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Unique technologies enable the extraction of metallurgical-grade alumina, high-purity alumina and high-value elements, including rare earths, from locally sourced aluminous clay, in an environmentally sustainable manner.
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Orbite Aluminae (V.ORT)’s plan for 2014: Focus, fix, finance, float and prove innovative tech
Chris Parry
Orbite Aluminae COO Glenn Kelly is not one to leave items on the to-do list.
In October this year, having been at the job for just a few months, he sent out a corporate update explaining why the company’s high purity alumina plant had been basically shuttered after intended production of 1 ton per day maxed out at 50 kilograms.
An unnamed Stockhouse journalist (okay, it was me) jumped all over that release to point out the company was looking at long delays before it could process a shard; a substantial problem for a company with, at the time, draining funds, heavy debt, angry shareholders and what appeared to be a broken production process.
To recap, I noted that, in order to turn things around, the company must:
And just to make sure I noticed, he came looking for me, requesting an interview with his detractor and bringing his A-game to someone very clearly not in love with his company.
“We’ve just closed a $56m financing,” Kelly told me on the phone Monday afternoon, knocking item one off my list. “The public side of that was $16m, which gives us the funds required to finalize our high purity alumina facility. The process will take another twelve months, it will cost $28m, and at the beginning of 2015, we will begin to produce HPA at a 3 ton per day level.”
Shareholders of Orbite have heard such claims before, something Kelly readily admits and regrets. But that was before he came on the scene and, with a new team in place that is, thus far, fully hitting its marks, he’s not apologizing for the mistakes previous management oversaw, which turned a promise to be in full production by mid-2013 into ongoing delays, a collapsing share price and angry investor base.
“Why I joined the company is the tech has tremendous potential,” says Kelly. “Clearly mistakes were made; there were growing pains in moving from a technical development into a commercially operating entity, taking it from lab scale to commercial scale. But we have the right people in place now - management changes have been brought in over last 12 months, and the team now can execute to the spot where it should have been.”
At the Orbite AGM this year, Kelly made it clear that he’ll let his actions speak louder than words and deliver on set milestones, something the earlier iteration of the company wasn’t so great at.
“We’re delivering on milestones now,” says Kelly. “In the short term, that’s the HPA facility, and we’ll update markets as to the advancements of that. We need to be transparently informing the market as to where we are.”
And where are they?
“In March we’ll be ordering the calcinator for the HPA facility” (That’s the key piece of equipment that delayed things in 2013.) “It’s a seven-month lead item so, step one is to select the right one that our facility needs.”
Kelly points out that the issues with the high purity alumina plant were equipment based issues - not process based, so restarting the plant requires an equipment upgrade, not a technology change.
“What’s at stake isn’t the process, it was trying to go too fast for such a major project, and the type of equipment selected was not the best for what we’re trying to do. It was installed and working, but production was dramatically reduced because of those issues. The core tech is not in question here.”
That tech, when working, has a lot of supporters. Glencore International AG has a ten-year offtake arrangement with the company for smelter-grade alumina, and Veolia Environmental Services has signed a JV agreement to recycle and remediate red mud using the Orbite process.
And then there’s the Government of Quebec, with which the company has long been in talks, but of which no information is publicly available.
When prodded on the subject, Kelly doesn’t bite. Aware of the company’s reputation in earlier times for pushing out positive news before all the key elements were in place, the former Director of Ressources Quebec is determined to make Orbite v.2.0 a milestone-smashing, transparent, long game playing, ‘no news before it’s time’ kind of company.
“Some shareholders have contacted us and said we’re not communicating like they’d like over the last six months, but the reason for that is we’ve been under financing mode with live prospectuses out there, and you can’t really communicate while those are happening.”
With that financing now locked in, the message from corporate is one that hasn’t been Orbite’s traditional stock in trade: Steady as she goes, finances are fine, things are moving forward, and shareholder dilution is no longer the easy out.
“We’re pretty much where we need to be,” says Kelly. “We’re at the important point of just closed finance, but we’re not taking all $56m at once. We took $16m last week, we’ll take another ten in four months, but we’re looking to limit dilution by stretching things out. The share price has been under pressure, and we don’t want to raise money at a low share price, so as stocks rebound we’ll take in those additional funds to limit dilution.”
To be sure, that’s cold comfort to shareholders who bought in 18 months ago at prices around the $3 mark. Today’s share price of $0.355, however, may provide a good opportunity to average down – or enter the market for the first time – if one is seeking value.
