The company is conducting an underwritten one-for-20 accelerated non-renounceable pro-rata entitlement issue to raise around $79 million.
The issue price is $6.55 per share, a 8.6% discount to Orocobre’s last closing price of $7.17.
The company will also conduct a $282 million placement to Japanese partner Toyota Tsusho Corporation at an issue price of $7.50, a 4.6% premium to yesterday’s close and a 17% premium to the 30-day volume-weighted average price.
The placement will give Toyota a 15% stake in Orocobre, the right to appoint a director, and anti-dilution rights.
While Orocobre has long maintained it would not be raising equity for the stage two Olaroz expansion, the decision was made to upsize the expansion from 17,500 tonnes of lithium carbonate per annum to 25,000tpa.
Capital costs are US$271 million, including $25 million contingency, and construction is targeted to start by mid-year for first production a year later.
Toyota will procure financing of up to $100 million for the expansion.
The expansion will take the total capacity of Olaroz to 42,500tpa of lithium carbonate, and is expected to lower operating costs.
It comes after Olaroz produced a record 3937t of lithium carbonate in the December quarter, up 84% on the previous quarter, at free-on-board cash costs of $3946 per tonne.
Quarterly revenue surged by 72% to $40 million with the average sales price of $11,550/t expected to rise in the current half by as much as 25%.
Guidance for the 2018 financial year was maintained at 14,000t and the operation notched up its seventh straight quarter of positive cashflow.
Orocobre managing director and CEO Richard Seville said the time was right to accelerate the expansion.
"The stronger than expected demand we and Toyota Tsusho are observing in the market and the production stability we have achieved in phase one means we are executing Olaroz phase two at the right time and are uniquely positioned given the strategic importance of lithium to Toyota Tsusho and Japanese industry,” he said.
Orocobre and Toyota are also finalising plans to build a 10,000tpa lithium hydroxide plant in Fukushima, Japan.
After proposed Japanese government subsidies of $27 million, Orocobre expects to contribute $6 million to the $60-70 million capital cost.
Estimated operating costs for the plant have been lowered to $1500/t from $2500/t and Orocobre said the plant should enhance Olaroz margins, diversify the company’s lithium product range and enhance relationships with end users in Japan.
A final investment decision is expected to be made by mid-year.
Orocobre shares will remain halted while the entitlement offer is being completed.
