Actually, fair enough. If you add "risk averse" to greedy and opportunistic, I agree that this behavior likely won't change soon. Just to add, I feel there are two main reasons that Orbite's share price may be capped at these levels in the near term, as you put it.

 

Firstly, risk-off has been the broad trend in Canadian markets since spring of 2011. Here's a chart of the relative performance of the TSX venture vs. the broader TSE composite. Although you can't see it in this chart, the venture index (a proxy for risk-on) started to outperform the broader TSE composite in late 2008 and this outperformance continued until spring of 2011. It was in the spring of 2011 that Orbite hit its high of $5.45 per share. So effectively, we are still in a downward-trend for risk in Canadian markets.

 

Secondly, because of the broad downward trend in risk, investors are very wary about paying up for future potential revenue and earnings, and the more unpredictability or uncertainty of future earnings, the less willing they are to bid up the share price. This is not how it works in periods of euphoria, when Mr. Market is willing to pay dearly for potential future cash flow (which often doesn't materialize, particularly in the case of junior resource stocks). On the plus side, this means investors can acquire stock of companies that have very strong future revenue and earnings potential more cheaply than during periods of market euphoria.

 

Orbite is still likely 6-8 months away from significant revenues/cash flow from its HPA business. At least that's the guidance that the company is giving (3 tpd by mid 2013). Customer offtake agreements have yet to be secured, and Orbite will likely have to raise capital in 2013/14 to fund a portion of the SGA plant. So Orbite will likely not be strongly cash flow positive until 2015 (see Euro Pacific research report from September 2012). 2 years can be a long time for a highly risk-averse market. However, particularly if Orbite builds a 2nd HPA plant, it should generate SERIOUS free cash flow (Euro Pacific estimates 59 cents per share).

 

If all goes according to plan, however, late in 2013 Orbite should start generating decent cash flow. There's still unpredictability here though in the absence of signed off-take agreements, percentange of product that will be 5N/6N, and signed contracts with 3rd-parties for scandium/gallium production. I think most participants on this forum expect these "uncertainties" to be eliminated over the next several months. However, I believe Mr. Market is not willing to pay up right now until these uncertainties are removed.

 

The big caveat to my mind is that Orbite is actually a strategic asset. So JV agreements or material offtake announcements with a household brand name like GE could send the share price higher from current prices at any time.

 

Unfortunately, to my mind, Mr. Market is likely to turn even more risk averse in the near future. As I recently posted in another forum:

My thinking is that it will be a difficult year ahead for the financial markets. My rationale is that the first 2 years of the 2nd Obama administration represents an important window of opportunity to make tough decisions. Personally, I think the 2nd Obama administration will be akin to the Hoover administration of 1929-33, where the oligarchy finally confronts the limitations of the status quo, and begins to implement tough changes. Welcome to the painful downside of the Great Leveraging of the last 30 years.

And of course, it's not just the US oligarchy that faces extremely difficult policy choices. Europe, Japan, China - the entire globe faces exceedingly difficult structural changes. We've had a 4-year rebound from the mini-seizure the financial system went through in 2008. In 2013, I believe the financial makets will have to wean itself off hopium and once again begin to confront painful realities.

I expect central bankers to continue to "print money" (i.e. QE, LTRO, etc.) - to (i) bail out banking systems (e.g. Europe), (ii) support sovereign bond markets, and (iii) fund fiscal obligations in the face of falling tax revenues. But consumer indebtedness is so high, unemployment and income growth so problematic, and as a consequence aggregate demand financed by income and savings (as opposed to credit) so preciarous, that I don't expect central bank largesse to do a whole lot for the real economy. And inevitably there will come a point where credit stops flowing into the stock markets.

 

Anyway, when you stated "Nothing I can do about except do the same thing and warn others of what to expect when you invest in this company", I just thought I'd add to your comment a rationale for "why" I think Orbite's share price may be capped in the mid-term.

 

Where could I be wrong? One, the broader equity markets behave more benignly in the next year that I feel they will, and two, the market places a higher value on Orbite's "future potential" (which I do believe is substantial) sooner than I feel is likely. That's the risk I'm taking, that a company who's future potential I strongly believe in is revalued upward while I'm on the sidelines. But I personally feel now is a time where it is better to be fearful than greedy.

 

Anyway, thinking out loud on a Saturday night. Would be more than happy to hear alternative perspectives.

 

glenn