Vancouver-based RB Energy (TSX:RBI) got a boost today with the announcement that it has made its first commercial shipment of lithium carbonate from its Quebec lithium operation. Shares of the company are currently selling for $0.40 each, up 29 percent from Friday’s closing price.
Specifically, RB shipped its first container of technical-grade lithium carbonate (98.8 percent) to Tewoo ERDC, its offtake partner, this past weekend. Moving forward, the company will make weekly shipments of lithium carbonate, “with volumes expected to increase week on week towards commercial production levels by late 2014.”
Commenting on the news, Richard Clark, CEO of RB, said, “[a]lthough the commissioning of our lithium operation has taken longer than anticipated, we are very pleased to have at last achieved the important milestone of a first commercial shipment of lithium carbonate.” He added, “I would like to congratulate our operations team for their efforts in overcoming the many challenges that we have faced in the commissioning process and I join with them in looking forward to realizing the full potential of our lithium business.”
Those familiar with the company are likely well aware of the delays and challenges mentioned by Clark. RB’s share price took a sharp dive last month when it reported that due to “unexpected commissioning issues encountered with the kiln and with the conversion of technical to battery grade lithium carbonate,” it would have to extend the commissioning timeline at its Quebec operation and postpone production of commercial volumes of lithium carbonate.
RB also noted that as a result of those delays, it likely would not “reach its original production targets for 2014″ and would not realize commercial production levels until Q4 this year, with nameplate production being put off until 2015′s first quarter. Finally, the company said that it was looking to secure additional sources of funding given that the delays had “accelerated the depletion of [its] treasury to a greater extent than anticipated.”
That’s a fairly long list of setbacks, but happily for RB, today’s news seems to have renewed shareholders’ confidence. In addition to being set to make weekly lithium carbonate shipments, the company is on track to meet its new deadlines for commercial and nameplate production. Also significant is the fact that RB’s need for cash is now being met by the forward sale of iodine from its Chile-based Aguas Blancas operation. A more comprehensive financing package to take the Quebec project to commercial production is in the works.
Investors will have to keep their eyes peeled to see if the company stays on track.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.