Orbite Announces First Quarter 2015 Results

MONTRÉAL, QUÉBEC--(Marketwired - April 29, 2015) - Orbite Aluminae Inc. (TSX:ORT)(OTCQX:EORBF) ("Orbite", or the "Company") announced today the filing of its Consolidated Interim Financial Statements for the first quarter ended March 31, 2015. The Company reported a net loss of $2.7 million (or $0.01 per share) for the first quarter ended March 31, 2015, as compared to a net loss of $4.4 million ($0.02 per share) for the same period in 2014, representing a decrease of $1.7 million, or 39.1%. All dollar amounts are in Canadian dollars unless stated otherwise.

First Quarter Highlights:

• Arrival of the Europe-sourced components of the new castable material for the refractory system at the Company's HPA plant in Cap-Chat in the port of Montreal, with subsequent delivery to the Cap-Chat site.
  
  
• RHI Canada Inc. appointed as the Company's contractor for the installation of the refractory system for the decomposer and calcination units at its HPA production facility in Cap-Chat, Québec. Work commenced March 30^th, progress on schedule.
  
  
• Canadian Intellectual Property Office ("CIPO") issued a notice of allowance for patent application No. 2 857 574, pertaining to Processes for Treating Red Mud.
  
  
• The United States Patent and Trademark Office ("USPTO") issued a notice of allowance for patent application No. 14/371,364, pertaining to Processes for Treating Red Mud.
  
  
• In January, Orbite announced it had received from Investissement Québec a $3.0 million bridge loan, collateralized against the Company's investment tax credits receivable for the year 2014.
  
  
• The Company announced it was selected to receive up to $4.5M in non-dilutive funding from Sustainable Development Technology Canada to be applied towards Orbite's technology development, demonstration and commercialization related to the processing of red mud, subject to certain conditions.
  
  
• On March 30, 2015, the Company entered into an underwriting agreement with Euro Pacific Canada Inc. (the "Underwriter") under which the Underwriter agreed to buy on a firm underwriting (bought deal) basis 8,500 units of the Company at a price of $1,000 per Unit for gross proceeds of $8.5 million. In addition, the Company also granted the Underwriter an upsizing option to purchase up to an additional 6,500 Units.
  
  
• On March 30, 2015, the Company received a payment of $4 million from tax authorities in consideration of investment tax credits on the equipment purchased for manufacturing and processing in the Gaspé region related to the 2012 and 2013 fiscal years. Consequently, investment tax credits classified as non-current decreased by $4.0 million, compared to December 31, 2014.
  
  
• Cash and Short-Term Investments of $2.2 million as at March 31, 2015. With subsequent $10 million bought deal ($9.4 million net of underwriter's fee) announced on April 6, 2015, pro-forma balance of $11.6 million.
  
  
• Property, Plant and Equipment increased by $3.6 million to $83.0 million.
  
  
• Quarterly Net loss and Comprehensive loss of $2.7 million (or $0.01 per share) for the first quarter ended March 31, 2015, as compared to a net loss of $4.4 million ($0.02 per share) for the same period in 2014, representing a decrease of $1.7 million, or 39.1%.
  
  
• Cash flows used in operating activities decreased by $1.8 million to $1.8 million during the quarter ended March 31, 2015, compared to the same period in 2014.
  
  
• Adjusted for certain non-cash working capital items and net interest payments, cash flow used in operations down by $0.4 million.
  
  
• Cash flows used for investing activities of $2.4 million.
  
  
• Shareholders' equity of $99.4 million, down slightly from $101.9 million for December 31, 2014.

Material Subsequent Events

• On April 6, 2015, the Company announced it completed the first portion of the public offering of units in the amount of $10 million under its short form base shelf prospectus and prospectus supplement dated March 18 and March 30, 2015 respectively. Euro Pacific Canada Inc., the underwriter under the offering, retains an option to purchase an additional $5.0 million of units until May 6, 2015.
  
