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Orbite Aluminae Inc T.ORT

Sector: Metals & Mining | Sub-Sector: Aluminum

Orbite Aluminae Inc is an exploration and development stage corporation involved in the extraction of different ores, namely alumina, using environmentally friendly extraction processes.
Price: $0.32 | Change: +$0.005 | %Change: +1.59%
Volume: 2.0m | Day High/Low: 0.325/0.305 | 52 Week High/Low: 0.70/0.21
T.ORT Orbite Aluminae Inc
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mgrenier - (6/22/2013 3:57:13 PM)
HPA Plant Value

One issue that I started to consider is that even if financing is found and the HPA plant starts to produce a year later at 3 tpd, it may not be that proifitable. The total projected cost of the plant for a 3 tpd capacity is now estimated at $105 millions. What it would take to bring it to 5 tpd is unknown and will be studied starting in late 2013, so I will not even consider it for the time being.

The capex has to be recouped over its useful life. I assume that the useful life of the expanded/modified plant will not be longer than that of the original design that was costing much less. This means than the overall cost per ton in terms of Capex over the life of the plant will be much higher than orginallty planned. So, even if operational costs do not increase, the overall cost per ton over the life of the plant will, reducing any potential profit. If on top of that HPA prices remain depressed, will the HPA plant be profitable at all?

Basically,Orbite should do a full fledge feasibiliy study before comitting any money they might get on th expansion/modification of the HPA plant. From what I read, they have had independent opinions reviews on engineering and costs, but I saw nohing on profitability/NPV.

If they were to do a FS and concude that the project will not be profitable, they should just scrap it. It would be the best economic decision. If a FS cncluded that the project is prfitable, of course they should d it.