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To: Whaspe who wrote (845)3/3/2012 8:49:22 AM
From: Terry Maloney
2 Recommendations   of 6254
 
I just pm'd this, re the AMF and other matters, thought I might as well post it publicly as well ...

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First off, I think the AMF is probably 'in the right' on all this. (It's been mentioned that they may need to regain some credibility because of a couple of Abromoff-like fraud cases that got by them here in Quebec, but imo they would be unlikely to try to achieve this by taking on such a high profile and potentially beneficial to Quebec company without good reason. There's be just too much egg on their faces if they ended up being perceived as having needlessly interfered with the project).

I'm not too worried about the REEs, whether or not they're found to be 'compliant' at this time ... as we know, they're not really rare at all, so the minimal amounts that ORT claims are probably present in the clay, and (assuming ORT's process works) will eventually make their way to the bottom line, regardless of whether they're included in the PEA ...

As I've mentioned previously, I think the real issue will be alternative energy (or alternative location for the plant) numbers ... this is what will probably make or break the SGA/REE project.

None of this affects the HPA project, though, so unless these guys have been outright lying about everything (unlikely, imo, too many high profile reputations on the line), the HPA alone should go a fair way towards supporting the current share price.

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From: Terry Maloney3/3/2012 10:06:25 AM
4 Recommendations   of 6254
 
Another article in La Presse this morning ...

lapresseaffaires.cyberpresse.ca

With a little help from Bing, I come up with this:

Orbite: Roche will prepare a new technical report

The Roche engineering firm will prepare the new technical report on Orbite Aluninae's alumina and rare earth project in Gaspésie.

The preliminary economic assessment stated a net present value of $7.7 billion, but the Financial Markets Authority (FMA) claims that the report was not in conformity with the Regulation on Information for mining projects.

The two new "qualified persons" who must endorse the report are Guy Saucier of Roche, and Alex Knox, a geologist specializing in rare earths. This was indicated in the order issued yesterday by the Office of Decision and Revision of the FMA, which prohibits transactions in the shares of Orbite (ORT) until the new technical report is filed. Orbite may however request the lifting of the order as soon as Roche has completed the auditing of certain sections of the report in question, bearing largely on the geology and the calculation of resources. The FMA argues in particular that the report does not provide enough information to "allow a reasonably informed reader to understand the assumptions on which the resource estimates are based, and on the manner in which they were produced". It is specifically the information on the rare earths which poses a problem. These elements will provide 56% of the revenue from the project, according to Orbite's assessment.

microsofttranslator.com

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To: steelaway who wrote (847)3/3/2012 11:13:29 AM
From: Detective
3 Recommendations   of 6254
 
Good synopsis. The big boy's need the business case screwed down tight which is what will happen with the bankable feasibility (BFS). However from Orbite's perspective the REE's bolt on is game changing from a different perspective .

Consider the potentially new global distribution relationships which could be ignited. The incumbents get nervous as their "oligopoly" is threatened.

The challenge is far more serious to incumbent aluminum sector/industry players outside of the technology itself.

Remember the communications "convergence" in the early 2000's? Content versus infrastructure vs new distribution models and businesses. Google ? what was that in 2003? Apple was a late 90's dog....with fleas, until it focused on the user experience and not the technology in and of itself.

Make no mistake if Orbite, the government of Quebec and Canada play the cards right they can be a catalyst in defining, controlling and benefiting....from the game changing technology. Here's where you brand new terms instead of aluminum........obitum.......rare earths's? obiree, etc., etc.,

I'm gonna say it again this is bigger than huge......Orbite, with REE's is potentially reducing the capital investment hurdles that only the big boy's can typically overcome.

There are some very, very nervous executive out there and so they should be.

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To: Mark Bartlett who wrote (844)3/3/2012 11:28:19 AM
From: Detective
   of 6254
 
Mark, in your estimation what would it take in terms of engineering, capital , development time to augment the existing HPA plant to produce REE's ? would the REE's be in sufficiant quantity from the HPA plant to drive significant revenues based on a reasonable estimate of l REE pricing? Could this approach be a logical next step prior to SGA?

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To: Detective who wrote (851)3/3/2012 11:43:23 AM
From: Mark Bartlett
   of 6254
 
Detective,

Honestly -- I am not sure.

First -- the HPAs are so valuable alone, the cost to augment the HPA facility to remove REEs would have to be minimal and they would have to be able to recover them in sufficient amounts to make it worthwhile. I do not recall that being part of the overall conversion plan from the existing pilot facility -- to the HPA facility.
I am guessing when I say that in the case of the HPA circuit, the throughput might not warrant REE removal.
Anyone else have any other thoughts. I was going to check the PEA, to see if there were any hints there, but it has been taken down.

