Orbite says pay back for Quebec project one year

It was a day later than scheduled, but that did not dampen Quebec-based Orbite Aluminae's enthusiasm in hosting a call to discuss Genivar's preliminary economic assessment (PEA) of its aluminous clay project in the province, which CEO Richard Boudreault said would prove a “game changer”.

The Investment Industry Regulatory Organisation of Canada had on Tuesday halted trading in the company’s shares in Toronto, requesting more information from it regarding the rare metals resource it announced at its Gaspe project, with resumption on Wednesday.

The PEA found the project to contain around one-billion tons of aluminous clay deposits, giving it a C$7.7-billion net present value and an internal rate of return at 114%. Payback would be less than a year.

The study anticipated Gaspe to produce 540 000 t/y of alumina, used to make aluminium, as well as rare earths, silica and hematite.

While on a production volume measure, the project is heavily weighted towards alumina output being the main focus, according to the scoping study, rare earths and other metal oxides will account for around 56% of annual sales.

Given the volatility in rare earths prices in recent months, it would be fair to ask what prices Genivar based its assumptions for the PEA on, which is what an analyst did on the webcast.

Boudreault explained that the company used an average price of $479/t of rare-earth oxide – the group of elements commonly used in electronics – which was August's pricing.

That was just before many of the elements, which had climbed more than fourfold in price over the past four years, fell back to earth – even prompting one of China’s biggest producers to halt output.

Boudreault conceded that the average price “may have gone down a tad since then”.

“But we don’t think it will have a significant impact on the overall [economics],” he hastened to add.

Orbite’s aim is to extract alumina from aluminous clay deposits, which it says is far more profitable than producing it from conventional sources of bauxite.

Playing on that, Boudreault likes to joke that his firm is “thinking outside the bauxite”.

The company aims to publish a full feasibility study next year, which should provide far more clarity on revenues from the rare earths. In the meantime, Boudreault said Orbite had signed a number of confidentiality agreements with companies interested in partnering with it.