  
• On April 7, 2015, the Company announced it shipped high purity alumina ("HPA") samples to five prospective customers, thereby entering their supplier qualification program. The samples were produced by calcining aluminum chloride hexahydrate ("ACH"), the precursor material for HPA, which was successfully produced at the Company's HPA facility in Cap-Chat in a production run during the third quarter of 2014. 
  
  
• On April 13, 2015, the Company announced that Orbite and Crede Capital, the holder of the Series Y Subscription Rights, had mutually agreed to terminate the Series Y Subscription Rights. Accordingly, the special meeting of shareholders initially scheduled to take place on April 2, 2015 and subsequently postponed to April 27, 2015, was canceled as approval of the Series Y Subscription Rights was no longer required.

"With the installation of the refractory materials ongoing and on schedule, we continue to be on track towards the completion of our 3 tpd HPA plant, and commencement of commercial production in Q3 2015," stated Glenn Kelly, CEO of Orbite. "We look forward to updating our shareholders of our progress in the coming months via press release and at our upcoming AGM, to be held June 18, 2015 in Montreal."

Summary of Q1 2015 Financial Results

Comprehensive loss

The Company is a development stage company and has no revenues. 

Net loss for Q1 2015 decreased by $1.7 million to $2.7 million, or from $0.02 per share to $0.01 per share. For the quarter ended March 31, 2015, the net loss decrease compared to the first quarter of 2014 was due principally due to a $0.9 million reduction in general and administrative expenses, as well as a $0.8 million reduction in net finance expense, as compared to the same period in the prior year.

Research and development charges remained relatively stable at $0.4 million during the quarter ended March 31, 2015, as compared to the same period in 2014.

General and administration charges decreased by $0.9 million for the first quarter, compared to the same period in 2014. The decrease during the quarter was due to a reduction in professional fees, share-based payments and severance payment.

HPA plant operation expenses remained relatively stable at $0.9 million, as compared to the same period in 2014.

Net finance expense decreased by $0.9 million to $0.2 million, as compared to Q1 2014. The decrease was attributable mainly to positive change in the effect of changes in fair value of derivative financial instruments and increase in interest income.

Financial position

Cash and short-term investments

As at March 31, 2015, the Company had aggregate cash and short-term investments balance of $2.2 million and positive working capital (current assets less current liabilities) of $1.9 million. Following the $10 million bought deal ($9.4 million net of underwriter's fee) completed on April 6, 2015, the Company had, on a pro-forma basis, a cash and short-term investments balance of $11.6 million and a pro-forma working capital of $11.3 million.

Sales taxes and other receivables

Sales taxes and other receivables decreased by $0.7 million during the first quarter of 2015 compared to December 31, 2014. 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.

Investment tax credits

Investment tax credits classified as non-current decreased by $4.0 million during the first quarter of 2015, compared to December 31, 2014. The decrease is due to payments received from the tax authorities relating to the 2012 and 2013 fiscal years, which are pledged as security for the $25 million convertible debentures issued in December 2012. The funds the Company will receive upon reimbursement of the 2012 and 2013 investment tax credits will be deposited in a segregated account and serve as security for the 2012 convertible debentures. These funds will be released to the Company according to the terms of the trust indenture agreement.

Restricted cash

Restricted cash increased by $4.1 million during the first quarter of 2015, compared to December 31, 2014. These funds represent a portion of the refundable 2012 and 2013 investment tax credits as well as the interest earned deposited in a segregated account which serves as security for the 2012 convertible debentures. These funds will be released to the Company according to the terms of the trust indenture agreement.

Property, plant, and equipment

Property, plant, and equipment ("PP&E") increased by $3.6 million in the first quarter of 2015 compared to December 31, 2014. The increase results mainly from $3.7 million invested in PP&E, attributable mainly to the HPA plant (which includes capitalized interest of $0.9 million).

Patents and others 

Patents increased by $0.1 million during Q1 2015, compared to December 31, 2014. The increase is principally due to the costs resulting from the 10 new filings including national entry phases in various countries.

Short-term loan

Short term loan increased by $3.0 million during Q1 2015 compared to December 31, 2014 due to the receipt of the $3.0 million loan from Investissement Québec.