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To: Terry Maloney who wrote (848)3/3/2012 11:47:28 AM
From: Whaspe
1 Recommendation   of 6254
 
Terry, I agree with you about alternative energy... as far as the short term goes. Because Orbite wants to build at least ten of these SGA plants, the demand justifies a capital investment into developing natural gas in the region. Something that won't happen by the time the first plant is built. Therefore, they will need an intermediate fix.

I agree completely with the first paragraph of steelaway's comments:
"A preliminary report full of disclaimers, replete with revenue and cost scenarios, based upon the field work of a geologist who worked his entire career with LaFarge Cement...in other words, an expert on the scoping out of sedimentary deposits all over the world, which report outlined all the areas which would be expanded upon in the BFS is dismissed by the AMF."

While it should come as no-surprise that the AMF would scrutinize Orbite's PEA, the methods used and the action taken don't justify what we now know as the underlying cause for their interference.

The use of natural gas as an energy source in the PEA was justified in terms of calculating energy and mass balances between Orbite's pilot plant and the pilot plants in Europe operated by SMS-Siemag and Outotec. Also, in view of its "green" status among fossil fuels, that Orbite should want to develop their process based on natural gas is not surprising. The risk of there being no proven resources or access to natural gas near their plant site was clearly spelled out in the PEA several times. For the AMF to charge that an informed reader wouldn't be able to pick up on this is misleading.
There is another reason for using natural gas that wasn't brought up in the PEA but probably also factored in its use. And that is for the purposes of demonstrating ability to license and deploy Orbite's process around the world. For example, Alcoa is spending over $10 billion to build a massive alumina refining and aluminum smelting complex in Saudi Arabia all because of the cheap access to natural gas.
alcoa.com
Alcoa has partnered with Ma’aden to develop a bauxite mine, refinery, smelter and rolling mill in Saudi Arabia. This joint venture offers unparalleled growth opportunity:Alcoa is building the lowest cost, most efficient aluminum complex in the worldUtilizing fully developed infrastructure, including low-cost natural gas powerEstablishing a strategic footprint in fast growing regionSmelter and rolling mill are scheduled to be on-line in 2013 and bauxite mine and refinery in 2014

And Rusal is needing to build an alumina refinery in Guinea or risk losing the largest bauxite reserve in the world. The Guinea government is attempting to impose stiff taxes and margins will be slim.
theaustralian.com.au

Both Russia and China currently have laterite deposits and high-silica bauxite deposits that would benefit immensely from the energy savings of Orbite's process.

Therefore, I think the use of natural gas in the PEA has also provided a basis for Orbite to open negotiations with these global companies and pave the way to licensing the technology.

In the meantime, Orbite can employ alternative fuel sources for the first SGA plant. Fuels such as bunker oil, or bio-mass, while more expensive than natural gas, will still be within the overall 30% OPEX margin of the PEA and will still allow for the realization of a healthy profit margin.

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To: Mark Bartlett who wrote (852)3/3/2012 11:51:10 AM
From: Whaspe
1 Recommendation   of 6254
 
Extracting REE's from the HPA line will be unfeasible and not worth it. Orbite needs to process ~2.5 million tonnes of clay annually to extract 975 tonnes of rare earths. The HPA plant will process 1050 tonnes of clay in 2013 and that would give ~450 kg's of rare earths... the concentration in the deposit is too low to make this feasible.

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To: Whaspe who wrote (853)3/3/2012 12:07:45 PM
From: Detective
   of 6254
 
Whaspe, the energy utilized in the middle east was a no brainer, you have to remember that the depletion of oil/gas reserves are staggering and all point to lower raw energy exports out of the middle east and use as a significant input to higher value add products domestically.

The governments you are referring to are very active in support of domestic policy and growth. Orbite has access to any combination of fuel in the gaspe.....and Canadian governments need to be actively supporting the appropriate business case at the right time.

It boils down to who will buy, when and how much will said buyers commit in advance of scaling the operations.

I guess its not unlke the Open Season the oil and gas pipeline industry holds for assessing demand where long term capital investments are required for build out of related infrastructure.

I've never been in the energy sector but laying a pipe in the ground ain't that big a deal if governments allow it not to be a big deal. It's a highly regulated and small group of players that need a push from governments to develop.

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To: Whaspe who wrote (854)3/3/2012 12:15:55 PM
From: Mark Bartlett
   of 6254
 
Whaspe,

Thanks for confirming my comments.

- M

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To: Mark Bartlett who wrote (852)3/3/2012 12:28:04 PM
From: Whaspe
   of 6254
 
<Anyone else have any other thoughts. I was going to check the PEA, to see if there were any hints there, but it has been taken down.>



It's removed from the front page but still on the site under regulatory filings. Get it while you can :)



But it should also still be on SEDAR.com

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