Orbite’s HPA production facility’s cost approximated at $55 million

Orbite owns and operates a facility in Cap-Chat, Québec, that was originally operated as a pilot plant up to and until March 2012. The 2,600 m2 pilot plant has since been converted into a full-scale 5,903 m2 high-purity production plant, designed to produce alumina at a purity level of 99.99% ("4N") and greater, which began commissioning on December 18, 2012. On January 22, 2013. Orbite announced that it had produced and independently verified the production of one tonne of HPA.

Although the commissioning and optimization activities are expected to continue further into 2013 than the Company previously anticipated, the plant is expected to achieve commercial production of 3 tpd in Q4 2013, thus completing Orbite's conversion from a pre-revenue development company into an alumina producer.

As a result of a recent management review of the project timelines, the HPA plant commissioning and optimization activities are now expected to continue into the second half of 2013. The procurement and installation of a new circulating fluid-bed calcinator, to supplement the existing rotary-kiln calcinators, was previously anticipated in Q2 2013 and is now anticipated in the second half of 2013. Given the foregoing, the HPA plant will operate throughout the second quarter of 2013 at a Phase I capacity averaging less than one tonne per day, and following the commissioning of the new CFB calcinator, will increase to the Phase II capacity of three tonnes per day, anticipated in the last quarter of 2013, followed by a gradual increase to the full production capacity of five tonnes per day, expected in early 2014. The declaration of commercial production, for accounting purposes, is anticipated at the beginning of Phase II. Construction of the scandium and gallium separation facility is expected to also coincide with Phase II.

In its Management Discussion and Analysis for the period ended September 30, 2012, management provided forecasts of capital costs for construction, equipment and installation ranging between $26 to $30 million net of projected refundable income tax credits ("RITC") (or $43 million to $50 million before RITC) for a production capacity of 3 tonnes of HPA per day ("tpd"). Subsequent to this estimate, management strategically opted to expand the HPA plant's production capacity from 3 tpd to 5 tpd to take advantage of the extra nameplate capacity of the new calcinator. Orbite expects incremental costs of $25 million net of RITC (or $35 million before RITC) to adapt the process and equipment to a 5 tpd capacity.

As a result, the total approximate projected capital cost for Orbite's HPA production facility, provisioned at a 5 tpd capacity, is currently forecasted at $55 million net of RITC (or $85 million before RITC), to be fully incurred by the end of 2013, while maintaining an equivalent total capex per tonne ratio and improving operational costs. As at December 31, 2012, $62,730,937 had been incurred and paid by the Corporation, of which approximately $19,932,275 represents RITCs.