Orbite Aluminae Provides HPA Plant Update

Orbite Aluminae (TSX:ORT) provided an update on the financing and construction of its high purity alumina plant. The plant is currently under construction in Cap-Chat, Quebec.

As quoted in the company’s press release, recent updates to financing for the project included:

• 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.

Orbite CEO, Glenn Kelly, said:

We are progressing well towards completion of our plant. 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.

Click here to read the Orbite Aluminae (TSX:ORT) press release