Value Microcaps Junior Miners

[value1008]

ORT.to / EORBF-- Bobwins, i've not been in this one for a couple of years, but was curious to get an update on their story when i saw that the conf. call transcript was out yesterday on Seeking Alpha. Here below is the 98% complete text -- i snipped a few irrelevant "thank yous" and operator remarks and corrected a few obvious flaws in the transliteration. The second questioner is a longtime shareholder who rather contentiously gets into the minutiae of the AGM and shareholder voting; much better questions on important other topics follow from some of the analysts and another shareholder...... Looks like Q3 will be the big "delivery time" for the co.

Anyway, the following transcript (despite the transliteration flaws) represents the best statement at this time as to what is going on with Orbite....


Orbite Aluminae's (EORBF) CEO Glenn Kelly on Q4 2014 Results - Earnings Call Transcript
Orbite Aluminae, Inc. (OTCQX:EORBF) Q3 2014 Earnings Conference Call April 8, 2015 10:00 AM ET
Executives
Glenn Kelly - President and CEO
Jacques Bédard - VP, Finance and CFO

Analysts
Matt Koranda - Roth Capital Partners
Ryan Walker - Euro Pacific Canada
Peter Trapp - Bifrost Capital
Robert Gibbens - Montreal Gazette
Unidentified Analyst - Private Investor
Operator
Good morning ladies and gentlemen. Welcome to the Orbite Aluminae Fiscal 2014 Fourth Quarter Results Conference Call. Considering most of the company's shareholders are English speaking, the management presentation will be in English only. Questions will be answered in the language of the question. A transcript of this call will be available in English on Orbite's website this coming Thursday, and a recording of the webcast will also be made available on the site. A transcript in French will be made available subsequently.
[Foreign Language]
Before we begin, I would like to remind everyone that certain matters discussed in today's conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties relating to Orbite's future operational results or business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that could affect results are detailed in Orbite's periodic results and public filings, which you can access in SEDAR's database found at www.sedar.com. Please note that Orbite disclaims any obligation to update any forward-looking statements discussed today and investors are cautioned not to place undue reliance on these statements. […]
I would now like to turn the meeting over to Mr. Glenn Kelly, President and Chief Executive Officer. Please go ahead Mr. Kelly.
Glenn Kelly - President and CEO
Thank you. Good morning everyone and thank you for being with us on the call. As per usual, I am joined by Jacques Bédard, our CFO. We started doing conference calls one year ago, and although unusual for a free revenue company, we felt it very important to provide a more in-depth discussion of our developments and make ourselves accessible to our shareholder base. As this is the Q4 and full year call, we have allocated more time than usual for both my remarks and the question-and-answer session that will follow.
This is one of the reasons we decided to postpone this conference call by a week, as being in distribution mode of the bought deal portion of our financing, significantly limited us, in what we could discuss and share with our audience. Now that we have closed this first portion, we are able to discuss matters more freely, while still observing disclosure regulation and commercially sensitive issues.
Today's call, as our calls before, are divided into three parts. I will start with an overview of our HPA [high purity alumina] projects, and then review 2014, following which Jacques will discuss the financials. I will then return with some forward-looking comments, prior to opening the floor for questions.
But first I'd like to address recent events around our financing. On Monday, March 23rd, we announced our intention to offer units for $8.5 million to $15.5 million, an initiative made possible through our filing of a Base Shelf Prospectus, a Base Shelf Prospectus that was approved by the AMF on March 20th. As of market open on Tuesday the 24th, we witnessed very heavy and unusual volatility in the stock, forcing us to take a step back and review our options. It was quite clear at that point, that we could not close the deal at the announced terms. You always expect some volatility in price action after financing, but not to the extent that we witnessed on that Tuesday. Nearly 16 million shares traded and the share price, that was down by 20% on what we consider neutral to positive news, is something we are looking into, and I have asked IIROC to investigate.
Consequently, we pulled the financing on the third day of that week, and following a cooling-off period to reestablish stability in the market, we announced the bought deal on March 31. This being a bought deal, we were already guaranteed gross proceeds of $8.5 million, but ended up raising a total of $10 million. Again, this deal was made possible by having a Base Shelf Prospectus, through which we filed a supplement, giving us the ability to move quite rapidly.
Additional units are available pursuant to an option granted to the underwriter, under which an extra $5 million tranche can be raised within 30 days of Monday's closing. With $10 million raised, as we announced on April 6th, we still have the option to raise an additional $20 million through an equity placement, under the Base Shelf Prospectus over the next 24 months. However, we will and continue to pursue non-dilutive debt funding.
Now with alternatives to the series-wide funding available to us, one of which we just closed, we sought it back to postpone the special meeting of shareholders to vote on a series wide financing to the 27th of April. As a result of the current funding at more favorable terms than the Series-Y, as well as the additional options open to us, the Board of Directors is reviewing its recommendation to shareholders, and will advise shareholders shortly. The nature of the Y series or the Series-Y instruments, is such that once the option has been exercised, as we did earlier this year, we are expected and required to hold the meeting, even if we were to recommend against proceeding with the Series Y.
