Some comments about that preliminary/draft analyst note (at the end of this post), if info is proven to be valid:

 

  • The HPA Plant Quick Analysis I have presented (once ramped up to 5 TPD) is still valid; in fact, even better results can be expected since 20% opex were used ($20k-$30k per ton),  whereas with mentioned modifications that should be brought (if info is valid), the production costs can be expected to be lower than $ 10k per ton, which is a more than excellent news.
JayB1, 722M would be for 365 day production
| posted on 1/19/2013 5:27:42 PM | reads: 458 | overall quality: 5

 

  • The additional costs of $25 M ($15 M after 40% R&D tax returns) - mainly for the Outotec oven and some other components - at design production of 5 TPD - would allow annual production cost savings of approx. $30-35 M.  So the payback is less than 6 months.  That decision is then extremely easy to justify...

 

  • The possibility of doubling HPA production to 10 TPD (with some relatively low additional expenses), and/or building other HPA Plants as mentioned in the Corporate Presentation is providing exceptional growth figures.

 

Smelter grade alumina

Don't get misled, the smelter grade alumina (SGA) produced using Orbite technology is still expected to have the lowest cost worldwide with the announced of at least 20% reduction of operating costs for SGA (NR of October 2nd, 2012) from PEA figures; that should bring down the SGA Plant operating costs from $210 per ton to $168 per ton, or lower ($ 0.17 per kg).  This is without even including any revenue from by-products, for aluminous clay of Grande-Vallée deposit.  We can expect lower alumina production costs with higher alumina content raw material such as kaolin or bauxite.   But Grande-Vallée deposit has very valuable by-products (RM/HREE/LREE, high-purity silica - with very homogeneous and fine/ultrafine particles size, hematite, Mg oxide,etc.). 

http://www.orbitealuminae.com/en/news/press-releases/orbite-announces-major-achievements-and-final-design-smelter-grade-alumina-sga-plant/

 

Red Mud

Do not get misled, the smelter grade alumina production costs from Red Mud should be in the same ballpark, or somewhat higher than aluminous clay processing; final costs again determined by the value of the by-products that can be all separated using Orbite low-cost and clean technology (titanium oxide, HREE, LREE, RM, hematite, silica, etc.).  Veolia did their due diligence and signed for a global partnership.  This is MAJOR.  Veolia has an impressive global presence that will create a synergy with Orbite Aluminae.

(Wikipedia)

Veolia Environnement S.A. is a multinational French company with activities in four main service and utility areas traditionally managed by public authorities - water supply and water management, waste management, energy and transport services. In 2011, Veolia employed 331,226 employees in 77 countries. Its revenue in that year was recorded at €29.647 billion.[2] It is quoted on Euronext Paris and the New York Stock Exchange. [...]

 

 The significance of having the lowest costs and clean technology:

HPA Plant Demonstrating The Orbite Process
| posted on 1/28/2013 12:08:08 AM | reads: 317 | overall quality: 5


 

Completing the BFS for end of 2013 seems to be a good and conservative move since it might allow including the optimization made to the HPA Plant that will be apparently now the little brother of the SGA Plant.  So, we can expect the SGA figures to further improve because of this optimization.   In fact, the estimates (previously presented) based on Net Present Value can be expected to improve.

Here is finally my first estimate of the SGA NPV (Net Prese
| posted on 12/9/2012 3:32:49 PM | reads: 881 | overall quality: 5

 

It might also provide additional time to some direct neighbor to finalize the study of their energy resource /prepare for production.

 

Alumina1

 

P.S.  See some further comments below 

 

c4063sv

Event:- Yesterday, Orbite Aluminae (S
 

| posted on 2/1/2013 12:05:38 PM | reads: 571 | overall quality: 5

 

Event:

- Yesterday, Orbite Aluminae (SPEC BUY, $9.00 target price) hosted a site tour that was well attended by research analysts and other attendees from Mackie Research, Euro Pacific, Roth, National Bank, Northern Securities, Octagon, Kantor, and Goldman Sachs.

- The event was a technically focused one and served to provide comfort that the HPA plant commissioning and SGA design is rapidly progressing, and that considerable de-risking of the technology and process has occurred.

 

Key Details:

- The HPA construction is fully financed with the current budget sitting at $45mm net of tax credits, and $75mm gross.

- Incremental to this, in 2013 ORT plans on spending approx $50mm to complete the SGA detailed engineering, and BFS by end of 2013 (revised from q2/2013 due to more focus in recent months having been put towards HPA commercialization).

