Orbite Aluminae Inc.
TSX : ORT
OTCQX : EORBF

Orbite Aluminae Inc.

June 12, 2015 07:30 ET

Orbite Provides Update on Financing and HPA Construction

MONTRÉAL, QUÉBEC--(Marketwired - June 12, 2015) - Orbite Aluminae Inc. (TSX:ORT)(OTCQX:EORBF) ("Orbite", or the "Company") today provides an update on the construction and financing of its high purity alumina plant (HPA) located in Cap-Chat, Québec.

Financing

  • The Company recently received confirmation from its tax consultants that it should be eligible to receive up to $7.5 million in tax credit refunds for the investments carried out in fiscal 2015.
  • Along the same lines as the bridge loan announced in January (see January 14, 2015 press release), Investissement Québec ("IQ") has agreed to provide Orbite with a $5.0 million bridge loan, collateralized against the Company's investment tax credits receivable for the year 2015.
  • The loan is conditional on the finalization of customary documentation and Orbite expects the conditions to be similar to the collateralized bridge loan provided by IQ in January 2015.
  • In addition, the Company announces that it will be receiving on or about June 30, 2015, from the Government of Québec, a $3.0 million installment towards its 2012 and 2013 Québec Investment Tax Credits, related to equipment purchased for manufacturing and processing in the Gaspé region during the 2012 and 2013 financial years.
  • The Company has to date received or expects to receive shortly the totality of the $25.7 million of tax credits due to the Company related to the 2012 and 2013 financial years. $25.0 million of these funds will have been deposited in a segregated account and serve as security for the convertible debentures issued in 2012. The remaining $0.7 million along with $0.2 million in related interest received will be applied towards the financing of the HPA plant.
  • Accordingly, the Company intends to redeem the 2012 convertible debentures and reduce interest payable by $2.0 million per year. The formal decision to proceed with such redemption will depend on the actual receipt of the remaining investment tax credits as expected.
  • The Company had filed for $27.5 million of tax credits related to the 2012 and 2013 Québec Investment Tax Credits but had recorded $25.7 million as receivable, net of a provision of $1.8 million. Discussions with the Government of Québec to qualify the $1.8 million balance as 2012 and 2013 Québec Investment Tax Credits are ongoing, and if successful, such refund will be also be applied towards the financing of the HPA plant.

Construction (Pictures can be found in the Media section of Orbite's website)

Decomposer and Calciner

  • Refractory installation process and internal prepping of the ovens at Cap-Chat commenced at the end of March, as planned, with CNC Mechanical (2002) Inc. ("CNC") and RHI Canada Inc. ("RHI").
  • Replacement bricks were successfully precast using the new refractory material and refractory installation on the calciner system auxiliary piping is proceeding well at RHI in Boucherville and will shortly undergo curing at Les Services Mobiles Thermetco's ("Thermetco") facility in Montreal. The new refractory material was also successfully cast in place and pre-cured in the decomposer and calciner in Cap-Chat.
  • Overall installation of bricks and mortar in the calciner, decomposer and piping is progressing well, with onsite technical oversight from Outotec and refractory suppliers. However, installation productivity by the contractors has not been as high as forecast by them at the contract bidding stage. Reasons for the lower than anticipated productivity, as indicated by RHI, are a steeper than anticipated learning curve, and longer intermediate curing requirements than originally projected for the new refractory material. To ensure precision and quality requirements related to this critical component of the plant are met, Orbite has agreed to the extended timeline.
  • Consequentially, installation is expected to be completed by late July, four to six weeks longer than the originally scheduled 8 to 10 week period.
  • A four-week heating and curing process of the refractory in both ovens will follow and will be carried out by RHI/Thermetco.

Steam Piping

  • Specialty alloy piping, analogous to that used in the nuclear industry, is required for high-temperature steam supply to the decomposer and calcinator. The shop prefabrication contract for this specialty piping has been awarded to Groupe Pro-B Inc. of Trois-Rivières (Québec).
  • Prefabrication of steam piping is to commence in mid-June and its onsite installation is to commence in August and will take approximately 3 weeks.