If this were to be the case, an amended voting recommendation would be sent out, accompanied by an addendum to the management proxy circular. Shareholders could then change or vote at anytime until April 23, 5 PM, so we will be advising shareholders shortly. In spite of closing the bought deal on Monday, we do still need more funding. As outlined in both the Base Shelf Prospectus and its supplements, as of February 28th, we required an additional $26.1 million in OpEx and CapEx, of which $3 million is contingency. [Indiscernible] has just been raised, and Euro Pacific has a 30-day auction to raise an additional $5 million. Also, as I mentioned, we have other options under active review, including the non-dilutive debt route.
A few more comments in relation to our recently closed funding activities. First, that we need additional funding to complete the plant has been known since November 2014, as this was discussed during our last conference call. This should not have been a surprise to the market, and its something we have communicated about quite openly. The details have also been described very clearly in our preliminary and final Base Shelf Prospectus and its supplement.
Second, the current deal that was closed, is more favorable for the company and its shareholders than decreed Series-Y option. Third, raising funds in the current climate, especially for a pre-revenue company is difficult. It speaks to Orbite's story and potential to have been able to announce this funding on a bought deal basis, and be in a position to pursue further options.
So on to our operations; I am pleased to state that we are back on track to complete our three-ton per day HPA [high purity alumina] plant in Cap-Chat; following receipt of the specialized refractory materials at the end of February, we awarded the refractory installation contract to RHI. They have been working on their quality control and quality assurance, and mobilized to Cap-Chat last week, as previously announced on the 31st. The quality assurance and quality control defines all installation steps per the Outotec recommended sequence and defines all quality control measures and acceptance criteria throughout the eight to 10-week installation process. RHI is a world leader in refractory systems and their installation, and we believe they are the right partner to undertake this key work, which will be done in collaboration naturally with Orbite, and under Outotec supervision.
With work towards completion of the calcination system back on track, we are in schedule for commercial production in the third quarter of this year. Also in parallel to the work on the calcination system, we will be going to the market and awarding mechanical and piping, electrical and instrumentation and installation contracts soon and subsequently begin work on these items also.
Now let's take a short look back at 2014, before I look at our operations, I'd like to mention a few financial highlights. We have reported a net loss of $3.5 million and $12.4 million for the fourth quarter and the full year ended December 31, 2014 respectively. This compared very favorably to the same period in 2013, for which recorded net losses of $9 million and $15 million for the quarter and year respectively. This represents a decrease of 61% and 17.3% for the quarter and the full year, again, respectively. So we continue to be very disciplined with our funds, and as a result, we have reduced our G&A expenses by 20% compared to the previous year.
As you all know, at the end of 2013, we completed an offering for $16 million, and concluded a binding agreement that was creed out of the U.S., for up to an additional $40 million, of which $10 million was drawn down through the Series-X subscription rates last July. With these funds secure, we are [were?] able to restart our project towards the completion of our first commercial plant, the three-ton per day HPA facility in Cap-Chat, at the beginning of 2014, and that we refer to as HPA-II.
The first issue we had to deal with was the calcination system, which is the back end of our plant, where the alumina precursor, or aluminum chloride hexahydrate or ACH, is converted into high-purity alumina.
The originally installed calcinator, which some of you may know as the Harper calcinator, had two main issues that meant the HPA plant could not perform as advertised. The first issue was delamination of certain components, caused by the highly abrasive and its acidic nature of the products that go through the system, resulting in contamination of the end-product. The second issue was that the Harper calcinator turned out not to be suitable for continuous operation, due to conglomeration of the HPA inside the system.
So these issues that we know of meant we had to identify a different technology solution and supplier. Early 2014, we conducted extensive pre-purchase piloting, with two potential suppliers and selected a fluidized bed oxime with Outotec. We find fluidized are found at the fluidized bed calcinations, in a way with the continuous operation issues, and we knew that the selection of the appropriate refractory materials, would solve the impurity issues. We ordered the new calcination system from Outotec, a world leader in this field in March of 2014, took delivery of the main components in July, and installed the decomposer and calcination vessels in September, after having modified the structure of the HPA building.
As you will remember, upon taking delivery of the refractory materials, we conducted extensive testing of these materials at our technology development center. These tests were done to reconfirm the suitability of the refractory materials for our operating environment, that is; first to ensure that they would not contaminate our end product, and second, to ensure they would physically stand up to the operating conditions in our system. All materials passed on the non-contamination front, but we identified, as you know, some non-conformities or defects in some of the refractory materials that could potentially lead to mechanical instability or failure of the refractory system. If this were to happen, this could result in serious downtime for maintenance and replacement of refractory materials, well before what we would consider the normal economic lifespan of this equipment.
So rather than risking serious lengthy and costly downtime, once the plant was operational, we decided to preempt potential future economic issues, and identify replacement refractory products. This we did, and the new materials selected and tested met both stability and purity criteria, providing us with the confidence required on the functioning of the calcination system. Some of you have asked us many questions on the cycle of testing these materials. Well, the cycle of testing and identifying the issues with the non-conforming materials, as well as testing the replacement materials sometime.
To give you some sense of the effort involved, we performed 18 corrosion tests lasting 72 to 144 hours each. We conducted seven spalling tests at a third party lab of 72 hours each. Each consisting of three 24-hour thermal cycles. All tested materials, either corrosion or spalling, were then subject to over 200 analytical tests, to determine the thermal mechanical properties, such as x-ray diffraction, scanning electron microscope and thermal abrasion, just to name a few. We then concluded with a number of scale-up tests of the selected materials.
So, all of this testing, in addition to identifying the problems with the non-conforming products, also show that the new materials met our operating requirements, providing us with the required confidence on the longevity and functionality of the to-be installed refractory.