Long-term debt and convertible debentures

Long-term debt (including short-term portion) and convertible debentures increased by $0.1 million and by $0.3 million, respectively, during the first quarter of 2015, as compared to December 31, 2014. Both increases in convertible debentures and in long-term debt are mainly due to effective interest accretion during the period.

Cash Flow Statement

Cash Flows from Operating Activities 

Cash flows used in operating activities decreased by $1.8 million during the quarter ended March 31, 2015, compared to the same period in 2014. Cash flows used for operations, which is cash flows used in operating activities, adjusted for certain non-cash working capital items and net interest payments, decreased by $0.4 million during the first quarter, compared to the same quarter in 2014, while cash flows from non-cash working capital items increased by $1.3 million during the quarter ended March 31, 2015, as compared to 2014. The decrease in cash flows used in operating activities during the first quarter of 2015 compared to the same period in 2014, is due mainly to a reduction in general and administration expense, sales taxes as well as accounts payable.

Cash Flows from Financing Activities

Cash flows from financing activities decreased by $0.9 million during the quarter ended March 31, 2015, compared to the same periods in 2014. The decrease during the quarter is mainly due to lower proceeds from financing activities.

Cash Flows used in Investing Activities

Cash flows used in investing activities decreased by $2.9 million during the quarter ended March 31, 2015, compared to the same period in 2014. These changes are mainly due to lower investments in the HPA plant construction.

Liquidity and Capital Resources

The Company is a development stage company that has not generated any revenues or significant cash flows from its operations. As at March 31, 2015, the Company had aggregate cash and short-term investments balance of $2.2 million and positive working capital (current assets less current liabilities) of $1.9 million. Following the $10 million bought deal ($9.4 million net of underwriter's fee) completed on April 6, 2015, the Company had, on a pro-forma basis, a cash and short-term investments balance of $11.6 million and a pro-forma working capital of $11.3 million.

The consolidated financial statements have been prepared on a going concern basis, meaning on the basis that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations.

In order to finance the completion of the construction and commissioning of the HPA plant, the Company closed a $10 million bought deal on April 6, 2015 with a potential to increase to $15 million. Combined with monthly burn rate and expectation of starting commercial production in the third quarter of 2015, the Company will need to raise an additional $16.1 million or 11.1 million if the additional 5 million mentioned above is exercised prior to expiry of the option on May 6, 2015. The Company is currently working on alternative sources of financing.

Orbite management will hold a conference call and provide a live audio webcast today, April 29, 2015 at 10:00 a.m. to discuss the Company's financials and provide an update on the Company's HPA project.

The call will be held in English. The Q&A session will be in English and French.

CONFERENCE CALL DETAILS:

Notice to Reader

The information provided in this press release is entirely qualified by the disclosures in the Company's Consolidated Interim Financial Statements and Management Discussion & Analysis (MD&A) for the quarter ended March 31, 2015, which are available at www.orbitealuminae.com and under the Company's profile at www.sedar.com. 

About Orbite

Orbite Aluminae Inc. is a Canadian clean technology based mineral-processing and resource development company whose innovative and proprietary processes are expected to produce alumina and other high-value products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, and in a sustainable fashion, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud, fly ash as well as serpentine residues from chrysotile processing sites. Orbite is currently in the process of finalizing its first commercial high-purity alumina (HPA) production plant in Cap-Chat, Québec and has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallée deposit. The Company's portfolio contains 15 intellectual property families, including 15 patents and 102 pending patent applications in 11 different countries and regions. The first intellectual property family is patented in Canada, USA, Australia, China, Japan and Russia. The Company also operates a state of the art technology development center in Laval, Québec, where its technologies are developed and validated.

Forward-looking statements

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 Company 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 Company 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 Company'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 March 31, 2015. The Company 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.

TMX EQUICOM
Marc Lakmaaker, External Investor Relations Consultant
1-800-385-5451 ext. 248
mlakmaaker@tmxequicom.com

For Media Inquiries:
TMX EQUICOM
Scott Anderson, External Media Relations Consultant
1-800-385-5451, ext. 252
sanderson@tmxequicom.com