From Mackie Report Jan 20Patent Portfolio, Update on Commissioning Orbite has announced that it has been issued patents in two additional countries, China and Russia. In addition, an update has been provided on HPA plant commissioning. IMPACT– Reiterates Tech Advantage, Strengthening IP Coverage Clarifying patent misconceptions: It is important to note that the China and Russia patents, like those patents issued in other countries (Canada, USA, Australia), protect the same processes as those used in Orbite’s high-purity alumina (HPA) plant as well as processes that will be used in its first smelter-grade alumina (SGA) plant. Orbite will be deploying essentially the same process at the HPA and SGA plant. The technology now has stronger protection in China and Russia, the largest producers of aluminum in the world. To be clear, Orbite’s processing technology is very much different than conventional technologies which rely on energy intensive approaches, and the re- smelting of ingots to achieve higher purities. HPA commissioning update: Another misconception is that Orbite is relying on material other than that from its Grand Vallee deposit to process, therefore calling into question the viability of Orbite’s process and compatibility with its own claystone feedstock. To be clear, Orbite has produced 4N HPA from its Grand Vallee feedstock. The distinction between relying on a feedstock in a semi-refined hydroxide liquid form, versus processing it all the way from clay form is an immaterial one. This distinction is even more immaterial when one considers that the liquid feedstock that Orbite has been processing recently has been produced internally at pilot operation, as opposed to being purchased from outside the Company. The initial stage of the flow-sheet (crushing, grinding, leaching) is a ‘low- tech’ process and should be easily replicable. Our discussions with the Company provide comfort that sufficient 4N samples produced to specifications should be shipped to customers in the next “couple of weeks”. Higher purity products will be produced shortly thereafter. Engineering has been completed for the new calcination oven amongst other improvements. This should be ordered before the end of Q1, and allow for upgrades to capacity and purity. ACTION – Maintain Spec. Buy Rating and $9.00 Target We are encouraged by Orbite’s recent progress with respect to commissioning, and believe ORT’s update yesterday should help clarify several misconceptions.ORBITE INVESTMENT THESIS:Orbite remains a favourite name in our coverage universe, and we are becoming increasingly of the view that 2013 will be a break-out year for its share price. As such, we review the key tenets of our investment thesis:- A demonstrated concept: The company has demonstrated pilot plant production of both smelter grade alumina (SGA) and high purity alumina (HPA). A $45 million+ construction to refurbish the pilot plant to a commercial producer is nearing completion, and first HPA revenue is expected in Q2/13.- A highly efficient, low cost HCl extraction technology: Orbite has demonstrated a viable technology to extract alumina and other by-products from low grading aluminous ores such as claystone and bauxite. Advantages of Orbite's hydro-chloric acid (HCl) process over others, such as the Bayer Process, include lower capital and operating costs.- By-product recovery and a cleaner approach - other advantages: Another very important advantage is the ability to produce high purity by-products through the implementation of an acid-recovery system. Also, because Orbite's process is closed loop it eliminates harmful tailing products that the alumina industry is known to produce (ie. red mud). In fact, Orbite has identified a business opportunity to remediate this red mud tailing product through deployment of its technology.- A 43-101 compliant PEA has been completed that validates economics: A PEA has been completed showing a 33% IRR over a 25 year duration for a 540,000 tonne per year SGA producing facility that achieves a production cost of $209 per tonne. This operating cost places Orbite’s approach in the top quartile of SGA producing plants worldwide.- 1 billion tonne alumina resource: This billion tonne resource is more than sufficient to allow Orbite to build several SGA and HPA production facilities, and fuel their operation for over 50 years. We note that there is approximately 400,000 hectares of similar land surround Grand Vallee resource.- Non-disclosure agreements signed with over 10 potential strategic partners: Discussions are underway with potential partners such as RUSAL (world’s largest aluminum co.) and NALCO (India’s largest producer). The announcement with one of the world’s largest waste management company, Veolia Environmental, not only provides further validation of Orbite’s technology but also lays the foundation of a business plan to derive significant cash flows.>