The solution being installed consists of a number of new components. The new mortar was provided by Outotec and received in December, as per the original planning. Part of the new castable, supplied by a third party, contained specialized materials, sourced from Europe.
As you know, upon placing the final order, we were informed that these materials could not be delivered until the end of February, two months later than the originally quoted January delivery date. This created unfortunate additional delays, caused by events we had no control over. However, on February 25th, we announced the arrival of the new materials in the port of Montreal. The castable was then prepared in March, and RHI mobilized the equipment and personnel to Cap-Chat last week.
Throughout 2014, we worked on the design of the plants, initially on a general basis and towards the end of the year, on a detailed basis, just like any project. However, during the latter parts of the detailed engineering phase, it became clear that certain elements of the old plant, which we had thought could be used or reused in the new plant, would not be sufficient to carry the nameplate capacity three-tons per day. In addition, some of the installed materials caused us some concerns with regards to longevity.
In short, the design of HPA-1 was not adequate, while our initial budget has been estimated on completing that original project, as per that original design.
Also, we decided to increase the capacity of certain elements in the calcination system, so that the intended subsequent upgrade to 5-ton per day, would be easier and much cheaper. This all resulted in increasing the estimated project budget to approximately $42 million. Furthermore, where we had initially anticipated being in commercial production by the time of this call, we now foresee commercial production for the third quarter of this year. This adds additional burn until we start generating revenues. The additional burn and the increased project budget are the main reasons behind our needing an additional $26.1 million, or $16.1 million since Monday. However, with new funds raised and additional options under review, we are confident of achieving the required capitalization to meet our Q3 target date for the start of commercial production.
Funding for [indiscernible] in 2014 has not just come from private sources. As we are bringing employment to the Gaspé region of Québec and are commercializing a green and potentially very disruptive and exportable technology, we were able to attract funding from Investissement Quebec, who is now our single largest shareholder, following a $10 million equity investment completed last May. Additionally, we received $4 million, or a $4 million interest-free loan towards the calcinator system from Canada Economic Development. This year, we received an additional $3 million secured bridge loan from Investissement Quebec.
We have also been selected, as you know, for a conditional $4.5 million grant from SDTC towards our red mud and waste monetization efforts in demonstration. It is important to understand that all the government related funding initiatives are subject to their own or third party due diligence processes, relating to both our technology and financials. We are pleased with the recognition from these sources, these government sources, and see this as a validation of and support for our efforts to bring this new technology to market.
So to summarize, we are back on track towards completing our HPA plant and towards commercial production in the third quarter. We are confident in the work conducted both at our technology development center and at the plant itself, and are excited to be entering this final phase of the project.
That completes my short review for 2014, I will now hand the call over to Jacques, who will go over the financials in a bit more detail, and following his review, I will come back with some closing statements.
Jacques Bédard - VP, Finance and CFO
Thank you, Glenn, and welcome everyone. As per usual, I will focus on the areas we consider most relevant in assessing our financial health, which are our cash balance, viabilities, financing and burn rate. In my discussion, I will focus mainly on developments in the fourth quarter, other than those related to balance sheet related items.
As at December 31, 2014, we held aggregate cash and short term investments of $3.4 million and positive working capital of $7.8 million. However, subsequent to the quarter end, in January 2015, we received a bridge loan from Investissement Quebec, and on Monday, April 6, we closed a $10 million convertible debenture bought deal with Euro Pacific.
As a result, on a pro forma basis, we held cash and short term investment balance of $16.4 million. Compared to previous quarter, working capital was reduced by some $6.4 million, relating both to ongoing operating expenses and investments in our HPA production plants. As of December 31, we had incurred external capital costs of $17.2 million in relation to the construction of the HPA plant.
During the quarter, cash flows used in operations, which is cash flows used in operating activities adjusted for certain non-cash working capital items and net interest payments, was reduced by $900,000 compared to the same period in the prior year, predominantly due to our continued rigorous financial discipline.
During the year, we concluded a number of financings, a $3.8 million non-interest bearing repayable financial contribution from Canada Economic Development for Quebec Region to be used for the purchase and installation of the alumina calcinator. A $10 million equity financing from Investissement Quebec last May; as well as a $10 million financing through the exercise of the Series X subscription rights in July 2014. Subsequent to the year, we received a $3 million bridge loan from Investissement Quebec, collateralized against the company's investment credit receivable for 2014 estimated at $4.4 million.
We have also been selected by Sustainable Technology Development Canada, for a non-dilutive $4.5 million conditional funding towards our red mud and waste monetization initiative. Then, as Glenn already described, we closed a bought deal with Euro Pacific for total gross proceeds of $10 million. The debentures are convertible at $0.325 per share, as well as carry a make-whole payment in case people convert prior to the maturity date. Euro Pacific also has a 30-day option to raise an additional $5 million.
As of February 28th, pro forma the debenture financing, we had $14.1 million in working capital, combined with our monthly burn rate and with our expectation of starting commercial production in the third quarter, we will need to raise an additional $16.1 million, subsequent to Monday's close, or even $11.1 million, if the $5 million option [for] Euro Pacific [is enacted]. We are pursuing funding options and shall inform the market on material events.
As a result of various financing activities during 2014, share capital and warrants during the year, increased by 31 million, mainly due to the issuance of common shares, as a result of the conversion of the 2013 and Series-X debentures in 2014. The $10 million equity funding from Investissement, and the exercise of stock options, warrants and shares issued for interest.