- The HPA acid regen system will be SMS Siemag constructed, but ORT will take a lead role on the design of this system. ORT is confident in integration of the HCl regen integration as design of this is already done and off the shelf equipment will be used.

- This was a component of the decision that was made in December when it was decided the HPA commercial process would be changed to virtually mirror the SGA process

- Partly as a result of the decision to match the HPA process with the SGA process, total capex of the HPA plant has been increased to $45mm net of tax credits up from $30mm previously. This implies that the gross amount of capex budget has been increased to $75mm, up from $50mm.

- Some upgrades and oversizing of key plant components have also resulted in the capex increases. For example, both the leaching reactor vessel and the silica filtration press have been sized to ten tonnes per day, well beyond the 5tpd plant capacity that remains the target by end of 2013.

- An Outotec oven will be ordered and received very shortly to replace the smaller and less efficient Harper ovens. This is understood to be the main component of the $15mm net capex increase. This HCl recovery system will allow greater efficiency and should help drive the opex down to $10k/tonne by year end, from a current level of approximately $20k to $30k/tonne. These opex levels are consistent with the guidance that the Company has been indicating for some time.

- Once installed, the Outotec oven will be a critical aspect of increasing the plant's production rate to the targeted 5 tonne per day rate by end of this year. Currently, the plant's production rate is slightly less than 1 tonne per day, but the aforementioned commissioning activities should result in a scale up to 3 tonnes per day by mid year and the 5 tonne per day rate by end of year.

- Important to note that the decision to have virtually identical flow sheets at both the HPA and SGA plants allows the HPA plant to act as a complete pilot plant for the SGA, and thus considerably de-risk the larger plant.

- In roughly two weeks, Orbite will make a significant leap in transitioning the plant to continuous as opposed to batch operation. Specifically, the crushing, grinding, and HCl leaching circuits will be tied in to the flow-sheet, and thus the Company will discontinue the processing of its hydroxide stock pile from which it has been producing during the commissioning process.

- Orbite's chief engineer was adamant of reaching this opex improvement, and even exceeding it over time as the plant is scaled higher. [The way I am interpreting this is that Orbite is confident to have costs lower than $10k per ton once @ 5 TPD]

- We observed white aluminum oxide coming off the end of the line, and this is the product that has been lab. verified (independently) at a 4N purity level.

- Efforts are currently underway to install the ion exchange system (for removal of organics and other impurities such as trace iron content).

- This along with closed piping to link the processing circuits together will increase purity further as air exposure of the solution will be virtually eliminated.

- It is believed that a purity of 5N would be achieved through these measures without even tying in the clean room, which will be a further initiative to reach a purity level of 6N sometime this year.

 

Conclusion:

- The visit to the plant provided comfort that the Company has a good handle on the optimization of the $40mm+ in equipment that has been purchased over the past several months.

- The decision to integrate an SGA design at the HPA plant is a prudent one and will help to achieve even further de-risking of the technology and design that has already occurred.

- While there may have been some escalation in capex, this is not uncommon for mining and tech. companies that are commercializing disruptive technology.

- Coming out of the site tour, we are confident that targeted volume and cost projections are attainable.

- Significant progress has been made in transitioning to continuous as opposed to batch operation, and visibility to further progress is clear.

- With independent lab verification having shown that the 4N purity has been achieved, with clear upcoming initiatives to increase purities further, this aspect of the business plan has also been considerably de-risked.

- There is a clear path to increase purities further (ie. “closing the loop”, ion exchange system, and clean room integration), which will help show that the Company will be able to generate higher value sales and thus increased gross margins.

- Important refinements have also been able to be made to the SGA plant design through the HPA commissioning process. For example multiple equipment venders are currently submitting bids for an improved silica filtration press.

- Having seen white powder coming off the end of the production line, we received comfort that significant progress has been made in the construction and full commercialization is close at hand.

 

Possible upcoming catalyst announcements:

- A 5n purity announcement may be made in the next few weeks. Updated product has been shipped to the verification lab just days ago and it is believed purity will be increased from the current levels of 4.3N.

- In tying in the ball mill and leaching circuit in addition to the HCl Outotec oven, Orbite will be moving towards a continuous operation, in effect closing the loop, and increasing efficiency.

- HPA off-take/off-takes.

- Potential licensing announcements as Orbite has been actively processing third party ore samples from potential partners who have supplied ore samples such as bauxite and other aluminous ores, red mud [one result yesterday...], rare earths, fly ash, etc.

- BFS is targeted for completion by end of 2013.