The Orocobre Limited (ASX: ORE) share price won’t be going anywhere on Friday after the lithium miner requested a trading halt following its full year results release.
How did Orocobre perform in FY 2020?
It certainly was a tough year for Orocobre following a further collapse in lithium prices amid an oversupply of the battery making ingredient and subdued demand.
For the 12 months ended 30 June 2020, the company posted a 50% decline in revenue to US$77.1 million and a US$67.1 million loss after tax. The latter compares to a net profit after tax of US$65.4 million a year earlier.
This loss includes impairments, foreign exchange movements, and other one-off items.
Potential deal with PPES.
The company also revealed that it has entered into a non-binding memorandum of understanding (MOU) with PPES. This is a joint venture between Toyota and Panasonic which specialises in the production of automotive battery cells.
This MOU is for the long-term supply of product culminating in 30kt of lithium carbonate equivalent in 2025. Management anticipates that the majority of the volume will be in the form of battery grade lithium hydroxide from its existing Naraha plant.
Though, it is worth remembering that MOUs are not legally binding and therefore there is no guarantee that it will go ahead.
Equity raising.
Finally, the reason for the trading halt is Orocobre launching an equity raising this morning.
The lithium miner is aiming to raise $126 million via a fully underwritten placement of 50 million new shares at a price of $2.52 per share. This represents a 13.1% discount to its last close price.
Proceeds from the equity raising will be used to allow the company to fully fund Olaroz Stage 2 and deliver the Olaroz Stage 1 ramp up through a range of operating, COVID-19, and pricing environments, as well as capital for future growth initiatives.
The company will then attempt to raise a further $30 million from retail shareholders via a share purchase plan.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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