Investment tax credits, classified as current, increased by $3.8 million to $5.2 million during 2014. Mainly as a result of the recognition of the 2014 accrued investment tax credit receivable on equipment purchase. Investment tax credit, classified as non-current, were reduced by $16.3 million, as these funds were received and deposited in a segregated account. These funds serve as security for the 2012 convertible debentures.
On March 31, we announced receipt of another $4 million in relation to our 2012 investment tax credit, and have now received a total of $20.3 million. The total Quebec investment tax credit, expected to be received under this program as of December 31, 2014, reached $30 million.
Compared to December 31, 2013, we recorded a $7.8 million decrease in non-current liabilities, predominantly as a result of the conversion of the December 2013 and series-X debenture into common shares, offset partially by an increase in long term debt, resulting from the $3.8 million received in the form of a non-bearing loan from Canada Economic Development, with a $200,000 balance of the $4 million facility to be received in 2015.
So this concludes my comments, and I will now hand the call back to Glenn.
Glenn Kelly - President and CEO
Thank you, Jacques. I will now make a few closing remarks before opening the floor to questions, and as I indicated earlier, we will allot more time for this portion than usual. The extensive work that we have done, both at our plant and at our technology development center, has made us confident that we have met all technological challenges to make our HPA plant work as advertised, and we are again on track for the start of commercial production in Q3.
Achieving commercial production will be a significant milestone […], showing that a small and independent company can make the difficult transition from a technology development company, to a commercially operating entity or industrial producer.
We believe taking this step will help accelerate the roll-out of our subsequent and important initiatives, the first being waste monetization.
An important milestone we achieved en-route to becoming commercial was sending out HPA samples to prospective customers, which we announced yesterday. This is important for two reasons; first, these samples were produced at the HPA facility in Cap-Chat, and were not lab prepared materials. These were produced using the aluminum chloride hexahydrate obtained during our Q3 production run, which was subsequently decomposed in the converted Harper system, and calcinated using small scale calcination equipment at our plant. The samples obtained are of sapphire-grade purity levels, more 4 and 8, as was confirmed by independent, third party labs.
In using the modified calcination system, sodium levels were slightly above our targeted values, but well within acceptable industry tolerances. However, the extensive testing that we have carried out on the refractory to be installed in the new calcination system, has shown that sodium levels, should be achieved -- or much lower sodium levels should be and will be achieved, once the new calcination system is operational. So the 4 and 8, which was already very good news, allows us to foresee being able to produce 5N HPA at commercial scale.
Second point, having indications of interest from over 30 customers with whom we have established agreed-upon HPA quality targets, we are now moving to the next and very important phase in our commercial outreach, by entering these customer's qualification programs. We expect shipping further samples over the next weeks and months. At this point, I cannot provide a prediction as to the anticipated length of the sales cycle, or our anticipated conversion rate, but we are very pleased with having achieved this very important milestone in our development.
Once we are commercial, we will extend our efforts in the pursuit of our second commercial initiative, that of waste monetization. The first step will be converting the front-end of the HPA plant to the chlorides process, so that we can start using different feedstocks such as red mud and fly ash, as well as being able to add a scandium and gallium separation drains.
This conversion has brought up many questions from shareholders, and I think it may be useful to spend a little time going over the history and the reasons behind the need for this conversion. When Orbite decided to build an HPA plant, the company was further advanced with its hydroxy-based process, than its chlorides-based process. At the time, an incentive to expedite construction of the HPA plant, based on a hydroxyl process, was that HPA, like many other rare materials, was selling at around $100,000 per ton. To put that into our context, you will see in our MD&A, that 5N HPA sells for between $25,000 and $30,000 per ton today.
Although a logical decision then, the hydroxy based process is not as economical and does not allow for the selective recovery of multiple products from a feedstock, as our chloride process does. In essence, it only recovers the alumina in the feedstock. So it’s easy to understand from this, how the project economics for the chloride process are much more interesting than for the hydroxide process, as the latter does not yield the valuable additional products that the chloride technology does, in addition to be more expensive to operate. This is also why we decided in 2013 not to complete the extraction part of our current HPA plants, based on the hydroxide process, but rather to postpone this and convert the plant to the chloride process at a later date, as the objective was revenue generation, we first proceeded with the finalization of the purification section of the plant.
We have tested the lab as a chloride process at lab scale, by treating a variety and a number of potential feedstocks, including different types of red much, fly ash, mine waste, and other mineral revenues at our technology development center. We have also conducted further testing with several technology providers at their lab facilities, in order to establish baseline performance of all the particular steps in our chloride based process. These tests were done and generated and confirmed our high level economics. In our view, the outcome of these tests validates the efforts we are putting into commercializing this technology.
The next step, which is underway, is a construction of a piloting unit at our technology development center, which will be run to establish the design basis for the conversion of the Cap-Chat extraction unit to the chloride process. As we have indicated in our disclosure, preliminary engineering and cost destination are ongoing, and we expect to finalize this by the end of this calendar year. The plants, while producing HPA in commercial quantities, will then also become an industrial scale demonstration unit, and play a key role in the scale-up of our technology, for both waste monetization and commodities production.
