Orocobre is finally starting commercial production of lithium carbonate after over six years analysing, drilling and building

John Robertson

PortfolioDirect

Orocobre is finally starting commercial production of lithium carbonate after over six years analysing, drilling and building. Its outlook is tied to product innovation around changing energy storage needs. It has elements of a technology investment as well as having a foot in the mining/commodity camp. Orocobre directors are optimistically anticipating cash operating margins staying above 200%. Its current market value of 3.5 times anticipated 2016 sales compares with the 3.5 times 2014 sales valuation of Apple Inc. Dupont, The Dow Chemical Company and Albemarle, the biggest player in the lithium space, are each valued at 1-2 times sales. With a 40 year operational life and ongoing growth potential through market expansion, Orocobre could be a mainstay in an equity portfolio. Unlike those miners which can be sure of selling what they produce, Orocobre's quarterly sales reports will bear careful watching to track the sales efforts and revenue trajectory against what is required to maintain its market value.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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