Heya MC. Just a quick follow-up to my previous response.

 

Today I reloaded on my position in Orbite to be fully invested. For the record, to repeat, I liquidated half my investment in Orbite at approx $3.30, and the past couple of days have now fully reinvested at approx $2.55. Here's my thesis.

 

From a technical perspective (2-year ORT chart), we're now well off the recent high of $3.90-ish, and appear to be consolidating in the $2.50 range, where the share price appears to be building resistance. Equally important, however, is the following:

 

News flow over the next 6 months

We should have some very positive news flow over the next couple of months, as the HPA plant gets commissioned, HPA offtake agreements are signed, and we move from 1tpd to 3 tpd production at the HPA plant. Equally important is Orbite's forecast of 5tpd production by the beginning of 2014. At a basket price of $50,000 per tonne (and there's upside to this figure), that's $85 million annually (approx 1.7 thousand tons annual HPA production). When you factor in upside to the basket price for 5N/6N purity, 3rd-party scandium/gallium production, and potentially high-purity silica production, Orbite should exit 2014 with a run ran > $100 million annual revenue.

 

And, of course, there's a lot more news to come during the next 6 months - the SGA feasibility study, SGA offtake agreements, JV partnerships (and SGA financing agreements), licensing JV's, and construction beginning on the SGA plant by mid-2013.

 

Orbite shifts its attention to its broader strategic vision

Equally as important, 2013 should be the year where Orbite more concretely announces its vision, and strategic partnerships, for building multiple SGA plants and multiple HPA plants. Already in the past 2 months, RB has started to talk more about Orbite's medium- and longer-term strategic vision - on both the HPA and SGA front. The recent press release re: the option to acquire the kaolin clay and sand property is another example. Mr. Market has yet to being pricing in the economic potential of this broader strategic vision, and 2013 should be the year that Mr. Market begins to price some of this potential into Orbite's share price.

 

Fundamental valuation metrics - revenue and cash flow

On a revenue and cash flow basis, 2013 will likely not bring in the revenue/cash flow that I was anticipating a few months back. I was looking for Orbite to come out of the gate producing 3tpd at the HPA plant, and it now looks like this run rate may not be achieved until spring/summer of 2013. I wasn't sure if Mr. Market might therefore hold back on granting Orbite a higher share price in the near term. I'm now coming around to the belief that while this may be the case for the next couple of months, Mr. Market is likely to begin pricing in the economic potential of Orbite's larger strategic potential by summer 2013, if not earlier.

 

Factoring in the end of the Debt Super-cycle

Alas, the wild card is the late stage of the both the 4-6 year credit cycle, overlapping with the extremely late stage of the K-wave/long-wave debt super cycle. I'm current re-reading William Strauss' and Neil Howe's The Fourth Turning, and am reminded just how extrordinary persisent this "winter season" of credit cycles are throughout history. Strauss' and Howe's book is a great read, signficantly because it reminds the reader that history and markets are cyclical, and that it's very dangerous to linearly extrapolate recent market history onto the future. In fact, market history provides a much better guide to broad market turning points than linear extrapolation of recent market behavior. Of course, the precise timing of cyclical turns is always uncertain, but the existence of the turns is actually not so uncertain. There's an incredible historical consistency to such turns (and cycles).

 

So for me, the challenge is to weigh my outlook for Orbite share price on the basis of Orbite-specific factors, while taking into account how Orbite's share price is likely to be effected by the inevitable onset of the next cyclical downturn (which I believe will be severe).

 

On that topic of the cyclical turn ahead in the secular credit cycle, here's a recent interview with Kyle Bass which some may find interesting, as well as Bass' recent missive from Hayman Capital.

 

In Summary ...

 

Anyway, just want to go on record as reloading in my position in Orbite, and explain my rationale. We'll see if it works out.

 

glenn