MONTRÉAL, QUÉBEC--(Marketwired - July 28, 2016) - Orbite Technologies Inc. (TSX:ORT)(OTCQX:EORBF) ("Orbite", or the "Company") today filed its financial statements for the second quarter ended June 30th, 2016. The Company reported a loss before net finance expense and taxes of $1.8 million for the quarter, a decrease from a loss of $3.5 million for the comparable quarter in the prior year, attributable mainly to lower general and administrative expenses, as well as an increase in other income of $1.0 million.
As at June 30th, 2016, the Company had aggregate cash and short-term investments balance of $5.6 million, and positive working capital (current assets less current liabilities) of $6.4 million. Subsequent to June 30th, 2016, the Company drew the remaining $2.1 million on the $4.9 million 2016 Investissement Québec ("IQ") bridge loan. As a result, the Company has, on a pro-forma basis, cash and short-term investments of $7.7 million.
All dollar amounts are in Canadian dollars unless stated otherwise.
Highlights - Second Quarter and Subsequent Events
Corporate & Financing
- During the quarter, the Company completed financings for an aggregate amount of $16 million. The funds raised enabled the Company to award the contracts towards the completion of Orbite's High Purity Alumina (HPA) plant and reaccelerate construction as described below.
- On May 12th, 2016, the Company announced the appointment of Charles Taschereau Vice-President and Chief Operating Officer of the Company.
HPA Plant Construction
- Fjordtech Industries Inc., who was awarded the contract for the remaining piping mechanical work, commenced work during the week of July 4th, and is proceeding as planned. Installation of the piping for the plant's cooling water system was completed on schedule, and Fjordtech is now concentrating on the crystallization sector piping installation, to be followed by installation of the piping for the digestion sector.
- The contract for the remaining electrical and instrumentation work, awarded to Electro Kingsey who commenced work on July 11th, is also proceeding as per schedule and is being completed concurrently with the completion of the piping installation by Fjordtech. Installation of electrical and instrumentation was also completed for the cooling water system. Work will now proceed in the crystallization and digestion sectors of the plant.
- Both contracts are being carried out on a fixed-price basis with penalty provisions for late delivery, and stipulate an 8 week project timeline, with work continuing over the present construction holidays. The contracts respect the revised project budget.
- Isolation Morissette has completed the insulation work on the steam piping and the calcination system (decomposer & calciner), also under a fixed price contract. Insulation work is now 75% complete.
- All other construction is complete (civil and structural, major mechanical installation, decomposer and calciner installation), or materially complete (ventilation).
Commissioning & Start-up
- As reported on June 21st, commissioning and cold start-up activities of the decomposer and calciner units were completed successfully.
- Additional cold testing was successfully conducted over the last few weeks. Alumina product (SGA) was successfully fluidized in both reactors, and up to 5 tonnes per day was successfully transferred from the decomposer to the calciner via the sealpot assembly system. Control and stability over the transfer of material through the seal pot was tested, and the sealing of the toric discharge device was verified.
- Commissioning and start-up of the cooling water system is commencing and will be completed by August 1st.
- Field service personnel from Outotec (decomposer and calciner) and Sandvik (calciner system heating elements) will be mobilizing on site the week of August 1st, to commence commissioning and startup of the steam superheater and the heating elements in the calciner and decomposer. Initial heating up of the decomposer and calciner is forecast for mid-August.
"Following the completion of our financing with Investissement Québec, we were able to reaccelerate construction work at our HPA plant," stated Glenn Kelly, CEO of Orbite. "Work is progressing on schedule and on budget to meet the timeline communicated to shareholders previously, while commissioning activities continue to meet expectations. Consequently, we reiterate our expectation of commencing commercial production in Q3 of this year."
- To date, 27 samples have been shipped to prospective customers, including one 50kg commercial sample. Two further commercial samples have been ordered (3 in total, to date). A further 21 samples are to be shipped to 20 additional prospective customers.
AGM - Board of Directors
- On Jun 22th, 2016, the Company held its annual meeting of shareholders. All Directors put forward by the Company were voted in office.
- During the quarter, seven notices of allowance were received. Additionally, seven new patents were granted, for a total of 14 new intellectual property rights.
- The newly awarded IP covers notably the HPA production process, Red Mud Monetization, and magnesium extraction and recovery.
- Coverage was expanded in the U.S., Russia, Australia, Japan and Canada.
Summary of Q2 2016 Financial Results
Revenues and earnings
The Company is a development stage company and has no revenues.
Net loss for Q2 2016 decreased by $1.8 million to $1.9 million, as compared to the same period in the prior year. The decrease in net loss during the quarter is principally due to proceeds received or receivable from the insurance claim for a 2014 incident at the HPA plant, resulting in a positive change in Other Income of $1.0 million, as well as a $0.5 million reduction in general and administrative expense.
HPA plant operations
HPA plant operations include administration, operating and maintenance costs for the HPA plant in Cap-Chat. HPA plant operation expenses remained relatively stable at $1.1 million during the quarter ended June 30th, 2016 compared to the second quarter in 2015.
