Vancouver – Orbite Aluminae (ORT-T) has released some hard numbers as to the potential of its patented aluminum-extraction process and corresponding project that it promises will transform the industry.
Focusing on the Marin aluminous clay deposit that forms part of the company’s Gaspé-based project, a preliminary economic assessment has set a hefty $7.7 billion pre-tax net present value and an internal rate of return of 114% based on a 5% discount rate and a 25-year mine life.
The numbers are, however, based on not only the successful recovery of roughly 540,000 tonnes of alumina per year, but also 189,000 tonnes of hematite, 1.2 million tonnes of high-purity silica, 28,000 tonnes of magnesium oxides, 104,000 tonnes of other value-added oxides, and 820 tonnes of rare metal and rare earth oxides.
As of an August technical report, the Marin sector of the 64.4-sq.-km property hosts 800 million to a billion indicated tonnes grading 23.13% alumina in clay and mudstone, while the report did not specify rare earth content. Based on alumina and hematite alone, the NPV comes in at $1.7 billion and the IRR at 33%.
The PEA, meanwhile, estimates that of $702-million in potential annual revenue, alumina would constitute just under a third at $229.4 million, while rare earth elements would bring in $393 million, hematite $37.9 million, silica $30.7 million, magnesium oxide $11.1 million and mixed oxides about $520,000. The company did not release the prices on which the PEA was based, noting only that they were based on “conservative metal oxides selling prices” as of August, 2011. Hours after the PEA was released, Orbite clarified that the rare earth resources are considered inferred, while also setting out estimated grades for the rare earths based on various analyses.
Resource estimates on the project are somewhat complicated by the novelty of the deposit and corresponding processing method, with testing ongoing. In September Orbite mined a 3000-tonne bulk sample to conduct further pilot testing at its Cap-Chat plant and allow larger-scale testing. The company plans to further adjust the process as it works towards a feasibility study due out by mid-2012.
As to the PEA, the authors used data from test work Orbite has already completed at its Cap-Chat pilot plant, as well as data from existing technologies, and assumed average recoveries of 93% alumina, higher than 90% hematite, magnesium oxides and silica, and 75% for rare earths.
Cost-wise, Orbite is looking at initial capital expenditures of almost $500 million, which would be paid back in under a year, while annual processing costs are estimated at just over $100 million and mining costs at almost $12 million. Operating costs per tonne of clay come in at $44.53 for all products or $42.71 for alumina and hematite. The project also hosts a 3% net operating profit royalty, which the company can buyout after five years.
Orbite took the unusual step of announcing days beforehand the exact date of the PEA release, with the company’s stock price responding by gaining 43¢ to close at $2.95 the day before the release. But on the day itself the TSX halted trading in the company’s stock shortly after markets opened, and kept it halted for the day, while Orbite abruptly postponed a conference call. Later in the day the company clarified the rare earth resources in a press release and later re-scheduled the conference call.
Boiler room antics at it’s best