Orbite Files a Positive Preliminary Economic Assessment Technical Report For Its First Planned Metallurgical Grade Alumina Plant

Last Update: 1/13/2012 7:01:35 AM

MONTREAL, QUEBEC, Jan 13, 2012 (MARKETWIRE via COMTEX) -- Orbite Aluminae (ORT) ("Orbite") has filed the previously announced detailed Preliminary Economic Assessment (PEA) prepared by the engineering consultant firm GENIVAR Inc. and the filing of a NI 43-101 compliant report about the first plant of the aluminous project in Grande-Vallee. The information presented in this report are for a single plant whereas Orbite's strategy is to build up to 10 such plants to ultimately capture a significant portion of the Quebec alumina market and to support the global sale of alumina.

The document is filed on Sedar ( http://www.sedar.com ) and on Orbite's web site at www.orbitealuminae.com . All amounts herein are in Canadian dollars and quantities are in metric tonnes unless otherwise noted.

On November 29, 2011, Orbite published the highlights of a positive PEA for a first Smelter Grade Alumina (SGA) plant, which confirmed the economics for its technology and strategy to become a low cost producer of alumina while minimizing environmental footprint. In the final PEA filed today, the two reference scenarios remain unchanged, resulting in a pre-tax NPV of $1.7 billion for the production of alumina and hematite only and a pre-tax NPV of $7.7 billion for the production of alumina, hematite, and all other valuable by-products. Recent market price variations for the Rare Elements contained in Orbite's deposit of aluminous clay were also taken into account through sensitivity analyses which are summarized below and detailed in the PEA.

"We are pleased to submit this Preliminary Economic Assessment and moving towards completing a Feasibility Study for the SGA Plant by midyear. This positive PEA is a key milestone achieved", said Richard Boudreault, President and CEO of Orbite. "Our strategic objectives remain to first launch the commercial production of High Purity Alumina this year (which the foreseen benefits are not taken into account in this PEA), to license our technology to industry producers in selected countries, and to move forward with the first of multiple projected plants for Smelter Grade Alumina".

"The uniqueness of Orbite's process is its capacity to refine alumina while, because of its hydrochloric acid closed loop system, enabling the extraction of other value added by- products such as high purity oxides, rare metals and rare earth elements oxides from a local Gaspesian source of clay," said Andre-Martin Bouchard, Eng., Vice President Environment at GENIVAR. "Nonetheless, the economics of producing and marketing only alumina and hematite, validate the robustness of the project".

Planned Smelter Grade Alumina (SGA) Initial Plant

Based on the PEA filed today, the annual production from the first of a series of SGA plants is estimated at 540,000 tonnes of alumina, 189,000 tonnes of pure hematite and 1.2 million tonnes of high-purity silica. This will be accomplished through the use of a patented and proprietary process incorporating an efficient and eco-friendly hydrochloric acid closed loop system that also enables the annual production of value-added by-products such as an estimated 28,000 tonnes of magnesium oxides, 104,000 tonnes of other value-added oxides, and a minimum of 975 tonnes of the following pure rare metals and rare earth elements oxides (all of which are classified as Inferred Resources), such as Gallium (Ga), Scandium (Sc), Cerium (Ce), Dysprosium (Dy), Erbium (Er), Europium (Eu), Gadolinium (Gd), Lanthanum (La), Neodymium (Nd), Praseodymium (Pr), Samarium (Sm), and Yttrium (Y).

Favourable Economic Scenarios for the first SGA facility

The two reference scenarios outlined, by GENIVAR in the PEA, were calculated using August 2011 market prices. The PEA also presents a detailed sensitivity analysis taking into account the impact on the economics assuming a 65% discount on Rare Earth Element prices, considering their significant price fluctuations over recent months. This 65% discount is equivalent to a 20% discount over and above the November Chinese domestic prices. Assuming these hypotheses and a projected 25 years of operations, the pre-tax NPV of the project would then range between $4.16 billion and $2.5 billion or the equivalent of $20.33 and $12.17 per share of Orbite on a fully diluted basis, when applying a discount rate of 5% and 10% respectively, and assuming an initial investment of $500 million. The project would generate an IRR of 65 % and the payback would be less than one and a half year, thus demonstrating a positive economic outcome.

In the PEA, Orbite's manufacturing costs for all products generated are estimated by GENIVAR to be $209.59/tonne of alumina (thus allocating all costs to alumina), or $201.02 per tonne of alumina, if only alumina and hematite are produced. The specific cost of producing alumina could be reduced to $91.26/tonne of alumina when apportioning the manufacturing cost, to all products sold, based on the energy they consume.

CRU International, an independent and well-recognized industry source of statistics on metal prices, recently forecasted that the site cost average for the alumina industry will be approximately US$265 to US$275 per tonne in 2012 and 2013 respectively, and expected to be much higher by 2022 (about US$320 to US$325 per tonne). Orbite therefore has a unique opportunity to enter the market with its SGA production having a forecasted competitive cost structure.

CRU also expects that the market for SGA will increase from about 80 million tonnes in 2010 to 120 million tonnes by 2016, growing at a Compounded Annual Growth Rate (CAGR) of 6.6%. They are also foreseeing increased demand for alumina production capacity of approximately 4.6 million tonnes per year extending until 2035, in order to maintain market balance.

Qualified persons

The PEA was prepared by leading independent industry consultants, all Qualified Persons (QP) under National Instrument 43-101. The QPs have reviewed and approved the content of this news release. The following consultants participated in the study:

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GENIVAR Inc., a leading Canadian independent and top ranking engineering
    
firm was mandated to do the PEA, prepared by Rod Doran, P. Eng. (30
    
years experience as a mining engineer) Project Manager and QP, with the
    
Andre-Martin Bouchard, Eng., QP for Environmental sections of the PEA.
    
Mr. Doran and Mr. Bouchard are independent Qualified Persons as defined
    
by NI 43-101, and have reviewed the technical information contained in
    
this news release. Many other third party specialists also contributed
    
to the PEA.
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The geological resources estimates were provided to GENIVAR by Jean-Guy
    
Levaque, Eng., independent QP, and responsible for Orbite's NI 43-101
    
compliant mineral resources estimates.

About GENIVAR Inc.

GENIVAR is a leading Canadian consulting services firm providing private and public-sector clients with a full range of professional consulting services through all project phases, including planning, design, construction and maintenance. Ranging in size, its clients operate in various market segments, including the building, industrial and energy, municipal infrastructure, transportation and environmental sectors. GENIVAR is one of the largest engineering services companies in Canada by number of employees, with more than 5,000 managers, professionals, technicians, technologists and support staff in over 100 cities in Canada and internationally. www.genivar.com