Orocobre Needs Cost Guidance

Orocobre deserves more attention than the ordinary mining start-up because it could eventually justify a core position in an Australian equity portfolio for decades, perhaps, if all goes right. The company has been very good at reporting progress as it has developed its lithium carbonate production facilities in Argentina. Last week, it continued to keep the market abreast with a detailed discussion of its production ramp-up. The latest report has provided an insight into likely near term production, sales and prices but there is nothing yet on costs. No doubt, the costs are higher than feasibility study guidance at the present time because of the early stage of production and the need to fine tune operations currently running below potential. A reticence to say anything about costs at this point is probably understandable but also a potentially damaging source of uncertainty. The company’s share price has once again dropped below 220 cents. Whether it should go higher or lower will depend to a large extent on guidance about the future cost profile (and, consequently, value).