Orocobre notes new Argentine foreign currency rules

THE BOURSE WHISPERER: Orocobre Limited has informed its shareholders of some interesting developments regarding the exchange of foreign currency regulations in Argentina.

According to the company’s announcement to the Australian Securities Exchange the national Government of Argentina has announced via decree that export revenues from mining projects must be repatriated to Argentina and converted to Argentine currency prior to being distributed either locally or overseas.

This will result in the payment for goods and supplies from overseas and the distribution of dividends will require the Argentine currency involved in such transactions to be converted to the foreign currency of the transmittal.

“This overturns the previous benefits provided by Argentina to oil and mining companies, in 2002 and 2003-04 respectively, that exempted them from the currency repatriation laws that apply to all other primary producers in the country,” Orocobre said in its announcement.

The company has had a preliminary analysis of the decree carried out by its legal counsel in Argentina, which it said indicates that it does not change the current regulations that allow, subject to the Argentinean central bank rules, the unlimited purchase and transfer of foreign currency to offshore destinations in consideration the purchase of equipment or supplies, debt repayment or dividend payments.

Orocobre said it will continue to investigate, through its Argentine legal counsel and advisors, any other implications on the financial and operational aspects of the company that may arise from the new regulations.

In the meantime, the company will be continuing with work to advance its Olaroz lithium-potash project located in the Puna region of Argentina.

The company is also currently undertaking exploration programs at its Cauchari and Salinas Grandes projects.

Orocobre recently delivered the results of a Definitive Feasibility Study for the Olaroz project, which it said highlighted strong project fundamentals, low operating costs and a very large resource base to underpin a long project life.