Lined Piping

  • Prefabrication contract for lined piping (acid duty) was awarded to Sarnia Piping Specialties Ltd, of Sarnia, (Ontario) and QIP Equipment Ltd. of Montreal (Québec).
  • Shop prefabrication is to commence in June, with completion anticipated for the beginning of August.

All piping, including utilities

  • Bids for installation of all piping have been received. The Company anticipates awarding the various contracts during the week of June 22.

Mechanical

  • CNC, who successfully installed the decomposer and calciner, has been on site on a continuous basis installing minor mechanical equipment.
  • CNC has also been awarded the contract to install major mechanical equipment (including crystallization system heat exchangers, HCl gas capture and handling system, etc). This segment of the construction process commenced in April.

Electrical and Instrumentation

  • Contract has been awarded to Les entreprises d'électricité JMN Inc. from Matane (Québec).
  • Electrical work, including installation of the main inlet transformer and the Outotec electrical supply system, has commenced and will continue until start-up.

Structural, buildings and foundations

  • Foundation work was awarded to Les entreprises Roy Duguay & Associés from Cap-Chat. All exterior foundations (hydroxide silo, cooling tower, new building extensions, etc) are well advanced and will be completed by June 15.
  • The structural and building contracts were awarded to Atelier de soudure Acier Gilles Roy Inc. ("ASGR") from Amqui (Québec). The new building extensions, to house the crystallizer heat exchangers and the electrical control room for the calcination system, are presently being prefabricated, with installation on site to commence in June.
  • ASGR is also presently completing various internal modifications to the structure as well as fabricating and installing equipment and personnel platforms.
  • Equipment foundations inside the plant are being installed and expected to be completed by the end of June.

Ventilation and Insulation

  • The bid evaluation process for supply and installation of insulation on calcination equipment and high temperature piping and vessels is under way, with contract award expected shortly and installation to begin early August.
  • Bids for supply and installation of a new ventilation system are under review, with contract award expected by June 15 and installation to begin in July.

Procurement, Schedule and Budget

  • Delivery dates for the majority of critical long lead items are being respected by suppliers.
  • However, originally confirmed delivery dates for certain critical components required for the completion of the high temperature steam system may not be met. In particular, a labour dispute (now resolved) at one of our suppliers may affect its ability to fulfil, within the initially contemplated timeframe, its commitment of supplying a number of components critical to our timeline in relation to the completion of the high temperature steam system for the calcinator and decomposer.
  • Consequently, we still anticipate commencement of commissioning in Q3 2015, but expect the longer refractory installation timeline and the potential delay in critical component supply to push the start of commercial production into Q4 2015.
  • The project is on budget.

Operational Readiness

  • All remaining engineering, operations, maintenance and lab personnel have been or are in the process of being hired.
  • Operating personnel are presently undergoing a 40-module operations training program and have completed approximately 250 training hours per person to date. Theoretical training will be completed by the end of July.
  • Health and Safety and Emergency Response Plans for continuous operations have been completed and are being implemented.
  • Commissioning and start-up procedures are being finalized by project and operations personnel.

"We are progressing well towards completion of our plant," stated Glenn Kelly, CEO of Orbite. "Though slightly longer than planned, we are nearing completion of the critical process of refractory installation, with other construction work either underway or contracts being awarded for the remaining elements of our plant. The expected $5.0 million bridge loan from Investissement Québec puts us very close to completing our HPA2-related financing requirements and we have additional options under review, such as our base shelf prospectus and asset backed debt."

"With commissioning scheduled to start in Q3, we are on track for commercial production in Q4 2015. We have successfully met all challenges that we have been confronted with this past year, which is testament to the very considerable skills and commitment of our people. We are now in the final stages of construction, and look forward to shifting our focus to commissioning, production and commercial activities."

About Orbite

Orbite Aluminae Inc. is a Canadian clean technology based mineral-processing and resource development 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 15 intellectual property families, including 17 patents and 95 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.

Forward-looking statements

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 31, 2015.

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.

Contact Information

  • TMX EQUICOM
    Marc Lakmaaker, External Investor Relations Consultant
    1-800-385-5451 ext. 248
    mlakmaaker@tmxequicom.com

    For Media Inquiries:
    TMX EQUICOM
    Scott Anderson, External Media Relations Consultant
    1-800-385-5451, ext. 252
    sanderson@tmxequicom.com