Glenn Kelly Here's a Multi Million Dollar Question For YouON NOVEMBER 13 2015 IN AN NR YOU SAID "We are now fully financed for the completion of our HPA facility," stated Glenn Kelly, CEO of Orbite. "We are making very good progress at the plant and have successfully commenced with the commissioning of sections of the plant. With the remaining work on schedule, we continue to be on track for the start of commercial production in Q4 of this year. We have also stepped up our commercial efforts and shipped multiple batches of HPA samples. These 5N+ samples made at our HPA facility in Cap-Chat, are consistent in their chemical and physical properties, showing the degree of control we have over our process. This provides assurance to our potential customers that Orbite will be differentiated in the market place by being a provider of consistent high quality HPA." DESPITE THE FACT YOU SAID ON NOV 13, 2015, ORBITE IS FULLY FUNDED, ON JANUARY 28 2016 YOU MADE A DILUTIVE PLACEMENT FOR $12 MILLION DOLLARS. The Company also granted the Underwriter an option (the “Underwriter’s Option”), exercisable in whole or in part, at one or more additional closings, at any time within 30 days of the closing of the Bought Offering, to purchase up to an additional 6,000 Units for additional gross proceeds of up to $6,000,000, resulting in aggregate gross proceeds of up to
$12,938,000 (inclusive of the Units-for-Debt Offering).
You said that Orrbite would use the net proceeds of the Bought Offering to advance a detailed engineering and cost estimate for increasing the production capacity of the Company’s high purity alumina plant (the “HPA Plant”) to 5 tonnes per day and to commence the preliminary engineering for its conversion of the alumina extraction unit to the Company’s chloride-based technology, and for general corporate purposes.
On March 15 2016
You reported that you were surprised with a 10 million dollar over run in expenses. - However, due to the complexity of the piping involved and the tight quarters for installation, piping installation advanced at one third of the budgeted and standard installation rate.
- A comprehensive review of costs recently incurred to install those systems and those required to complete specialty piping installation, notably in the decomposer and crystallization sectors, indicate that capital costs initially projected must be increased by approximately 9.9M$, to incorporate the impact of the slower installation pace. This brings the revised total external capital cost budget of the project to 56.2M$ from 46.3M$, as previously contemplated.
- Key areas of cost variance between the updated and previous estimate are notably due to additional labor for piping installation and additional engineering and project management fees related thereto.
- Consequently, and in order to limit construction costs and manage its working capital, the Company has ended overtime work and may postpone certain activities, which will push back the start of commercial production into Q2 of 2016 instead of Q1 as previously contemplated.
The Company's current financial resources are insufficient to cover such additional construction costs, and the Company is currently exploring financing alternatives, such as leveraging its estimated $5.6M of 2016 Investment Tax Credits as security for a non-dilutive bridge loan, as it has done in the past.
You then put a hold on completing the commissioning and delayed everything into quarter 2 which is now looking more like quarter three.
My question to you is Mr. Kelly, if as you said in Nov. of 2015 you were fully funded and you then aquired additional millions of dollars from the January 28 2016 placement. Instead of halting and dramatically slowing down the commissioning why did you not use the January 28 placement money to keep on going to complete the commissioing while at the same time negotiate the further funding that you secured. WHAT HAPPENED TO THE JANUARY 28 MILLIONS OF DOLLARS PLACEMENT MONEY?