Orbite Provides Update on HPA Construction
December 12, 2014 (Source: Marketwired) — Orbite Aluminae Inc. (TSX:ORT)(OTCQX:EORBF) (“Orbite” or the “Company”) today provided an update on the construction of its high purity alumina plant.
Refractory Material and Project Update
Orbite had announced on October 29th that, following quality control testing by the Company’s Technology Development Centre (TDC), product non conformities had been identified with some of the refractory materials supplied by Outotec which could have led to mechanical integrity problems during operations. Specifically, the non-conformities were found in the mortar and the castables supplied.
Orbite then identified and tested replacement materials that could be used to replace the brick and mortar inner lining of the decomposer and calcinator (castable monolith), with no detrimental impact on product quality.
Orbite reported on December 4th, following extensive testing of refractory materials at the Company’s TDC that the brick and mortar refractory approach had been selected, instead of a castable monolith for the inner lining of its decomposer and calcinator.
The initially supplied non-conforming mortar will be replaced with a new mortar formulation, sourced from Outotec, anticipated to arrive in Canada in December, as planned. The non-conforming castable material will not be replaced by an Outotec product, but by the alternative proprietary material, sourced from a third party supplier, and tested and approved by Orbite’s TDC.
Get our daily investorintel update
Some of the components of this new castable are sourced from a European manufacturer. Orbite has been informed by its supplier that, contrary to earlier communicated timelines, the components from Europe will not be available until the end of February 2015, leading to commencement of refractory system installation at the end of March 2015.
Consequently, the commencement of commercial production at the HPA facility has been deferred by one quarter to Q3 2015.
Orbite has received and is presently evaluating refractory installation bids from 3 specialized contractors, and expects to award the contract shortly.
HPA Project Budget
Orbite had originally estimated project costs at $31.0M (see June 2013 release), based upon cost estimates prepared by 2 external engineering firms, to complete the plant construction work undertaken in 2012, based on the then contemplated plant design. This estimate was subsequently scaled back to $28.5M after excluding some of the construction work related to the front end (extraction section) of the HPA plant.
The engineering review, conducted throughout 2014, has shown that the original design of the 2012 HPA plant was inadequate to deliver at 3tpd capacity. Consequently, the facility was materially redesigned, and certain installed equipment and piping will be replaced to meet capacity and longevity specifications.
Accordingly, Orbite is increasing its project budget to approximately $42M (inclusive of a $3M contingency provision), representing an increase in total plant cost from $105.9M to $117M.
The incremental costs are due to the following:
- Management decided to maximize the heating capacity in the Outotec calcination system in order to increase the ultimate calcinator capacity to 5tpd, resulting in higher than originally budgeted system costs. This increase in capacity could not have been fitted at a later date, and committing to this change now significantly reduces costs associated with subsequent capacity increases.
- Engineering costs will be higher than forecasted, related to the additional work needed.
- The project delay resulting from the non-conforming refractory supply will lead to increased project management costs.
- Some of the work originally excluded from the front end of the plant has been reinstated in the project.
- Certain equipment and piping, planned to be reused, will be replaced.
- The refractory solution selected will require additional installation work, in part related to the replacement of some preinstalled castables in certain piping sections of the decomposer and calcinator.
- Recently received costs for some specialty piping and equipment are higher than forecasted.
The additional funds required to complete the HPA production facility are available to the Company under the Series Y Subscription Rights agreement with Crede. The Company has until January 30 to call a special meeting of shareholders to approve the Crede funding. In the interim, the Company continues to explore alternative funding sources.
“Our primary concern is the commissioning of a properly designed HPA facility that will deliver consistent output of high quality products, while at the same time facilitating a more economical upgrade to a 5tpd capacity,” stated Glenn Kelly, CEO of Orbite.
Orbite Aluminae Inc. is a Canadian cleantech company whose innovative and proprietary processes are expected to produce alumina and other high-value products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, and in a sustainable fashion, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud, fly ash as well as serpentine residues from chrysotile processing sites. Orbite is currently in the process of finalizing its first commercial high-purity alumina (HPA) production plant in Cap-Chat, Québec and has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallée deposit. The Company’s portfolio contains 15 intellectual property families, including 12 patents and 95 pending patent applications in 10 different countries and regions. The first intellectual property family is patented in Canada, USA, Australia, China, Japan and Russia. The Company also operates a state of the art technology development center in Laval, Québec, where its technologies are developed and validated.
Certain information contained in this document may include “forward-looking information”. Without limiting the foregoing, the information and any forward-looking information may include statements regarding projects, costs, objectives and future returns of the Company or hypotheses underlying these items. In this document, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or the Company management’s good-faith beliefs with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company’s control. These risks uncertainties and assumptions include, but are not limited to, those described in the section of the Management’s Discussion and Analysis (MD&A) entitled “Risk and Uncertainties” as filed on November 5, 2014 on SEDAR.
The Company does not intend, nor does it undertake, any obligation to update or revise any forward-looking information or statements contained in this document to reflect subsequent information, events or circumstances or otherwise, except as required by applicable laws.
Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>