Orbite Announces Third Quarter 2015 Results and Provides Update on HPA Construction
Commenced commissioning in Q3, on track for commercial production in Q4
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 11/13/15 -- Orbite Technologies Inc. (TSX: ORT)(OTCQX: EORBF) ("Orbite", or the "Company") announced today the filing of its Consolidated Interim Financial Statements for the third quarter ended September 30, 2015. The Company reported a loss before net finance income and taxes of $2.5 million as compared to $2.4 million for the same period in 2014. Due to a decrease in non-cash-net finance income, the net loss was $2.1 million (or $0.01 per share) for the third quarter, as compared to a net loss of $0.2 million ($0.00 per share) for the same period in 2014. As at September 30, 2015, the Company also reported a working capital of $4.6 million. All dollar amounts are in Canadian dollars unless stated otherwise.
Third Quarter and Subsequent Events Highlights
- Announced the collaboration with the National Research Council on HPA benchmarking for lithium-ion batteries, a high-end application the Company anticipates will generate considerable growth in the coming years.
- Shipped first 5N+ HPA samples to prospective customers, produced at the Company''s HPA facility in Cap-Chat using a modified set-up of the old calcination system. Subsequent to the quarter, a second set of high purity 5N+ samples was sent, demonstrating the control and customization capabilities of the Company''s HPA production process.
- Received notice of allowance for several Canadian and U.S. patents, including patents relating to fly ash monetization providing further protection for Orbite''s waste monetization initiatives. Subsequent to the quarter, U.S. fly ash monetization patent 9,181,603 was awarded.
- Announced its intention to redeem all outstanding 2012 debentures, and effected the redemption subsequent to quarter''s end thus reducing its interest payments by $2 million annually.
- Subsequent to quarter''s end, the Company completed a $22 million non-dilutive debt facility. The facility is comprised of a US$6.5 million (C$8.5 million) revolving credit facility, term loan A (US$0.45 million, or C$0.6 million) and term loan B (US$10.0 million, or C$13.0 million) - all with MidCap Financial ("MidCap"). The credit facility and term loans with MidCap bear interest at the London Interbank Offered Rate (or Libor) rate, which shall be no less than 0.5% (currently 0.2%), plus 6.5%.
- Additionally, the Company announced that Investissement Quebec ("IQ") increased the amount of its second secured bridge loan, initially granted in June 2015 in the amount of C$5 million, to C$7.6 million. This loan is collateralized against the Company''s Investment Tax Credits ("ITC") receivables for 2015 and subsequent financial years.
- The Company also used a portion of the proceeds of its November 5 financing, namely $3.03 million, to repay in full the bridge loan contracted with IQ to finance the Company''s 2014 ITCs.
HPA Plant Construction Update
Decomposer and Calciner, and other Major Mechanical
Steam Piping
Lined Piping
Installation of all piping, including utilities
Electrical and Instrumentation
Structural, buildings and foundations
Ventilation and Insulation
Operational Readiness
Procurement, Schedule and Budget
"We are now fully financed for the completion of our HPA facility," stated Glenn Kelly, CEO of Orbite. "We are making very good progress at the plant and have successfully commenced with the commissioning of sections of the plant. With the remaining work on schedule, we continue to be on track for the start of commercial production in Q4 of this year. We have also stepped up our commercial efforts and shipped multiple batches of HPA samples. These 5N+ samples made at our HPA facility in Cap-Chat, are consistent in their chemical and physical properties, showing the degree of control we have over our process. This provides assurance to our potential customers that Orbite will be differentiated in the market place by being a provider of consistent high quality HPA."
Summary of Q3 2015 Financial Results
Revenues and earnings
The Company is a development stage company and has no revenues. Net loss for Q3 2015 increased by $1.9 million to $2.1 million, or from $0.00 per share to $0.01 per share, as compared to the same period in the prior year. The increase in net loss was due primarily to and decrease in net finance income (non-cash). The net loss for the nine month period ending September 30, 2015, decreased from $8.9 million to $8.6 million.
HPA plant operations
HPA plant operations include administration, operating and maintenance costs for the HPA plant in Cap-Chat. HPA plant operation expenses increased by $0.3 million during the quarter ended September 30, 2015, and increased by $0.5 million, for the nine months ended September 30, 2015, as compared to the same periods in 2014. The increase during the three and nine-month periods are due mainly to salaries, consulting fees, insurance and shared based payments partially offset by environmental services and energy.
Other expenses
R&D and General & Administrative expenses remained stable compared to the same period last year at $0.4 million and $1.1 million, respectively (Q3 2014: $0.4 million and $1.2 million, respectively).
Financial position
Cash and short-term investments and working capital
As at September 30, 2015, the Company had aggregate cash and short-term investments balance of $3.4 million, and positive working capital (current assets less current liabilities) of $4.6 million.
Following receipt of the funds from the November 5, 2015 secured debt financings and the revised loan agreement with IQ regarding its 2015 ITC receivables, the Company had, on a pro-forma basis, a cash and short-term investments balance of $19.6 million and pro-forma working capital of $20.8 million, net of fees and commission but before expenses.
Financing activities
Redemption of 2012 Convertible Debentures
On October 16, 2015, the Company redeemed all outstanding 2012 debentures in the aggregate principal amount of $25 million plus accrued interests. As per the terms of the Trust Indenture, for each $1,000 principal amount of debentures redeemed, the Company issued 285.714 class A share purchase warrants exercisable until December 13, 2017, at a price of $3.50.