It’s important to note the fact that our extraction and purification units, can and will be operated independently of each other, meaning that we will continue to produce HPA at a commercial scale, while using the front end of our plant and demonstrate our chloride technology, with different feedstocks and determine from these operations, the design parameters for the next scale-up step, which will be commercial prototype in the 100,000 to 200,000 ton per annum scale.
Important in our efforts to bring our technology to the commercial stages to ensure our IP is well protected. We were therefore pleased to announce recently the granting of patent allowances, both in Canada and the U.S., related to the application of our chloride technology to red mud monetization. However, we have additional patents pending for waste monetization, and as for red mud, we have received a positive international preliminary report on patentability or an IPRP for our family of patents pertaining to fly-ash monetization, where we see a tremendous opportunity for technology.
Subsequent to receiving this positive report, we have filed national phase entries under patent prosecution highways, where these are allowed, and expect to receive further notices for allowance for this patent family, soon, in Canada, the U.S. and Europe. The patent prosecution highway is a program or an accelerated procedure for awarding patents in participating countries and regions following a positive IPRP. With our IP portfolio growing ever stronger, we are well positioned and excited about pursuing the substantial commercial opportunity.
However, first things first; for now, which means focusing on our HPA plant and focusing on financing its completion. Our progress through 2014 and into 2015, though bumpy, has put us in a good position. We are months away from being commercial, and we are confident of achieving a required capitalization to meet with our timeline. We are confident of our future, and I look forward to updating you as we have in the past, in the coming months, with regards to our HPA plant, our commercial activities, as well as our subsequent initiatives.
That concludes my prepared remarks, and I would now like to open the lines for questions. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions]. Your first question comes from Matt Koranda with Roth Capital Partners. Please go ahead.
Matt Koranda - Roth Capital Partners
Good morning guys. Thanks for taking my questions. So I wanted to start out with the refractory installation. I know you guys had mentioned that RHI had been deployed to the facility last week. Could you just comment on how installation is proceeding, has it begun, and when you anticipate this being completed? Are there any items during the refractory installation that kind of keep you up at night?
Glenn Kelly - President and CEO
I will start by the end of your question, any items that keep us up at night, you know, with all the thorough testing that we ran, we are very confident that we are installing the correct materials inside both of those ovens. The process for installing refractory, couple of points; three layers of refractory material, three layers of brick, mortar holding those bricks together, and castable, which is pretty well concrete that's port in place, notably at the base of these two ovens.
So the whole process, we are talking here three layers and 400,000 pounds of bricks and mortar to put into place, that's approximately a 10-week process, and before you start actually putting the bricks in place, both ovens have to be setup with the proper materials and equipment, allowing the personnel to work in both ovens in an efficient manner if I can put it that way. That is what's ongoing, there have been no bricks installed yet, but that should be upcoming over the next week or so. RHI is in the process of setting up their site, to be able to start the installation.
Matt Koranda - Roth Capital Partners
Okay, great. Then moving on to funding and capital expenditures coming up here, I think you have made it pretty clear that roughly $16 million in incremental funding is going to be necessary. Could you just give us a sense for what the remaining work that needs to be completed is -- what other big ticket items are left in that $16 million, that you have indicated?
Glenn Kelly - President and CEO
We provided some guidance on that front in both our Base Shelf and prospective supplements, but I will go through the major ones. We have, in the remaining funds, to be incurred or expensed, $3 million for contingencies, and $2 million for spare parts and commissioning. So there is a $5 million piece that comes at the back end of the project. The refractory installation that is underway is $2 million, and we do have about $1.6 million still to be incurred for different equipment purchase. I'd say the remaining now, on top of that is installation work, mechanical and piping, and then electrical and then instrumentation. If you want, Matt, there is a more detailed breakdown in the prospectus supplement there.
Matt Koranda - Roth Capital Partners
Okay, great. That's helpful. And then with regard to potential funding or additional debt related financing that you have kind of indicated, how do you envision debt-related financing could be structured? Would it be with a commercial entity, like a commercial bank, or is it more likely to come from a governmental entity? I know you have worked with several different entities, so if you could just comment a little bit on that?
Glenn Kelly - President and CEO
I will comment to the extent that I think I am allowed to, which is very little. But I would say, if I look at what allows us to evaluate the death route; first as Jacques indicated, we do have some investment tax credits, and R&D and mining tax credits on the books that can be monetized. Second of all, as you know, we will have $170 million worth of equipments in place, once the project is buttoned up towards the end of this year or the end of the third quarter. So we think that makes a compelling proposition for raising, we think at least, the amount of debt required to get us there.
I won't comment on to who we are speaking to, whether private or governmental, I'd rather not go there.
Matt Koranda - Roth Capital Partners
Okay, that's fair. And then just if we could talk about consumer qualification by layer, maybe you could just talk about -- you have shipped samples to customers in prior years, are you effectively starting over with the qualification processes here now? And then in terms of off-take agreements, since the plant is pretty close to completion, do you -- can you provide us a bit of a time horizon for maybe when you'd be able to announce some off-take agreements?
Glenn Kelly - President and CEO
Sure. I think your first question was, are we basically starting over? Definitely, we shipped samples, I think it was before my arrival, a year and a half or two years ago; and we have reengaged with the customers or potential customers that we had back then and more. We have a more elaborate list of interested parties now, than we did back then. I'd say, one big difference is the samples that we shipped, have been totally produced at the HPA facility. So its indicative of our process. Yes, the calcination equipment to be installed will be different, but we think that will just increase the quality of the HPA and not decrease it in a -- or effect it in a negative fashion.
