Orbite lines up funds for HPA plant

Orbite Aluminae (TSX: ORT; US-OTC: EORBF) says it will complete an equity raise “within the coming weeks” to help finish building and optimizing its high-purity alumina (HPA) plant in Cap-Chat, Que., after a proposed financing was delayed in July. 

The junior made the announcement on Aug. 14, after the stock had plunged 18% to close at 40.5¢. This provided some relief to Orbite’s share price, which took a noticeable beating following the second-quarter results released on Aug. 9, where Orbite said it needed more capital to wrap up building its first alumina plant.

The Montreal-based firm ended the quarter with $8.8 million in cash and equivalents, plus $7.6 million in working capital. However, it noted in June that it would need to secure another $31 million to bring the plant to commercial production after capital costs had escalated to $106 million from $85 million earlier. By the end of March, it had invested $75 million in the project.  

The plant is operating at a capacity of less than 50 kg per day to meet customer sample requests. Orbite started shipping HPA samples to customers in Europe, Asia and North America in late March, and expects the facility will reach 3-tonne-per-day commercial production in 2014’s third quarter, a slight delay from its previous estimates of mid-2014 and late 2013. 

But before the junior can reach that milestone, it needs to raise more funds — something it has been working on for a while. In mid-July, it filed a short-form prospectus with respect to an equity offering slated to close around July 22. Orbite had anticipated raising $35 million to $50 million at 70¢ per unit, with each unit comprising a Class A share and a half-Class A share purchase warrant.

But in late July Orbite said its proposed offering would be rescheduled to a later date. It updated the market on its financing initiatives on Aug. 14, noting it’s reviewing several funding avenues, including revisiting the terms of the offering provided in its July prospectus after the recent drop in its share price. Orbite has lost more than a quarter of its value since Aug. 9.

Regardless, the company says it’s confident that it will secure financing that will cover at least part of the capital needed to complete the HPA plant. 

Orbite recently closed at 49¢, within a 52-week trading range of 37.5¢ to $3.93.