Orbite Technologies Inc. (TSX:ORT)(OTCQX:EORBF) (“Orbite”, or the “Company”) yesterday filed its financial statements for the third quarter ended September 30, 2016 and today announced that, further to its press release of October 25, 2016, production activities continue to progress well at its high purity alumina (“HPA”) plant.HPA Production Update As reported on October 25, feedstock … Continued
HPA Production Update
- As reported on October 25, feedstock digestion is now operating automatically and smoothly with batch production times having decreased to below 4 hours, well within design parameters. So far, 24 digestion batches have been completed.
- The digestion liquors continue to be transferred to the crystallisation circuit for the production of aluminum chloride hexahydrate (“ACH”) crystals, the precursor to HPA. To date, about 55 tonnes of ACH crystals have been produced, corresponding to approximately 14 tonnes of HPA, once calcined.
- Nucleation and growth of ACH crystals is now also operating automatically. Crystal sizes and morphology, two critical parameters in achieving high purities, are optimal. Accordingly, purity levels of ACH crystals have reached 5N8, corresponding to 5N+ HPA.
- Partial decomposition of ACH crystals, to produce amorphous HPA, has commenced utilizing the Company’s Harper equipment. This amorphous HPA will be used to build the initial ‘bed’ in the fluidized bed decomposer and calciner. Once the bed is constituted, ACH crystals will be fed directly into the decomposer and calciner to produce Gamma and Alpha HPA.
- The company continues to produce ACH crystals for production of HPA.
- The Company reported a loss before net finance expense of $2.6 million for the quarter, a marginal increase from a loss of $2.5 million for the comparable quarter in the prior year.
- As at September 30, 2016, the Company had an aggregate cash and short-term investments balance of $3.7 million, and positive working capital (current assets less current liabilities) of $1.6 million. Subsequent to the quarter, the Company completed a bought deal financing, and benefited from the exercise of warrants leading to, on a pro-forma basis, cash and short-term investment balance of $9.2 million and pro-forma working capital of $6.6 million.
- During the quarter, the Company achieved net cash flow from financing activities of $9.6 million. The funds raised enabled the Company to materially complete the construction of the Company’s HPA plant.
“With the commencement of production, we have achieved a significant milestone in the development of Orbite”, stated Glenn Kelly, CEO of Orbite. “Crystal size and morphology of the ACH crystals produced at the plant are very good and have allowed us to reach our target 5N8 purity level. Having achieved this in only a little over one month following our first production run is, we believe, a strong validation of the strength of our process and technology. Consequently, we have now commenced the sequence of converting these ACH crystals into high purity alumina, first by the partial decomposition of the ACH to produce amorphous HPA. This HPA is then injected into the decomposer to build the fluidized bed, which will function as an equalization bed to adsorb the initial impact of the substantial amounts of hydrochloric acid present in the ACH. This requires careful staging, but once the bed is fully constituted, production of HPA will speed up significantly. Subsequent to achieving the successful end-to-end operation of the plant, focus will be on the switch to automated and continuous operation of the plant. Additionally, we will start delivering HPA samples from the plant to prospective customers, including commercial samples, the final step prior to contractual engagement. We are proud of our achievements, and look forward to reporting on our continued progress.”
THIRD QUARTER HIGHLIGHTS
HPA Plant Construction
- At the end of the second quarter, the Company awarded, on a fixed price basis, the contracts for the remaining construction work related to piping and mechanical, and electrical and instrumentation to Fjordtech Industries Inc., and Electro Kingsey, respectively.
- During the quarter, Orbite, together with its partners, materially completed the construction of the HPA facility, successfully completed hot commissioning, and commenced production, as detailed below.
Commissioning, Start-up & Production sequence
- At the beginning of September, the Company commenced hot start-up activities of the decomposer and calciner ovens and related support systems.
- Hot start-up activities continued successfully throughout the month of September and the first production of ACH crystals, the precursor to HPA, commenced.
