Glenn - thanks for sharing your thinking and strategy.

 

On my side, I have continued accumulating based on the cumulative news that keep improving the economics of Orbite, and also because Short Interests are over-exposed and have paid a huge price to bring and amplify downward pressure and/or capping the share price. This, plus the fact that the HPA Plant is about to be commissioned, and everything is pointing towards a success.

 

Shorts & friends are wishing the share price remains in these low levels for obvious reasons, but it cannot stay there for very long. The share price is definitely not reflecting Orbite value, and significant news keep adding-up. All of these news are not lost; this is money in the bank.  Market is just keeping it in the background for now.  Less than 200,000 short positions covered in first half of September helped bringing the share price to 3.93 - imagine what approx. 11M short positions to cover can do.

 

I find your >100M number pretty conservative for the HPA Plant revenues since Orbite should aim for 5N, 6N as much as they can; also, HP-silica can be expected to be very lucrative.  But I guess this is why the ">" symbol is there;)

 

We should not be afraid/shy of bringing the numbers as close as possible to what it can be estimated, as long as it is realistically backed with reasonable assumptions.

 

Suppose a production split as follows (realistic projection, not conservative, not exaggerated, just what can be reasonably expected):

 

HPA1 Plant - Cap Chat HPA Plant - De-risked using Full Scale Pilot Plant
(Take 2: with more accurate production projection; 2013 & 2014)

 

High-purity alumina

     
         

2013

       
 

ton

$/ton

Sales

 

4N

700

50,000

$ 35,000,000

 

5N

350

100,000

$ 35,000,000

 

6N

230

400,000

$ 92,000,000

 

Total Production

1280

 

$ 162,000,000

 
     

$ 126,563

per ton

         

2013

       
 

TPD

days

Production

 
     

(ton)

 

Jan

1

31

31

 

Feb

2

28

56

 

Mar

3

31

93

 

Apr

3

30

90

 

May

3

31

93

 

Jun

3

30

90

 

Jul

3

31

93

 

Aug

4

31

124

 

Sept

5

30

150

 

Oct

5

31

155

 

Nov

5

30

150

 

Dec

5

31

155

 
     

1280

 
         
         

2014

       
 

TPD

days

Production

 
     

(ton)

 
 

5

360

1800

 
         

2014

       
 

ton

$/ton

Sales

 

4N

900

50,000

$ 45,000,000

 

5N

600

100,000

$ 60,000,000

 

6N

300

400,000

$ 120,000,000

 

Total Production

1800

 

$ 225,000,000

 
     

$ 125,000

per ton

 

I already did an estimate for HP-silica revenues yesterday; but now repeated here with silica production corresponding to above projected alumina production for 2013 and 2014 (without considering the possibility of treating additional silica from external source - just in-house processed silica):

 

High-purity silica (HP Silica)

     

Year

HPA

HP-Silica

SGA (ref.)

 
 

(TPY)

(TPY)

   

2013

1280

2844

540,000

ton of alumina

2014

1800

4000

1,200,000

ton of silica

         
         

2013

 

ton

$/kg

Sales

4N

50%

1422

16.42

$ 23,352,889

5N

50%

1422

100

$ 142,222,222

       

$ 165,575,111

         

2014

 

ton

$/kg

Sales

4N

50%

2000

16.42

$ 32,840,000

5N

50%

2000

100

$ 200,000,000

       

$ 232,840,000

         

 

Summing this up, we are ending up with the following:

 

       

Opex

     
       

15%

of total sales

 

HPA + HP Silica

   

Sales

EBITA

EPS

P/E

Price/Share

 

HPA

HP Silica

HPA + HP Silica

       

2013

$ 162,000,000

$ 165,575,111

$ 327,575,111

$ 278,438,844

$ 1.39

12

$ 16.71

2014

$ 225,000,000

$ 232,840,000

$ 457,840,000

$ 389,164,000

$ 1.95

12

$ 23.35

 

This might be off by +/- several %, but it gives a really good idea of the rough figures, in a very possible and realistic scenario.

 

Reduce 2013 numbers because there will be probably a couple of months to build up inventories, characterize and classify material, etc.

 

But also consider this is for HPA1 ONLY, and not considering HP-hematite, magnesium oxides, gallium & scandium, etc.

 

 

This is NOT considering:

  • SGA Plants (with several Billions NPV per Plant – that increased from PEA with 20% opex reduction; HP-silica additional revenues that could match estimated revenues in PEA, significant increase of REE/RM extraction rates from value used in PEA; complete or close to complete Engineering – ready for construction; multi-SGA Plant strategy = sustained growth).
  • SGA at lowest costs + strategically next to smelters.
  • Multi-HPA Plant strategy = sustained growth - will become the leader in high-purity alumina.
  • Huge resources + now potential addition of alumina-rich kaolin of Nova Scotia.
  • Leading REE/RM outside China – will be the first to produce Scandium and Gallium in 2013; CLEAN technology - at lowest costs.
  • Solution to Red Mud - 3B ton of residues worldwide that can now be seen as a resource; similar for Fly Ash.
  • And now, tax break for 10-years on 300M+ projects (SGA1 would qualify).

 

Again, wake up Mr Market, you’ve been put to sleep by Short Interests - HPA1 Plant about to rev.

Wake up analysts – you are in late from latest press releases...

 

 

Alumina1

 

 

 

Complementary info:

HPA1 - Cap Chat HPA Plant - De-risked using Full Scale Pilo
 

| posted on 11/20/2012 8:51:30 AM | reads: 300 | overall quality: 5

 

 

 

 

Without even talking about UC Rusal and Nalco that are in advanced d
 

| posted on 10/31/2012 7:34:58 AM | reads: 496 | overall quality: 5

 

 

Could somebody in the high-purity silica in
 

| posted on 10/30/2012 9:01:17 AM | reads: 234 | overall quality: 4

 
Orbite Aluminae, now recognized by their peers:
According to that same very reliable source:
 

| posted on 11/4/2012 1:13:45 PM | reads: 561 | overall quality: 5

 

About Short Interests:

Here are the short positions for Nov. 15, 2012 (TSX)
 
| posted on 11/21/2012 12:12:39 AM | reads: 130 | overall quality: 4

 

 

Here is updated Short Interest info based the latest data fo
 

| posted on 11/11/2012 2:07:07 PM | reads: 1204 | overall quality: 5