Orbite Technologies Inc EORBF

Comment on Q4

[Plus50]

In regards to what was stated in the 4th quarter results about the decomposer and calciner: -- In February 2017, temperature ramp up of the calcination section was completed successfully. In the last weeks of February operations, the Cap-Chat HPA plant approached 1 tonne per day ("tpd") of continuous throughput and attained instantaneous feed rates into the decomposer of up to 1.4 tpd. Did they run for 3 days or a week at 1tpd continuous just to get some readings and baselines/data? All we know is they maxed out at 1.4 tpd before the equipment was unable to function properly. Didn't they need to prove to somebody they could run continuously for 3 days? -- However, recent developments have led Orbite to conclude that the present decomposer and calciner electrical heating system, as designed and supplied by Outotec, is not robust enough to reliably achieve the 3 tpd design capacity of the calcination system, but is rather limited to approximately 1-1.2 tpd. -- This is an equipment issue and not a process issue. It is the Outotec supplied calcination equipment that does not meet contract design and performance specifications and is deficient, not the Orbite process. -- The Orbite process has been proven; 5N+ equivalent ACH crystals have been produced and 4N7 HPA has been produced using 4N7 equivalent purity crystals (ie: no impurities were picked up in the calcination section). Reading that last paragraph they produced 4N7 HPA from 4N7 equivalent purity crystals/with no impurities. They state 5N+ equivalent ACH crystals were produced but did not produce 5N+ HPA. Their thinking must be that if they produced 4N7 HPA from 4N7 equivalent purity crystals they will do it with 5N+ equivalent purity crystals as well. They state this again a few paragraphs later. -- The Orbite process has been proven; 5N+ equivalent ACH crystals have been produced and 4N7 HPA has been produced using 4N7 equivalent purity crystals (ie: no impurities were picked up in the calcination section). They must be positive they can produce 5N+HPA but at what quantity. Now, less than 1tpd for sure if everything is going well. That is not financially viable. Then there is the pre decomposer they think is needed upstream of the present decomposer to unload it so it can operate at a higher throughput of up to 5 tpd. I do not have much experience with this but if the heaters are burning out all the time or malfunctioning then maybe they are overloaded. You would think this would have been picked up by engineering design. They have produce 4N+ HPA before with this method or am I wrong. Let me know. Anyway by this time they should know and exactly what size and shape the pre decomposer should be and how big the heaters should be. Lets make sure they get those heaters just right this time. -- Preliminary scoping work previously undertaken by Orbite and its Technology Development Centre to increase plant capacity to 5 tpd has led to a straightforward solution that is believed could both resolve the issues encountered with the electrical heating element system and allow the capacity of the decomposer to be increased to 5 tpd (the calciner capacity is already 5 tpd). This solution is the installation of a predecomposer, operating at 300 - 400 degrees C, that would remove a significant portion of the hydrochloric acid ("HCL") present in the ACH crystals prior to their injection into the decomposer, thereby significantly reducing thermal effects on the decomposer's electrical heating system. If this is what will solve the problem lets get to it. Is the cost $8 million? Probably more than that when all said and done. Should we stop now really after all this. This is a clean tech company working on a disruptive clean tech in a province that needs jobs, that pledged a billion dollars to Bombardier, has not had a deficit in 3 years. A federal government that should be looking at this when they are looking at funding an artificial intelligence program. I think ORT should get $50 million. Enough to pay the covenants get the plant running and change the CEO but with who and how to pay them. I guess the government's would decide. Look at Bombardier and the fiasco there and the millions the people at the top are getting paid. That stock trades at near $2 and was near bankruptcy and they got billions. Altech is working towards producing 4N HPA from clay using an HCL process in Malaysia. I reported this earlier this year and they are still working toward that end.