5
averaging less than one tonne per day, and following
the commissioning of the new CFB calcinator, will
increase to the Phase II capacity of thre
e tonnes per day, anticipated in the last quarter of 2013, followed by
a gradual increase to the full production capacity of
five tonnes per day, expected in early 2014. The
declaration of commercial production, for accounting purpo
ses, is anticipated at the beginning of Phase II.
Construction of the scandium and gallium separation facility
is expected to also coincide with Phase II.
Once in Phase II, the HPA plant will begin operating us
ing the same processes as the proposed SGA plant,
and as such, is also expected to act as a
demonstration plant for the SGA processes.
In its Management Discussion and Analysis for
the period ended September 30, 2012, management
provided forecasts of capital costs for construction,
equipment and installation ranging between $26 to $30
million net of projected refundable income tax cred
its ("RITC") (or $43 million to $50 million before
RITC) for a production capacity of 3 tonnes of HPA pe
r day ("tpd"). Subsequent to this estimate,
management strategically opted to expand the HPA pl
ant's production capacity from 3 tpd to 5 tpd to take
advantage of the extra nameplate capacity of the new
calcinator. Orbite expects incremental costs of $25
million net of RITC (or $35 million before RITC) to adapt the process and equipment to a 5 tpd capacity.
The Corporation's decision to proceed with a capacity
increase at this stage of the project was driven by a
cost-benefit analysis vs. implementing it once the plan
t will be operating at a 3 tpd commercial production
level. As a result, the total approximate project
ed capital cost for Orbite's HPA production facility,
provisioned at a 5 tpd capacity, is currently forecasted
at $55 million net of RITC (or $85 million before
RITC), to be fully incurred by the end of 2013, while
maintaining an equivalent total capex per tonne ratio
and improving operational costs. As at December 31, 201
2, $62,730,937 had been incurred and paid by the
Corporation, of which approximately $19,932,275 represents RITCs.
Outlook for proposed SGA plant
The Corporation proposes building and operating an
SGA production plant (the "SGA Plant") using clay
mined from the Corporation's Grande-Vallée deposit. Th
e SGA Plant site selection has not been completed
at the time. The SGA Plant design is based on the
parameters of the Preliminary Economic Assessment
with an expected production of 540,000 tonnes per year
of smelter-grade alumina as well as by-products
that include high-purity hematite, silica, magnesium
oxide, and individually separated rare earth and rare
metal oxides. The SGA Plant design is based on Orbite's
patented and patent-pending proprietary processes
which involve hydrochloric acid leaching and a clo
sed-loop acid recovery and regeneration system.
The basic design of the SGA Plant has been completed,
whereas the detailed engineering is expected to be
completed following the selection of a joint-ventur
e partner(s) and SGA plant site. The Corporation
anticipates the completion of a NI 43-101 compliant feasibility study technical report by the first quarter of
2014, subject to securing sufficient funding. Permitting for
the mine site and SGA plant site is expected to
move ahead in parallel to the detailed engineering.
The Company is pursuing discussions with prospective
joint-venture partners in connection with the SGA
Plant project, including UC RUSAL.
Outlook for Veolia Red Mud Demonstration Plant
On February 4, 2013, Orbite and Veolia Envi
ronmental Services signed an exclusive worldwide
collaborative agreement for the treatment and remedia
tion of red mud from stockpiles or from the effluent
of existing alumina refineries. The terms of the partne
rship include the preparation of a study confirming
the viability of a red mud treatment plant using
Orbite's proprietary processes, as well as specific
milestones for the selection of a plant site, capacity, st
ructure of the ownership and financing, of such a
plant, with the intent to initiate
construction in 2014. Discussions in respect of site selection, management
of a co-enterprise and financial terms asso
ciated with the first plant are ongoing.