Now to the customers, and why we are not shipping the needs of all 30 at the same time, well the needs vary in terms of purity, in terms of particle size and in terms of density. So we are -- as we are producing to their different specifications, we will be sending them the different samples. And finally, I think the last piece of your question, when would we expect any commercial contracts. The only comment I will make there is, depending on the customer, they go away, run this through their evaluation process, and get back to us and either ask for bigger samples or more material, or start looking at purchasing from us. So I won't give any guidance as to specific dates, but definitely, we've started the -- what I'd call the pre-sales cycle, and would drive, if possible, to start closing some contracts in 2015, definitely.
Matt Koranda - Roth Capital Partners
Okay, great. And just a quick follow-up to that; and I think you did kind of briefly allude to it in the answer. Would customers need to see additional samples, once the new calcination equipment is installed? I mean, to the extent that you are going to have to be able to provide those and go through further testing, is that going to -- to kind of extend the sales cycle a bit? Do you anticipate that, or do you think that they will be comfortable enough with what you have done with the current calcination equipment to make commercial level purchases?
Glenn Kelly - President and CEO
I'd say a bit of both, depending on the use of the HPA and what they will be inserting it into in terms of the products that they are producing. I would say, with what we have achieved so far, some customers will be satisfied, and I would expect a couple to say okay, we are satisfied, can you now show me the product produced with your fluid beds, the decomposer and calciner. So in short, a bit of both, Matt.
Matt Koranda - Roth Capital Partners
Okay, great. Thanks. That's it for me, and I will jump back in queue.
Operator
Your next question comes from Ryan Walker with Euro Pacific Canada. Please go ahead.
Ryan Walker - Euro Pacific Canada
Hi guys. Thanks for the call. Most of my questions have been answered and asked. I was just wondering, the ACH that was mentioned in the press release yesterday, from what was that produced, and will that be a similar process that will occur during commercial production later this year?
Glenn Kelly - President and CEO
Yes, as indicated, I believe back in October 2013, once we decide not to complete the front-end of the plant and convert it to the chlorides technology in a subsequent step, that then require that we buy and purchase either recycled aluminum, SGA smelter grade alumina, or aluminum hydroxide to use its feedstock. The ACH was produced by using aluminum hydroxide feedstock from a reputable supplier, who will continue to supply us, until we get the front end of the plant converted.
Ryan Walker - Euro Pacific Canada
Okay. Thanks a lot. And really, I guess that was it. All the other questions have been answered for me. So I will pass it along from here I guess. Thanks.
Operator
Your next question comes from Lorenzo DeLasio.
Unidentified Analyst - Private Investor
Well thank you gentlemen for holding the conference call and the excellent content. I have a few questions, and first of all would be, there was a problem with the proxy vote and tabulation on March 31, 2015, that was brought to my attention by a substantial shareholder. And shareholders did not have access to the online or telephone system to register their votes. At this point, we don't know how many shareholders were impeded, nor how many shares were not voted. I hope this is corrected, I spoke with Matt Simm [ph] from Computershare and they said it was. Furthermore, there was a shareholder that had contacted, or was on these, on the morning of the 31st, and was told that the voting period had ended, which is not the case, and contrary to the public announcement, indicating the voting ended on March 31, 2015, at 5:00 PM. That was my first question.
Glenn Kelly - President and CEO
Okay. Lorenzo, if you allow me to answer what I think was the question; first of all, the limit date to March 31st for voting was for a shareholder meeting held on April 2nd, when we announced that the meeting was pushed back to April 27. That limit date was automatically pushed back. We are aware that there may have been some issues at Computershare. I understand, and we looked into those. We understand that they have been rectified and we apologize for them, they are out of our control. But definitely, if any shareholders were not able to vote and you're not getting the requisite or required response from Computershare, please let us know and we will ensure that shareholders are able to vote.
Unidentified Analyst - Private Investor
It was rectified by Computershare with my contact and it was put into place very quickly. But again, we are not sure how many people -- we are not able and how many shares were not voted. Furthermore --
Glenn Kelly - President and CEO
But on that point, I think it’s quite clear, that when you do vote, you get a confirmation that you did vote. So I would not like to leave the people on this call with the impression that Computershare system is not working. We can take this up offline if you would like, Lorenzo, but as far as we are concerned, Computershare is a very reputable transfer agent, and they have the facilities in place and the equipment in place for all shareholders to be able to register their vote and know when their vote has been registered.
Actually, we have a nice list of who has voted. So I am sure, when you vote, you must know also.
Unidentified Analyst - Private Investor
Yes. But when the sit was not available to shareholders, they could not get a confirmation. So at this point we don't know, because the deadline at that time had gone by. We are not talking about the reputation of Computershare, so whether an anomaly or a glitch, it occurred, and was rectified. But we still don't know what the impact was.
Glenn Kelly - President and CEO
Mr. DeLasio, I would impress on you to ask questions, and I know there are other people in the queue that are waiting to ask questions. So if you can go ahead and ask your next one?
Unidentified Analyst - Private Investor
[Indiscernible] yesterday of verifying the SEDAR site, the filing for the notice in meeting, that the February 27 record date has not changed. You've arbitrarily moved the DGM from the 2nd to the 27th and kept the same record date as the 27th of February. I believe that impedes many shareholders from voting who have purchased on or after the February 27th date. That would be 1 million of shares that the shareholders will not be able to vote. I believe that is against shareholder's rights. I would ask the company to correct this, and modify the record date accordingly to the amount they postponed it by?
