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Orbite reports Q1 2017 results; net loss up due to increasing project cost
Orbite Technologies Inc. reports its financial and operating results for the first quarter ended March 31, 2017.
The company reports production of close to 2 tonnes of the first 4N5+ high purity alumina ("HPA") from the Company's HPA plant in early 2017. Ramp-up of production at the HPA plant continued during the first quarter of 2017. In the later part of the quarter, ramp up slowed down due to issues with the electrical heating element system. Orbite concludes that the present decomposer and calciner electrical heating system is not robust enough to reliably achieve the 3 tpd design capacity of the calcination system and is producing approximately 1-1.2 tpd. This however is an equipment issue and not an issue with the proven Orbite process.
On March 31, 2017, the Company announced a solution to solve these issues which required additional external capital costs and time to implement which led to the suspension of its operations at its HPA plant. The anticipated default under the Company's credit facilities, and the ensuing existence of material uncertainty about the Company's ability would continue as a going concern.
Investment Quebec and Canada Economic Development confirmed in May that they intended to maintain the loan agreements in place under the current terms and were willing to support Orbite in its restructuring efforts. The Cap-Chat plant was now under care, maintenance and control.
The Company reported a loss before net finance expense of $4.1 million for Q1 2017 compared to $2.6 million in Q1 2016. The net loss increase was due to a $1.1 million increase in HPA Plant operation costs and a decrease of $0.5 million in other income and $0.7 million in net finance expense. Production ramp-up as well as repairs and maintenance on the supplied calcination equipment have caused to the extra operation cost.
As at March 31, 2017, the Company had aggregate cash and short-term investments balance of $3.5 million. Cash flows used in operating activities for Q1 2017 was $5.1 million compared to $0.05 million for Q1 2016. The increase is attributable mainly to the HPA plant operations charges and a decrease in accounts payable and accrued liabilities.
The 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. The recent developments indicate the existence of material uncertainty that may cast significant doubt about Orbite’s ability to continue as a going concern.Get fresh Aluminium data and insights
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