$22M Secured Debt Financing
On November 5, 2015, the Company completed a secured debt financing totalling up to C$22 million (or US$16.95 million) in the aggregate (the "Facility"). The Facility is comprised of a US$6.5 million (C$8.5 million) revolving credit facility, term loan A (US$0.45 million, or C$0.6 million) and term loan B (US$10.0 million, or C$13.0 million). The credit facility and term loans will bear interest at the London Interbank Offered Rate (or Libor) rate, which shall be no less than 0.5% (currently 0.2%), plus 6.5%.
Extension of $2M Loan from Government of Quebec
On October 6, 2015, the Company entered into a revised agreement with the government of Quebec regarding its $2 million non-interest bearing loan contracted on March 24, 2010, whereby the first principal payment date was deferred to January 2020 and the last principal payment date in January 2024.
Amendments to Contribution Agreements - CED
On October 20, 2015, the Company entered into amendments to its contribution agreements with Canada Economic Development for the $800,000 and the $4.0 million of non-interest bearing secured loans contracted on September 4, 2009 and February 5, 2014, respectively. The amendments provide that the $4.0 million loan payable in 10 semi-annual installments which were to begin in April 2017, have now been deferred to January 2020.
Investissement Quebec
The Company announced on November 5, 2015 that Investissement Quebec ("IQ") agreed to increase the amount of its second secured bridge loan, initially granted in June 2015 in the amount of C$5 million, to C$7.6 million.
The Company utilized part of the proceeds of its debt financing to retire the January 2015 $3.03 million debt outstanding with IQ.
More information on the Company''s financing instruments can be found in Orbite''s filings on
Investment tax credits and other government assistance receivable
On July 10 and September 4, 2015, the Company received $3.7 million in aggregate from the Government of Quebec in consideration of investment tax credits on the equipment purchased for manufacturing and processing in the Gaspe region. The payment relates to the 2012 and 2013 financial years. At the date of publication of the consolidated interim financial statements, a total amount of $25.1 million had been received (including interest) and was deposited in a segregated account to serve as security for the convertible debentures issued in December 2012, which were subsequently redeemed.
Restricted cash
Restricted cash (including short-term portion) increased by $8.7 million during the first nine months of 2015, compared to December 31, 2014. These funds are comprised of payments received as consideration of refundable 2012 and 2013 investment tax credits, as well as the interest earned on such deposits, deposited in a segregated account, which serves as security for the 2012 convertible debentures. On October 16, 2015, the Company redeemed the entire outstanding 2012 debentures in the aggregate principal amount of $25 million plus accrued interests and these funds were released to the Company according to the terms of the trust indenture.
Property, plant, and equipment
Property, plant, and equipment ("PP&E") increased by $13.8 million in the first 9 months of 2015 compared to December 31, 2014. The net increase results from the investment of $20.8 million as PP&E, before investment tax credits, and is mainly attributable to the HPA plant (which includes capitalized interest of $3.0 million), partially offset by $6.7 million of investment tax credits.
Short-term loan
Short term loan increased by $8.0 million during 2015 compared to December 31, 2014 due to the receipt of an $8.0 million loan from Investissement Quebec.
Cash Flow Statement
Cash Flows from Operating Activities
Cash flows used in operating activities decreased by $0.9 million and $4.0 million during the quarter and nine months ended September 30, 2015 compared to the same periods of 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, increased by $0.4 million and decreased by $0.2 million for the quarter and the nine month-period ended September 30, 2015 respectively, compared to the same periods in 2014. Cash flows from non-cash working capital items increased by $1.3 million and $3.8 million during the quarter and the nine months ended September 30, 2015 as compared to the same periods of 2014. The increase in cash flows used for operations during the quarter is due mainly to HPA Plant operations and the decrease for the nine-month period ended September 30, 2015 is due mainly to reduction in general and administrative expenses partially offset by an increase in HPA plant operations. The increases in non-cash working capital items during the quarter ended September 30, 2015, are principally due to prepaid expenses and accounts payable and accrued liabilities. Whereas the increases during the nine month period are due to sales taxes, investment tax credits, prepaid expenses and accounts payable and accrued liabilities.
Cash Flows from Financing Activities
Cash flows from financing activities decreased by $4.9 million and by $2.9 million during the quarter and the first nine months ended September 30, 2015 compared to the same periods in 2014. The decreases for the quarter and the nine-month period ended September 30, 2015 compared to the same periods in 2014 are due mainly to lower net proceeds received from the issuance of the 2015 convertible debentures and short-term loan from Investissement Quebec partially offset by higher proceeds from issuance of shares, series X convertible debentures, warrants, exercise of options, and long-term debt.
Cash Flows used in Investing Activities
Cash flows used in investing activities decreased by $0.3 million and increased by $2.8 million during the quarter and the nine months ended September 30, 2015 respectively, compared to the same periods in 2014. The increase during the nine month period ended September 30, 2015 is mainly due to investments in HPA plant construction, partially offset by investment tax credits on property, plant and equipment received.
Orbite management will hold a conference call and provide a live audio webcast today, November 13, 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 September 30, 2015, which are available at and under the Company''s profile at .
About Orbite
Orbite Technologies Inc. is a Canadian cleantech 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, Quebec and has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallee deposit. The Company''s portfolio contains 15 intellectual property families, including 22 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, Quebec, 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 on SEDAR.
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.
Contacts:
NATIONAL Equicom
Marc Lakmaaker
External Investor Relations Consultant
416 848 1397
For Media Inquiries:
NATIONAL Equicom
Scott Anderson
External Media Relations Consultant
416 586 1954
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