansion of flagship lithium project

(Adds details, production forecast, background)

Aug 23 (Reuters) - Australia’s Orocobre Ltd on Friday said it finalised a $180 million debt facility for the stage-2 expansion of its flagship Olaroz Lithium project in Argentina.

The Olaroz project in Northern Argentina is a joint venture between Orocobre, Japan’s Toyota Tsusho Corp, and Jujuy Energia y Minera Sociedad del Estado, a mining investment firm owned by the local government.

Orocobre said in a statement that the remaining funds for the expansion will be provided through shareholders loans from Orocobre and Toyota Tsusho.

The lithium miner said in a corporate earnings statement that it expects production from the project to be at least 5% higher in fiscal 2020 than a year ago.

Orocobre’s underlying net profit after tax for the year ended June 30 fell to $24.8 million, from $25.7 million a year ago amid a weaker market.

Market conditions for lithium, a key ingredient in the battery industry, have worsened because of lower demand from Chinese customers after a change in the country’s electric vehicle subsidies and global trade tensions.

The miner in July noted that several producers of Australian hard rock lithium had been asked by customers to delay shipments, find alternative customers and renegotiate offtake agreements.

Orocobre said it expects average sales prices for lithium carbonate to be about $7,250 per tonne for the September quarter.

Orocobre’s shares rose as much as 6%, its biggest one-day gain in more than two weeks, amid a slighlty higher broader market.

Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Stephen Coates and Richard Pullin

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