Consider the Orbite market cap currently sits at around $72m, with $56m just bagged in financing and $79m in net fixed assets. If you’re a Moneyball investor who looks for companies undervalued by the market, the early Orbite investors’ pain might appear to be a new investors’ profit potential.
“It’s true, there’s some value at the share price being at historical lows,” says Kelly. “There was a big financing overhang, which saw it take some time to raise money, but that’s behind us now.”
What’s ahead is a multi-revenue stream future – once that calcinator is in place.
HPA is the low hanging fruit, but red mud recycling and smelter grade alumina production loom – as does rare earth extraction, fly ash, mine tailings and more.
“We’re going to work this year with engineering the plant to bring production capacity to five tonnes per day in 2015, and add rare earth extraction development in mid-2015,” says Kelly. “The high purity alumina is the first priority. The HPA plant will serve as a large scale demo of a smelter grade alumina plant, which would be much bigger in size and investment.”
The ability to draw multiple extractions out of waste is where Kelly sees the great potential that will make the long wait worthwhile for investors. Competitors may be able to extract one resource from their waste feedstock, but none can feed multiple supply streams in a way Orbite plans to.
“The HPA facility is the cornerstone for all three of our technologies. It will be built, tested and showcased,” says Kelly.
He adds, “We haven’t talked about red mud remediation but we do have a world scale partner extremely interested in our product. We’ll be selecting with Veolia the best site to implement our tech. That’s still on track. We told the market that we’d have news in early 2014 when we decide the structure of the JV, etc. After the HPA facility, it’s our second priority, and it’s no smaller in importance.
“For me, it’s our big future,” says Kelly. “We have probably the best partner in the world when looking at that space.”
So will the promise of Orbite’s tech play out in the marketplace?
That I’m not qualified to say. But I can say without any doubt that, if staring down detractors and answering their questions clearly and openly, and hitting milestones, and raising money in a crappy market, is something you value in a COO, then Orbite appears to have turned a corner.
I asked Kelly to tell me the main message he wanted to get out there by tapping me on the shoulder after the drubbing I gave his company in 2013 and his answer was clear.
“There’s a new team in place. We’re moving forward, not making the same mistakes, and we have experienced people at the wheel.”
Which means there are no more fish to shoot in the Orbite Aluminae barrel.
In October this year, having been at the job for just a few months, he sent out a corporate update explaining why the company’s high purity alumina plant had been basically shuttered after intended production of 1 ton per day maxed out at 50 kilograms.
An unnamed Stockhouse journalist (okay, it was me) jumped all over that release to point out the company was looking at long delays before it could process a shard; a substantial problem for a company with, at the time, draining funds, heavy debt, angry shareholders and what appeared to be a broken production process.
To recap, I noted that, in order to turn things around, the company must:
- Raise funds (time unknown)
- Order a calcinator (three months)
- Receive the calcinator (seven months)
- Install the calcinator (time unknown)
- Restart production
And just to make sure I noticed, he came looking for me, requesting an interview with his detractor and bringing his A-game to someone very clearly not in love with his company.
“We’ve just closed a $56m financing,” Kelly told me on the phone Monday afternoon, knocking item one off my list. “The public side of that was $16m, which gives us the funds required to finalize our high purity alumina facility. The process will take another twelve months, it will cost $28m, and at the beginning of 2015, we will begin to produce HPA at a 3 ton per day level.”
Shareholders of Orbite have heard such claims before, something Kelly readily admits and regrets. But that was before he came on the scene and, with a new team in place that is, thus far, fully hitting its marks, he’s not apologizing for the mistakes previous management oversaw, which turned a promise to be in full production by mid-2013 into ongoing delays, a collapsing share price and angry investor base.
“Why I joined the company is the tech has tremendous potential,” says Kelly. “Clearly mistakes were made; there were growing pains in moving from a technical development into a commercially operating entity, taking it from lab scale to commercial scale. But we have the right people in place now - management changes have been brought in over last 12 months, and the team now can execute to the spot where it should have been.”
At the Orbite AGM this year, Kelly made it clear that he’ll let his actions speak louder than words and deliver on set milestones, something the earlier iteration of the company wasn’t so great at.
“We’re delivering on milestones now,” says Kelly. “In the short term, that’s the HPA facility, and we’ll update markets as to the advancements of that. We need to be transparently informing the market as to where we are.”
And where are they?
