More on Orocobre

My wire on Tuesday referring to comments about Orocobre by Pilbara Minerals CEO Neil Biddle seemingly touched a raw nerve within the Orocobre cheer squad. Controversially, Biddle had questioned Orocobre’s ability to produce battery-grade lithium carbonate. Biddle’s remarks were most likely an outbreak of acute project envy (APE). Where Biddle has failed repeatedly to deliver, Orocobre has succeeded. Orocobre is a rarity – an Australian resources company with sales and not just an expensive unfunded idea. Its resource size raises the possibility of it becoming a core portfolio investment for Australian investors for the next 30 years. All good; but the time has passed for it to be judged on how well it builds a plant. It needs to validate a market value approaching $400 million. Orocobre has said it is going to sell 17,500 tpa at a cost of US$2,000/t and a price of US$5-7,000/t. Is this enough? It could be but judgments about future market price now depend on valuations generally, the company’s growth prospects and how skillfully sales and profit guidance is presented.