Glenn Kelly - President and CEO
Well first of all, I would take very strong exception with what you have just said, in terms that this is against shareholder's rights. Let me just go over what the regulatory requirements are. First of all, a shareholders meeting must be held, not before 30 days, after a record date, but prior to 60 days of the record date. So our record date was February 27th, which means our soonest date was March 27, and our latest date is April 27. It is extremely common for shareholder meetings to be held within that 60 day period naturally of the record date.
Unidentified Analyst - Private Investor
Okay. But your date was of April 2nd initially?
Glenn Kelly - President and CEO
It was April 2nd, and for the benefit of shareholders -- okay. It was April 2nd, because we could not hold it before March 27th, if you'd listen to my answers. We could not hold it before March 27th, so that is why it was put April 2, and the latest date that we can hold it, is April 28th. Now, if we look at the alternative and say we would like to set a new record date, for your information, that would be a minimum 60-day process, if we were to reboot, set a new record date and then hold a subsequent shareholders meeting. I do not think, that is to the benefit of shareholders, compared to pushing back the date, well within the regulatory requirements.
Unidentified Analyst - Private Investor
Okay. Well we will verify with DMS.
Glenn Kelly - President and CEO
Please do so, Mr. DeLasio. Well I would strongly advise that you do so, actually.
Unidentified Analyst - Private Investor
Okay. Next question has to do with --
Glenn Kelly - President and CEO
This will be your last question.
Unidentified Analyst - Private Investor
I am sorry, but I think you allowed more time for the question-and-answer period.
Glenn Kelly - President and CEO
Yes you can. It’s just that we have about 20 other people in the queue, we'd like to give them an opportunity.
Unidentified Analyst - Private Investor
And I am sure they will get their questions in time. My next question has to do with the presentation at Roth, and your corporate presentation that was modified to the Duke Energy. Was Duke Energy -- you require the authorization of Duke Energy to include them in your corporate presentation?
Glenn Kelly - President and CEO
Well let's come back to -- you said we modified our presentation. Once again, you are not asking questions, and I would take a pushback on that. We did not modify our presentation. Duke Energy and the issues in the Carolinas in the U.S. is public knowledge, quite well known, and the fact that we refer to the situation in the U.S. and use the Duke Energy situation as a case study is widely or is totally appropriate. I mean, this is public knowledge, and no more, no less.
Operator
Your next question comes from Peter Trapp with Bifrost Capital. Please go ahead.
Peter Trapp - Bifrost Capital
Good morning Glenn. So my question is fairly simple; you have gone into great detail on the financings that you have gotten or the funds that you've gotten from Investissement Quebec, and I think you said Canada Technology and the Economic Development. You talked a little bit about [indiscernible] and also the funding from Euro Pacific, but the thing that kind of puzzles me is, your friends at Veolia, for whom you hope to do great things, just don't seem to be stepping to the plate. And you have a joint venture, they have a seat on the board, and you're looking for funds, and I am not asking that you answer directly; but it would seem to me that Duke Power and Veolia would be great candidates for that kind of help from funding, given the projects that you have going and some of the problems that they have. So I mean, I just throw that out and if you could respond, I'd appreciate it?
Glenn Kelly - President and CEO
Sure. I think you raised -- you said Veolia and Duke Energy, I would say there are many others that you can add to that list. That we won't name or comment, or that we are in discussion with. As I responded to one shareholder at last year's AGM, if I was on the other side of the table, I would like to see our HPA facility up and running, as a show of the strength of our company and our technology. That being said, and getting back to the agreement that you referred to with Veolia, that agreement is pretty well an agreement where we worked together. Neither party or Veolia has not put any money on the table under that agreement, and we definitely do not want to continue moving forward on that basis. Our plan, for waste monetization and the subsequent conversion of the facility in Cap-Chat and the subsequent scale-up, is to have a good portion of that funded by our partner or partners in that business segment, and that's what we are pursuing.
Right now, we are finalizing funding on the production of high purity alumina, which may be a little less interesting for those parties who are looking into waste monetization.
Peter Trapp - Bifrost Capital
Okay. As a follow-up, I just wanted to mention that, as far as samples that you're sending out to potential customers, in the general area of HPA or Sapphire and other, areas that have to do with the application to technology. I found that when people like AXTI and Umicore send stuff out, sometimes it’s a much longer processing than maybe you have been led to believe, and sometimes it’s a year or so before you land up with an order. So I am just hopeful that these 30 commercial opportunities are as anxious as you are. That's more a comment than a question.
Glenn Kelly - President and CEO
Well, and that's a very good comment. If you look at the HPA market, and so I think we have cut it down to probably about 15 subsectors, including everything for use in artificial members in your body. Definitely, in that segment, which is a very low volume segment, the qualification period is a year, because it’s being used for medical devices or medical implants. If you're looking at industrial sapphire production, the qualification period is much quicker. So it will vary depending on what markets you're trying to access and we are comfortable that with the 30 that have expressed some interest, that we will have some commercial agreements in place, and we may be selling part of our product under spot or short term contracts, as our product gets better known. The demand is there, and the demand is, as you know, increasing in two segments; industrial sapphire and lithium ION batteries. So we are feeling comfortable going into this, Peter.