“In March we’ll be ordering the calcinator for the HPA facility” (That’s the key piece of equipment that delayed things in 2013.) “It’s a seven-month lead item so, step one is to select the right one that our facility needs.”
Kelly points out that the issues with the high purity alumina plant were equipment based issues - not process based, so restarting the plant requires an equipment upgrade, not a technology change.
“What’s at stake isn’t the process, it was trying to go too fast for such a major project, and the type of equipment selected was not the best for what we’re trying to do. It was installed and working, but production was dramatically reduced because of those issues. The core tech is not in question here.”
That tech, when working, has a lot of supporters. Glencore International AG has a ten-year offtake arrangement with the company for smelter-grade alumina, and Veolia Environmental Services has signed a JV agreement to recycle and remediate red mud using the Orbite process.
And then there’s the Government of Quebec, with which the company has long been in talks, but of which no information is publicly available.
When prodded on the subject, Kelly doesn’t bite. Aware of the company’s reputation in earlier times for pushing out positive news before all the key elements were in place, the former Director of Ressources Quebec is determined to make Orbite v.2.0 a milestone-smashing, transparent, long game playing, ‘no news before it’s time’ kind of company.
“Some shareholders have contacted us and said we’re not communicating like they’d like over the last six months, but the reason for that is we’ve been under financing mode with live prospectuses out there, and you can’t really communicate while those are happening.”
With that financing now locked in, the message from corporate is one that hasn’t been Orbite’s traditional stock in trade: Steady as she goes, finances are fine, things are moving forward, and shareholder dilution is no longer the easy out.
“We’re pretty much where we need to be,” says Kelly. “We’re at the important point of just closed finance, but we’re not taking all $56m at once. We took $16m last week, we’ll take another ten in four months, but we’re looking to limit dilution by stretching things out. The share price has been under pressure, and we don’t want to raise money at a low share price, so as stocks rebound we’ll take in those additional funds to limit dilution.”
To be sure, that’s cold comfort to shareholders who bought in 18 months ago at prices around the $3 mark. Today’s share price of $0.355, however, may provide a good opportunity to average down – or enter the market for the first time – if one is seeking value.
Consider the Orbite market cap currently sits at around $72m, with $56m just bagged in financing and $79m in net fixed assets. If you’re a Moneyball investor who looks for companies undervalued by the market, the early Orbite investors’ pain might appear to be a new investors’ profit potential.
“It’s true, there’s some value at the share price being at historical lows,” says Kelly. “There was a big financing overhang, which saw it take some time to raise money, but that’s behind us now.”
What’s ahead is a multi-revenue stream future – once that calcinator is in place.
HPA is the low hanging fruit, but red mud recycling and smelter grade alumina production loom – as does rare earth extraction, fly ash, mine tailings and more.
“We’re going to work this year with engineering the plant to bring production capacity to five tonnes per day in 2015, and add rare earth extraction development in mid-2015,” says Kelly. “The high purity alumina is the first priority. The HPA plant will serve as a large scale demo of a smelter grade alumina plant, which would be much bigger in size and investment.”
The ability to draw multiple extractions out of waste is where Kelly sees the great potential that will make the long wait worthwhile for investors. Competitors may be able to extract one resource from their waste feedstock, but none can feed multiple supply streams in a way Orbite plans to.
“The HPA facility is the cornerstone for all three of our technologies. It will be built, tested and showcased,” says Kelly.
He adds, “We haven’t talked about red mud remediation but we do have a world scale partner extremely interested in our product. We’ll be selecting with Veolia the best site to implement our tech. That’s still on track. We told the market that we’d have news in early 2014 when we decide the structure of the JV, etc. After the HPA facility, it’s our second priority, and it’s no smaller in importance.
“For me, it’s our big future,” says Kelly. “We have probably the best partner in the world when looking at that space.”
So will the promise of Orbite’s tech play out in the marketplace?
That I’m not qualified to say. But I can say without any doubt that, if staring down detractors and answering their questions clearly and openly, and hitting milestones, and raising money in a crappy market, is something you value in a COO, then Orbite appears to have turned a corner.
I asked Kelly to tell me the main message he wanted to get out there by tapping me on the shoulder after the drubbing I gave his company in 2013 and his answer was clear.
“There’s a new team in place. We’re moving forward, not making the same mistakes, and we have experienced people at the wheel.”
Which means there are no more fish to shoot in the Orbite Aluminae barrel.
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