Orbite Technologies Inc EORBF

Mackie Report

[Dr.Sig.Orbite]

Orbite Achieves HPA Production Milestone
EVENT – Production and Independent Verification of HPA
Orbite Aluminae has announced a plant commissioning update, indicating that it
has successfully produced its first tonne of HPA (high purity alumina) during the
last week of December and early January. Samples have been independently tested
by EAG, confirming that an initial purity “of greater than 4N [99.99%] was
achieved.” Further commissioning and optimization, including developing the
ability to upgrade the material to 5N or higher, is expected to be completed within 2
months. Moreover, the acid regeneration circuit has also been commissioned at the
Cap-Chat plant, achieving acid recovery rates during HPA calcination of over
99.99%.
Non-commercial production of HPA will continue throughout commissioning at a
rate of less than 1 tonne per day, though ORT notes that a portion of the equipment
in the plant has already been provisioned to a capacity of five tonnes per day. The
first HPA samples for customers in Europe, America and Asia will be shipped as the
material becomes available throughout Q1/13. ORT continues to target the start of
commercial production for the beginning of Q2/13.
IMPACT – Positive; Commercial Production on the Horizon
This announcement comes following ORT’s considerable investment in the plant to
put the facility into commercial mode at a higher level of production capacity.
We view the news as a positive event as it confirms that the Company should be able
to start-up commercial operations at the start of Q2/13 (in-line with our forecast),
and be in a position to deliver customer-grade products (4N product at the very
least).
Furthermore, a de-risking milestone has been achieved with respect to design of the
SGA (smelter grade alumina) plant with the successful acid regeneration loop being
installed at the HPA plant. Orbite’s successful commissioning of the acid
regenerating circuit at the HPA plant is a key de-risking milestone in the
development of the SGA plant, as key stakeholders become convinced that this
technology is feasible.
ACTION – BUY; Maintain $9.00 Target
We maintain our SPEC. BUY rating and $9.00/sh target price on ORT. The Company’s ability to demonstrate the production of customer-grade products is a positive as the Company proceeds toward commercial operations.