BRISBANE, Australia, Nov. 23, 2017 /CNW/ -- Orocobre Limited (ASX: ORE,TSX: ORL ) ("Orocobre" or "the Company") wishes to announce that all resolutions were passed as ordinary resolutions following a poll at the Annual General Meeting held on 24 November 2017.
Details of the votes cast are as follows:
1. Adoption of the Directors' Remuneration Report
2. Re-election of Mr. John W. Gibson as a Director
3. Re-election of Mr. Courtney Pratt as a Director
4. Grant of Performance Rights to the Managing Director & CEO, Mr. Richard Seville
5. Approval for the giving of Retirement Benefits to the Managing Director & CEO, Mr. Richard Seville
6. Proposed increase in Non-Executive Directors' Remuneration
2017 AGM Chairman's Address
Good morning and welcome to the 2017 Annual General Meeting of Orocobre Limited. My name is Robert Hubbard and I am the Chairman of Orocobre and I will Chair today's meeting.
I would like to start by introducing my fellow members of the board and the Orocobre executive management team who are with us today. Richard Seville is our Chief Executive and Managing Director and he is joined by Leanne Heywood, a non-executive director. Also with us are our joint company secretaries, Neil Kaplan, the CFO of Orocobre and Rick Anthon, the head of corporate development and general counsel. In the audience with you are other members of our Corporate office. Also with us today is Brad Tozer from our auditors Ernst and Young.
As you all know your board is very culturally and geographically diverse with representatives from Argentina, USA and Canada, in addition to Australia. We have again decided to minimise expenditure for the meeting and my overseas colleagues on the board are all apologies today.
We have before us today six resolutions for consideration. Prior to consideration of the formal agenda I will give a short address and Richard will provide his more comprehensive presentation. There will be opportunity for questions at the conclusion of Richard's presentation (released to ASX on 14 November 2017), however if you have any questions specific to a resolution could you please raise them when we come to that resolution.
The operating environment
The market fundamentals remain very positive for lithium and Orocobre. Discussion on the impact of electric vehicles and their likely market penetration remains at a superficial level in Australia, however this is contrary to many countries and in particular Europe, North America and China. We believe the move to EVs is now irresistible with a corresponding impact on the demand for lithium.
In Argentina, the recent mid-term elections endorsed the national reform agenda of President Macri and the progress being made by Governor Morales in the Jujuy province. Orocobre is supportive of the direction being pursued by the President and Governor and we look forward to further fiscal and economic reform as Argentina continues its journey of returning to the global economy.
Collectively, these factors are producing a much improved operating environment for Orocobre compared to the Olaroz construction and early operating periods, although inflationary pressures remain.
Review of performance
The annual report explains in depth the operating and financial performance of Orocobre last financial year. There will be an opportunity to ask questions on the report later, however I will take this opportunity to make comment on a few specific points:
The financial year was another year of significant progress for our company and its flag ship Olaroz project. We achieved production of just under 12,000 tonnes of lithium carbonate, representing over 5% of the global market for lithium, and a maiden operating profit of $19.4M after the sale of some assets and impairments at Borax Argentina. The company achieved this in an environment of growing demand for lithium and consequently growing prices, factors that seem unlikely to abate in the near term. Even in ramp up we had an operating margin over 60% and we have established Olaroz as a profitable producer.
Share price performance was a roller coaster ride, primarily because we downgraded production guidance in February 2017 due to problems with our pond management. We know this damaged confidence in the company and we have worked hard to restore that confidence. Uninformed speculative commentary on pond design was neither helpful nor accurate.
In bringing Olaroz on-line management have achieved something that has not been done for over 20 years. It is unique by the inclusion of a purification circuit which can produce 100% battery grade lithium on site. Our experience illustrates the challenges of bringing new projects on line in an industry with limited depth of skills and we believe these skills and knowledge shortfalls will impact on supply growth in the short to medium term. The experience gained by our team will be invaluable as we look towards optimising current production and our future expansion projects.
Growth and development
In conjunction with our joint venture partners we have continued to investigate expansion of the Olaroz project and the construction of a lithium hydroxide facility in Japan.
Your directors are convinced that the most value accretive strategy we can pursue for our shareholders is to expand at Olaroz, and through this take advantage of the buoyant market conditions. We anticipate that as our operating performance continues to improve we should be in a position to make a decision in the first half of 2018 as long as we are confident phase 1 operating performance has been stabilised.
We have also progressed consideration of a lithium hydroxide facility to be based in Japan. We will not operate this facility, preferring to direct our management resources to Olaroz, but I can assure you we will be an active investor and this will provide access to a new product stream for our lithium carbonate and mitigate risk as battery technologies develop. A decision on this development is also expected early in the first half 2018.
Last year I advised that we intended to improve our reporting on sustainability. Consistent with that commitment we will be releasing our first Sustainability Report next week, focused solely on the Olaroz project. The report is a major achievement however, it is a consequence of Richard and his management team making Shared Value the bed rock upon which the Olaroz project would be developed almost 10 years ago. We take a long-term view on the development of Olaroz since this is in the best interests of all stakeholders and is the best way to deliver returns to our shareholders.
The report, amongst other things, highlights the importance of our local communities and their interest, not only in economic development, but effective management of the entire basin. This will require a coordinated approach between other basin participants, the Jujuy Government and Orocobre. We are supportive of a collaborative approach and will work with all interested parties.
We have continued the approach to remuneration that was endorsed by shareholders at the 2016 AGM. This has traditionally reflected a market based approach, taking into account the unique characteristics of Orocobre and the personal demands we make on our senior management given the location of our assets and international time differences. The form of our remuneration report and quantum of remuneration appears to have been well accepted by shareholders.
In 2018 we intend to make changes to the structure of our incentives. The key change is the split between short term cash incentive and long-term equity incentive will be altered to favour the long-term incentive. This will see future management remuneration being highly dependent upon share price appreciation, ensuring greater alignment with our shareholders. It should also assist in retaining our key people as the skills we have nurtured become more valued by other companies embarking on the same journey that we are travelling.
The first example of this change is Resolution 4 which deals with the allocation of 197,769 performance rights to Richard. Richard's overall remuneration package has not changed, however the split of incentive has broadly changed from a ratio of short term to long term incentive of 50/50, to 15% short term and 85% long term.
The composition of the board has not changed during the year. However, John Gibson who assumed the role of Chair of the Audit Committee in July last year has stood down from that role and Leanne Heywood is the new Audit Committee Chair. The composition of the Committee does not change. I would like to express my appreciation to John for his contribution as Audit Committee Chair in the last year.
Resolution 6 proposes an increase in the Directors' fee pool. This will enable us to keep fees consistent with market rates but more importantly provide the board with the flexibility to make additional appointments to the board should new skills be required.
In closing I would like to pass my appreciation to the management team both here and in Argentina and my colleagues on the board for their innovation and sheer hard work. I reserve my final thanks to our shareholders for your patience and support on the Orocobre journey.
About Orocobre Limited Orocobre Limited (Orocobre) is a dynamic global lithium carbonate supplier and an established producer of boron. Orocobre is dual listed on the Australia and Toronto Stock Exchanges (ASX: ORE), (TSX: ORL). Orocobre's operations include its Olaroz Lithium Facility in Northern Argentina, Borax Argentina, an established Argentine boron minerals and refined chemicals producer and a 35% interest in Advantage Lithium.