Salar de Salinas Grandes Project (Orocobre 85%)    
     

In addition to the flagship Olaroz Project, Orocobre has been actively identifying and developing a significant portfolio of other high quality lithium-potassium-boron projects that have great potential for development as low cost suppliers to key lithium, potash and borate markets. The Company has, through its 85%-owned subsidiary, South American Salar Minerals Pty Ltd, an active Puna Region exploration program focused on further development of these projects. Orocobre holds an 85% interest in the Salar de Salinas Grandes lithium-potassium-boron brine project.

South American Salars holds rights to properties covering over 120,000 hectares in and around Salinas Grandes, located approximately 70 kilometres southeast of Orocobre’s flagship Olaroz Project, in the Puna region of the Provinces of Jujuy and Salta, Argentina. The proximity of Salinas Grandes to the flagship Olaroz Project provides potential operating synergies, including the option to process concentrated Salinas Grandes lithium brine at an expanded lithium carbonate plant at Olaroz after recovering potash resources.
Figure 1: The location of the Salinas Grandes and Olaroz projects in northern Argentina

In early 2010, Orocobre announced the discovery by South American Salars of what was believed to be very attractive lithium and potassium sampling results at Salinas Grandes. Sampling indicated highly concentrated levels of lithium and potassium over an area of the nucleus covering approximately 60 square kilometers.
The Company subsequently undertook an initial drilling program aimed at completing an initial inferred resource during the second quarter of 2011. This drilling program consisted of 12 triple-tube diamond core holes with an average spacing of 3.3 km in the east of the salar, where most drilling was done. Holes were drilled vertically to between 60 and 75 m depth, with one hole drilled to 71 m with a diamond core and to 180 m total depth with a tricone. Down-hole geophysical logging was conducted on six of the holes. In addition, the company subsequently undertook a program of shallow auger drilling (47 holes) and preliminary pumping tests.

The diamond drilling established that lithium, potassium and boron concentrations in brine are elevated (generally exceeding 600 mg/l Li) in the upper 6-20 meters of the Salinas Grandes salar. However, diamond drilling showed that concentrations decrease with depth, with only isolated Li-bearing intervals (concentrations generally < 500 mg/l Li) to depths of approximately 70 m. On this basis a resource has only been estimated for the shallow part of the salar.

In March 2012, the Company announced the initial resource estimate and issued encouraging results of initial pumping tests for the Salinas Grandes Project. An independent hydrogeological assessment, by consulting hydrogeologist Murray Brooker, estimated an inferred resource of 56.5 million cubic metres of brine at 795 milligrams per litre lithium and 9,550 milligrams per litre potassium, which is equivalent to 239,200 tonnes of lithium carbonate and 1.03 million tonnes of potash (potassium chloride) based on 5.32 tonnes of lithium carbonate being equivalent to one tonne of lithium and 1.91 tonnes of potash being equivalent to one tonne of potassium. The estimate extends to an average depth of 13.3 meters, and applies the company’s property boundaries and a 1,000 mg/l Li cut-off from the extensive surface pit sampling data to establish peripheral resource boundaries.

The shallow brine body has attractive grades and excellent chemistry, with low magnesium to lithium ratio of 2.5, a high potassium to lithium ratio of 12.5 and a low sulphate to lithium ratio of 5.8 in the central area of drilling, rising to 10.6 for the area covered by all the company properties over the salar. Evaporative concentration test work since late 2010 suggests high recoveries of both potassium and lithium could be expected using a simple, low operating cost, process route. Laboratory scale testing has produced potassium (82-89% KCl), prior to washing to obtain +95% KCl. The low sulphate levels of the Salinas Grandes brine indicate that potash recovery would be high as a co-product of lithium carbonate production with potentially eight tonnes of potash produced for each tonne of lithium carbonate produced.

To better understand the behaviour of pumping from the shallow brine unit, four pump tests on purpose-constructed large diameter test production bores at different locations across the salar are planned for the next phase. These will evaluate brine extraction and the stability of brine grade over a long period of time, up to a year, to better understand the potential for commercial production. Provided that adequate pumping rates can be sustained over time with stable and economic lithium and potassium grades, the company anticipates undertaking further drilling and a preliminary economic assessment for the project.

Further technical information on Salinas Grandes maiden resource estimate and initial pumping test results is available in the Company’s March 7, 2012 news release and in the “Technical Report on the Salinas Grandes Lithium Project” dated April 16, 2012.

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