- The Company subsequently produced in October, 35 tonnes of ACH crystals (corresponding to close to 10 tonnes of HPA once calcined) with initial purity levels exceeding expectations and approaching the levels corresponding to 5N HPA.
- 3 commercial samples were shipped during the quarter with 1 remaining to be shipped. To date, 31 samples have been shipped to 19 prospective customers.
- Feedback has been positive and the Company anticipates engaging in contract discussions upon commissioning of the plant’s product treatment section.
- The Company will be producing 18 more samples to fill requests from 14 new prospective customers.
During the last quarter, the Company was awarded 12 patents in 6 countries (Australia, Japan, Canada, United States, Russia, and China) and 4 notices of allowance were received:
- Processes for Treating Red Mud – United States (2nd patent) and Japan
- Processes for Treating Fly Ash – Australia
- Processes for Treating Various Materials – Canada
Summary of Q3 2016 Financial Results
Revenues and earnings
The Company is a development stage company and has no revenues.
Net loss for Q3 2016 increased by $2.7 million to $4.8 million, as compared to the same period in the prior year. The increase in net loss during the quarter is principally due to an increase in net finance expense (income) related to the 2016-2018 ITC Debentures transaction costs and an increase in general and administrative charges related to share-based payments for advisory services.
HPA plant operations
HPA plant operation expenses remained relatively stable at $1.1 million during the quarter ended September 30, 2016 compared to the third quarter in 2015.
General and administrative charges
General and administrative charges increased by $0.2 million during the quarter compared to the same period in 2015. This increase is due mainly to an increase in share-based payments and discontinuation of patent applications.
Cash and short-term investments and working capital
As at September 30, 2016, the Company had aggregate cash and short-term investments balance of $3.7 million, and positive working capital (current assets less current liabilities) of $1.6 million.
Subsequent to September 30, 2016, the Company completed a public offering on a bought deal basis for an aggregate amount of $5.5 million under the short form base shelf prospectus and prospectus supplement, dated March 18, 2015 and October 27, 2016, respectively, and received $4.6 million, net of commission and estimated fees. Additionally, warrants and share options were exercised; as a result, the Company has, on a pro-forma basis, cash and short-term investment balance of $9.2 million and pro-forma working capital of $6.6 million.
During the quarter, and subsequently in the month of October, the Company completed three financings which closed on August 10, September 28, and October 31, 2016.
For further details about each financing, please refer to the various continuous disclosure documents available on the Company’s website www.orbitetech.com or at www.sedar.com.
Property, plant, and equipment
During the nine-month period ending September 30, 2016, the Company recorded a net increase in Property, plant, and equipment (“PP&E”) of $19.4 million, mainly attributable to investments in the HPA plant.
Cash Flow Statement
Cash Flows from Operating Activities
Cash flows used in operating activities for the third quarter was $3.5 million compared to $0.9 million for the same quarter a year ago. The increase is attributable mainly to non-cash working capital items namely decrease in accounts payable and an increase in sales taxes and other receivables.
Cash Flows from Financing Activities
Cash flows from financing activities in the third quarter increased by $3.6 million to $8.6 million, as compared to the same period in the prior year. This increase is due mainly to higher proceeds received from the issuance of Convertible Debentures and the issuance of shares, warrants and exercise of options, partially offset by the repayment of bridge loans with Investissement Québec.
Cash Flows used in Investing Activities
Cash flows used in investing activities increased by $1.7 million to $7 million compared to the same period a year ago, is attributable to higher investment in the HPA plant and the changes in investment tax credits receivables, offset partially by changes in restricted cash.
Orbite management will hold a conference call and provide a live audio webcast today, November 11, 2016 at 10:00 a.m. (ET) 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:|
|Date:||November 11, 2016|
|Time:||10:00 a.m. (ET)|
|Dial in number:||+1 888 231-8191|
|+1 647 427-7450|
|Taped replay:||+1 855 859-2056|
|+1 514 807-9274|
|+1 416 849-0833|
|Available until:||12:00 midnight (ET), Friday, November 18, 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 September 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 45 patents and 71 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.
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