Orocobre Limited is pleased to provide a progress report on the construction of the Company's flagship Olaroz lithium project.
Construction of the Olaroz lithium project officially began on 21st November 2012. Progress has been swift due in a large part to the preparation and planning that took place in the preceding year. Sinclair Knight Merz, with the assistance of INFA, a well respected Argentine engineering group, completed detailed engineering for all areas of the operation, including brine extraction, transport and evaporation, the lithium carbonate plant and key areas of the re-purification and micronizing circuits. The procurement process was also well advanced with all main suppliers identified and with many construction and supply contracts at an advanced stage of negotiation or ready for awarding by the construction commencement date.
In addition, prior to official construction start, various aspects of site preparation had been advanced, including the drilling of fresh water bores and pumping station and the time consuming removal of scrubby vegetation, "tolar", from the area of the evaporation ponds prior to earth moving. Since then, numerous contracts with a total value of US$45m have been executed, or are ready for execution. These include the earth moving contracts for the construction of the 4.2 square kilometres of evaporation pond and road construction for the bore field access road across the salt lake (which will allow production bores to be drilled), the drilling contract for sixteen 200m production bores, purchase of 37km of pipeline for gas supply, and the establishment of the construction camp, fuel and water supply. All major contracts awarded to this point have been on or under budget.
Since start of official construction, and taking into account the Christmas break, significant progress has been made on-site as follows:
- The establishment of the construction camp at Olaroz, and the renting of supplementary accommodation at the nearby town of Susques for first stage construction crews
- Mobilization of earth moving equipment and commencement of works
- The clearing of tolar over approximately 50% of the evaporation pond area (2 sq km) and the commencement of earth works for evaporation pond construction.
- Establishment of a long term water supply to be used both for both domestic and construction purposes
- Establishment of fuel supply/storage and telecommunications
- The construction of 50% of the access roads on the salar to the bore - field area.
Currently 142 construction workers are at site with a peak maximum expected of 400 by mid 2013.
The project implementation is through EPCM (Engineering, Procurement and Construction Management) with a high proportion of local involvement through construction and supply contracts and local employment. The unique community and shared value policy continues as a key success factor, training local people with supervision by high quality experienced professionals.
The Olaroz lithium project is being developed by Orocobre (66.5%) with is partners Toyota Tsusho Corporation ("TTC") (25%) and the Jujuy Province mining and energy company, JEMSE (8.5%) with a construction budget of US$229m including contingency. The project is fully funded with up to US$275m of funding available via US$82.8m of equity funding from TTC and Orocobre and US$192m of project finance for Mizuho Corporate Bank. First production is scheduled for the end of second quarter, 2014.