|By Marketwired .||
|August 9, 2013 08:32 PM EDT||
MONTREAL, QUEBEC -- (Marketwired) -- 08/10/13 -- Orbite Aluminae Inc. (TSX:ORT)(OTCQX:EORBF) ("Orbite", or the "Corporation") announced today the filing of its unaudited financial and operating results for its quarter ended June 30, 2013. The Corporation reported a net loss of $3.4 million ($0.02 per share) for the second quarter of 2013 compared to $6.1 million ($0.03 per share) for the second quarter of 2012. All dollar amounts are in Canadian dollars unless stated otherwise.
Second Quarter Highlights:
-- Mr. Glenn R. Kelly joined Orbite as its Executive Vice President and Chief Operating Officer -- Mr. Denis Arguin joined as VP operations -- Appointments of Mr. Peter Crossgrove, Mr. Pascal Decary and Mr. Claude Lamoureux to the Board of Directors and the resignations of Mr. Toby Gilsig, Mr. Charles Chevrette and Mr. Michael Hanley -- Provided updated capital cost estimates for completing the HPA plant to a capacity of 3 tonnes per day -- Concluded an agreement resolving the billing dispute with its principal suppliers -- Concluded a binding offtake agreement with Glencore International AG for the purchase of 100% of the smelter-grade alumina from the Corporation's proposed SGA plant -- Initiated the implementation of measures with the objective of reducing its operating capital requirements including abolishment of 2 positions at management level -- Cash and Short-Term Investments of $8.8 million -- Other Current Assets of $5.2 million -- Non-current Investment tax credits receivable of $24.7 million -- Property, Plant and Equipment of $61.3 million -- Accounts Payable and Accrued Liabilities of $5.4 million -- Comprehensive loss of $3.4 million or $0.02 per share -- Cash flows used in operating activities of $4.8 million -- Cash flows used for investing activities of $6.7 million
"We instituted important changes since the beginning of the second quarter and initiated a cost reduction program adapted to our short term priority which is to complete the high-purity alumina plant within the new timetable which remains subject to securing sufficient funding" said Richard Boudreault, President and Chief Executive Officer. The Corporation is currently focused on the advancement of the following projects, briefly described in order of priority:
1. Short Term Priority: High-Purity Alumina (HPA) Plant: The Corporation is completing the construction and optimization of its wholly-owned HPA plant in Cap-Chat, Quebec, which is currently producing intermittently at a capacity of less than 50 kg per day to satisfy customer sample requests. The plant is expected to achieve commercial production of 3 tonnes per day in Q3 2014, subject to securing the requisite funding. The Corporation initiated cost reduction measures aimed at reducing its operating capital requirements with the objective of completing the construction and optimization of the HPA plant. 2. Medium Term Priority: Red Mud Remediation (RMR) Project: The Corporation signed a Memorandum of Agreement with Veolia Environmental Services in February 2013 for the exclusive worldwide remediation of red mud using RMR plants based on the SGA plant design. The Corporation and Veolia are actively working on achieving specific milestones in 2013 and 2014 that include completing an economic model for first demonstration plant site selection, determining the optimal capacity, ownership and funding structure of the first demonstration RMR plant, completing engineering and establishing a construction timetable, subject to securing sufficient funding. 3. Long Term Priority: Smelter-Grade Alumina (SGA) Project: The Corporation has completed the basic engineering and a Preliminary Economic Assessment for a proposed SGA plant processing aluminous clay from its Grande-Vallee deposit. The Corporation intends, after the completion of its HPA production facility, to undertake a Feasibility Study, including site selection and detailed engineering, subject to securing sufficient project financing.
Summary of Financial Results
The Corporation is a development stage company and has no revenues.
The net loss decreased by $2.7 million or 44% to $3.4 million ($0.02 per share) for the second quarter of 2013 compared to $6.1 million ($0.03 per share) for the second quarter of 2012. The decrease is mainly due to a financial gain recognized during the quarter ended June 30, 2013 resulting from a change in fair value of the embedded derivative pertaining to the convertible debentures holders' conversion option and due to the fact that the comparative period included an impairment charge on the pilot plant fixed assets.
Cash and short-term investments decreased by $31.8 million to $8.8 million during the first six months of 2013 compared to December 31, 2012. The decrease was mainly due to the continued investment in the construction of the production-scale HPA plant and exploration and evaluation activities related to the smelter-grade alumina project, research and development, general administration and the HPA plant operations expenses. The decrease was partially offset by the collection of sales taxes receivable.
Sales taxes and other receivables decreased by $3.5 million to $0.5 million during the first six months of 2013 compared to December 31, 2012. The decrease of sales taxes (GST, QST and HST) receivable from the Federal and Provincial governments is primarily due to the reimbursement of previously filed returns and the reduction in the amounts receivable at the end of June due to a lower volume of purchases compared to the fourth quarter of 2012.
Investment tax credits classified as non-current increased by $4.8 million to $24.7 million during the six months of 2013 compared to December 31, 2012 as a result of the recognition of investment tax credits receivable on the equipment purchased for manufacturing and processing in the Gaspe region. The Corporation has pledged all refundable investment tax credits from 2012 and 2013 related to its manufacturing and processing facility in the Gaspe region, as security for the $25 million convertible debentures issued in December 2012. The funds the Corporation will receive upon reimbursement of the investment tax credits will be deposited in a segregated account and serve as security for the convertible debenture. These funds will be released to the Corporation according to the terms of the trust indenture agreement.
Property, plant, and equipment ("PP&E") increased by $13.2 million to $61.3 million during the first six months of 2013 net of recoverable investment tax credits compared to December 31, 2012. The net increase results from an increase of $18.1 million before investment tax credits, in the investment in PP&E mainly due to the conversion of the pilot plant into a production-scale HPA plant, which increase is partially offset by the recording of $4.8 million in government grants and refundable investment tax credits on equipment purchases for the HPA plant. As at June 30, 2013, the Corporation had incurred external capital costs of $75.2 million (or an estimated $50.5 million net of recoverable investment tax credit).