General and administrative charges
General and administration charges consist mostly of personnel related costs (salaries and benefits), share-based payment expenses, consulting, accounting, business development, legal, and investor relation costs relating to head office activities. General and administrative charges decreased by $0.5 million during the quarter compared to the same period in 2015. This decrease is due mainly to a decrease in salaries, share-based payments, investor relations and communication, partially offset by an increase in consulting and professional fees.
Cash and short-term investments and working capital
As at June 30th, 2016, the Company had aggregate cash and short-term investments balance of $5.6 million, and positive working capital (current assets less current liabilities) of $6.4 million.
Subsequent to quarter end, the Company drew the remaining $2.1 million on the $4.9 million 2016 IQ bridge loan. As a result, the Company has, on a pro-forma basis, cash and short-term investments of $7.7 million.
- On May 5th, 2016, the Company concluded a $4.9 million bridge loan with IQ, collateralized against the Company's investment tax credits receivable ("ITC") for the 2016 financial year which are expected to total $6.5 million.
- On May 6th, 2016, the Company closed a non-brokered private placement totaling $1.0 million.
- On May 11th and June 27th, 2016, the Company received payments totaling $3.6 million from tax authorities in Québec for 2014 investment tax credits ("ITC"), used to pay down a portion of the Company's revolving credit facility and term loan A on a prorated basis.
- On May 19th, 2016, the Company completed an equity financing in the amount of $5 million with Ressources Quebec inc. ("Ressources Quebec"), a subsidiary of IQ.
- On June 1st, the Company completed a $5.0 million debt financing with IQ.
A more comprehensive description of the Company's financing activities is provided in the Company's MD&A and other filings on www.sedar.com.
Property, plant, and equipment
The Company recorded a net increase in Property, plant, and equipment ("PP&E") of $11.9 million in the first six months of 2016 compared to December 31st, 2015, mainly attributable to investment in the HPA plant.
Cash Flow Statement
Cash Flows from Operating Activities
Cash flows used in operating activities remained stable at $4.3 million. An increase in Other Income and lower General and Administrative expense were offset by a decrease in non-cash working capital items.
Cash Flows from Financing Activities
Cash flows from financing activities in Q2 2016 decreased by $3.2 million as compared to the same period in the prior year. This decrease is due mainly to lower proceeds received from the issuance of Convertible debentures partially offset by the issuance of shares, warrantsand the exercise of options.
Cash Flows used in Investing Activities
Cash flows used in investing activities decreased by $3.8 million. During the quarter, the Company focused on raising the funds required to complete its HPA facility. During this period, the Company had de-mobilized external contractors on site and generally reduced construction activities to preserve working capital.
Orbite management will hold a conference call and provide a live audio webcast today, July 28th, 2016 at 10:00 a.m. to discuss the Company's financials and provide an update on the Company's HPA plant.
The call will be held in English. The Q&A session will be in English and French.
CONFERENCE CALL DETAILS:
||July 28th, 2016
||10:00 a.m. (EDT)
|Dial in number:
||+1 888 231-8191
||+1 647 427-7450
||+1 855 859-2056
||+1 514 807-9274
||+1 416 849-0833
||12:00 midnight (EDT), Thursday, August 4th, 2016
Notice to Reader
The information provided in this press release is entirely qualified by the disclosures in the Company's Consolidated Interim Financial Statements and Management Discussion & Analysis (MD&A) for the quarter ended June 30, 2016, which are available at www.orbitetech.com and under the Company's profile at www.sedar.com.
Orbite Technologies Inc. is a Canadian cleantech company whose innovative and proprietary processes are expected to produce alumina and other high-value products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, and in a sustainable fashion, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud, fly ash as well as serpentine residues from chrysotile processing sites. Orbite is currently in the process of finalizing its first commercial high-purity alumina (HPA) production plant in Cap-Chat, Québec and has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallée deposit. The Company's portfolio contains 16 intellectual property families, including 36 patents and 92 pending patent applications in 11 different countries and regions. The first intellectual property family is patented in Canada, USA, Australia, China, Japan and Russia. The Company also operates a state of the art technology development center in Laval, Québec, where its technologies are developed and validated.
Certain information contained in this document may include "forward-looking information". Without limiting the foregoing, the information and any forward-looking information may include statements regarding projects, costs, objectives and future returns of the Company or hypotheses underlying these items. In this document, words such as "may", "would", "could", "will", "likely", "believe", "expect", "anticipate", "intend", "plan", "estimate" and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or the Company management's good-faith beliefs with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company's control. These risks uncertainties and assumptions include, but are not limited to, those described in the section of the Management's Discussion and Analysis (MD&A) entitled "Risk and Uncertainties" as filed on March 30, 2016 on SEDAR, including those under the headings "Recent increase in budgeted capital costs will require additional financing and may adversely impact our prospects", "We will need to raise capital to continue our growth" and "Development Goals and Time Frames".
The Company does not intend, nor does it undertake, any obligation to update or revise any forward-looking information or statements contained in this document to reflect subsequent information, events or circumstances or otherwise, except as required by applicable laws.