Exploration and evaluation assets increased by $1.3 million to $16.8 million during the first six months of 2013 compared to December 31, 2012. The increase is mainly due to the valorization work done on the Le Tac and on the Chaswood properties, and preparatory work for upcoming studies on the Rimouski - Cap-Chat properties and the continuation of engineering studies relating to the SGA project.
Accounts payable and accrued liabilities decreased by $23.2 million to $5.4 million during the first six months of 2013 compared to December 31, 2012 mainly as a result of the payments made during the first and second quarters but also due to a lower volume of purchases made during the second quarter of 2013 compared to the fourth quarter of 2012.
Share capital and warrants increased by $13.8 million to $131.5 million mainly due to the presentation of the portion of the suppliers' settlement agreements to be settled in shares as equity whereas it was previously presented as a provision at March 31, 2013. On July 23, 2013, the Corporation issued an aggregate of 14,525,146 Class A shares to 2 suppliers, at a price of C$0.945, in full settlement of their respective outstanding claims.
Cash Flows from Operating Activities
Cash flows used in operating activities increased by $2.4 million to $4.8 million during the quarter ended June 30, 2013 compared to the same period in 2012. The increase is mainly due to the general increase in disbursements due to the overall higher level of activities in 2013, the interest payments on the convertible debt in the magnitude of $500,000 quarterly and the variation in the non-cash working capital items period over period. Cash flows used in operating activities decreased to $3.8 million for the six months ended compared to the same period in 2012 principally due to the cash inflows generated by the variation in working capital elements, namely from the recovery of sales taxes receivable. This decrease was partially offset by the general increase in overall activities in 2013 and the payment of interest on the convertible debentures.
Cash Flows from Financing Activities
Cash flows from financing activities decreased by $327,482 to $20,789 and $410,536 to $23,784 during the quarter and the six months ended June 30, 2013 compared to the same periods in 2012 since there were fewer exercises of warrants and options in 2013.
Cash Flows used in Investing Activities
Cash flows used in investing activities increased by $3.4 million to $6.7 million and $24.4 million to $27.9 million during the quarter and the six months ended June 30, 2013 compared to the same periods in 2012 mainly due to the increased level of investment in property plant and equipment at the HPA plant which was partially offset by a reduction in investments in exploration and evaluation assets and a reduction in the inflows from short-term investments. Compared to the first quarter of 2013, the Corporation has reduced its cash flows invested in the HPA plant construction and commissioning activities while it completed the review of its capital cost estimates and timelines.
Liquidity and Capital Resources
Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they come due.
The Corporation is a development stage company that has not generated any revenues or significant cash flows from its operations. The Corporation's source of funding has primarily been from the sale of equity and debt securities, and to a lesser extent, earning interest income, which is highly dependent on the cash balances and prevailing interest rates. The Corporation has limited financial resources, has no recurring revenues and continues to rely on the issuance of shares, debt or other sources of financing to fund its overhead, HPA plant construction, commissioning and ongoing operations and to advance its development-stage projects. As at June 30, 2013, the Corporation has an aggregate cash and short-term investments balance of $8.8 million and positive working capital (current assets less current liabilities) of $7.6 million which are insufficient to complete the construction and commissioning of the HPA plant. The Corporation has negative cash flows from operations of $3.8 million for the six months ended June 30, 2013 and $11.9 million for the year ended December 31, 2012. Management is actively seeking to raise the necessary capital to meet its funding requirements but there can be no assurance that management's plan will be successful. Until such time that financing becomes available at acceptable terms, the Corporation has taken action to limit the ongoing exploration and development work and reduce its operating costs. Accordingly, these conditions have resulted in a material uncertainty that may cast significant doubt about the Corporation's ability to continue as a going concern.
Notice to Reader
The information provided in this press release is entirely qualified by the disclosures in the Corporation's Financial Statements and Management Discussion & Analysis (MD&A) for the quarter ended June 30, 2013, which are available at www.orbitealuminae.com and under the Corporation's profile at www.sedar.com.
Orbite Aluminae Inc. is a Canadian Corporation with innovative and proprietary processes that is expected to produce alumina and other high-value by-products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, without generating any wastes, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud and fly ash. Orbite is currently operating and optimizing its first commercial high-purity alumina (HPA) production plant in Cap-Chat, Quebec. Orbite has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallee deposit. Orbite signed an exclusive worldwide collaborative agreement with Veolia Environmental Services for the remediation of red mud using the Orbite processes with the intent to construct a Veolia-operated plant. The Corporation has an intellectual property portfolio that contains 14 IP families and owns the intellectual property rights to nine patents and 40 pending patent applications in 10 different countries.
Certain information contained in this document may include "forward-looking information". Without limiting the foregoing, the information and any forward-looking information may include statements regarding projects, costs, objectives and future returns of the Corporation or hypotheses underlying these items. In this document, words such as "may", "would", "could", "will", "likely", "believe", "expect", "anticipate", "intend", "plan", "estimate" and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or the Corporation management's good-faith beliefs with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Corporation's control. These risks uncertainties and assumptions include, but are not limited to, those described in the section of the Management's Discussion and Analysis (MD&A) entitled "Risk and Uncertainties" as filed on August 9, 2013 on SEDAR.COM, and could cause actual events or results to differ materially from those projected in any forward-looking statements. The Corporation does not intend, nor does it undertake, any obligation to update or revise any forward-looking information or statements contained in this document to reflect subsequent information, events or circumstances or otherwise, except as required by applicable laws.