Peter Trapp - Bifrost Capital
Well I just wanted to end by congratulating you on getting as far as you have and so close to success. It has been a long haul, but I think you have done an incredible job over the last couple of years. So congratulations.
Glenn Kelly - President and CEO
Thank you. It has been a bumpy road, but we are continuing in the right direction.
Operator
[Operator Instructions]. Your next question comes from Lorenzo DeLasio. Please go ahead.
Unidentified Analyst - Private Investor
Glenn, I was actually cut off while I was speaking to the Duke Energy question. May I ask, has Orbite registered to obtain RFP from Duke Energy?
Glenn Kelly - President and CEO
Just for your knowledge, I don't have any cut-off button on my phone here, so I don't know what happened.
The RFP that you're speaking about, one I am not going to comment, whether we did or not, that would not be appropriate disclosure. But two, I would ask you to read what's in that RFP. They are not looking for technology suppliers, they are looking for consultants to provide them with a study of what the available technology is existing out there for the reuse of fly-ash R. So its not an RFP for technology supply, its an RFP for technology studies.
Unidentified Analyst - Private Investor
I did not read the RFP, I just asked --
Glenn Kelly - President and CEO
Yeah I know, we are quite well aware of the process surrounding Duke and other fly ash producers in the U.S.
Unidentified Analyst - Private Investor
Okay. You're indicating that you can't disclose, if you have or not, but yet you just indicated that it would not be something that Orbite would be registering for? So why would that -- just answer yes or no?
Glenn Kelly - President and CEO
No I didn't say either, I am just clarifying what the RFP was for, for the benefit of the other listeners of this call.
Unidentified Analyst - Private Investor
But my question was, have you registered, yes or no?
Glenn Kelly - President and CEO
As I said, I will not answer that.
Unidentified Analyst - Private Investor
Well it’s not something that must not be disclosed. Shareholders are asking?
Glenn Kelly - President and CEO
That's unfortunate Lorenzo. We have our interpretation of what our disclosure rules are, and with all due respect, I will interpret those as our counsel tells us to, and not based on your advice.
Operator
Your next question comes from Gary Carter. Please go ahead.
Gary Carter- Private Investor
Yes, good morning. I had a question regarding the front end; why is it that the change, where two-three years it was with great fanfare, that the hydrochloride process was efficient and everything seemed to be going along great. And then now, how is it that we are to believe that switching gears on a completely different process is going to address the issues. And further to that point, going through all these efforts and changes, is this process even going to be economical?
Glenn Kelly - President and CEO
Thanks for that question Gary. Maybe I touched a little bit upon that in my remarks, but let me take a step back here; you just referred to the hydrochloric process, which -- let me go one step further, is what we call the chlorides process, which is the future Orbite. Now unfortunately, the HPA facility was built or the initial construction, the HPA-1 was built with another process, the hydroxide process. Now the hydroxide process works, you can extract alumina out of the clays, but that's all you get. When high purity alumina was selling for $100,000 a ton, and I won't comment on the decision that was taken back then, but the margins were probably a lot higher and whatever technology was used in the front-end, was probably less critical.
When the specialty metals industry and values came back to earth, those margins have been squeezed quite a bit in the high purity aluminum market also. So for us, the hydroxide process, one, would not be economical, and two, it’s not the process that we would be using in waste monetization, or in the production of smelter grade alumina. So the decision we made, we are looking at the plants, and saying okay, that we complete the full plant, both the front end which was built or mostly built with the hydroxide process, and the back end which is the purification section. The decision we made, was to complete the purification section, start generating revenues by the sale of HPA, and then come back and convert the front end, to what you called, the hydrochloric process or the chlorides process, which is the one, that is much more economical and is the one that we will be using in the treatment of red mud, fly ash, and production of smelter grade alumina, and is the one that was just patented in the U.S. and Canada for red mud.
I think I just answered your first question, the first part of your question. So the big difference between both: hydroxide, you get alumina only and you do it in a very inefficient method. The chloride process, we separate the alumina as the first step, we drop out the iron, and then we drop out all of the other constituents and we recuperate and recycle the hydrochloric acid. The hydroxide process is chemically very demanding. You don't recuperate many of the reagents that you use, and you are only getting one product out of it, which is alumina. I can tell you, for us, it has no future. It’s an interesting process, but unless and until high purity alumina prices get back to the $100k level, I would -- it would not be something we would be looking at.
So I will throw it back to you and ask you if I have answered your question and if not, please ask another one.
Gary Carter - Private Investor
Yes, I appreciate that detailed response. The reason for that question and supplemental to that is that, an analyst, I am trying to recall the name, Louise Morrow [Louisa Moreno], I am trying to remember the pronunciation, but it was emphatically stated, her belief or the belief of that analyst if this process would not be economical, and so that's why I was wondering how you can be so confident in this from a lab to a industrial scale application that it will be economical?
Glenn Kelly - President and CEO
Well, that's based on the work we have done, and you may be referring to Louisa Moreno. But I won't comment, I don't know if it’s her or not, she used to be an analyst with an investment bank. So how we can be confident is based on the work we have done, both internally and with our suppliers, our technology suppliers. There are two things that are critical in the economics of this process, and we will use the hydroxide process as a very good example of what is not economical. The two critical factors, one, if you are going to be, for whatever feedstock you are bringing into your process, be it fly-ash, red mud, or our clays from Grande-Vallée, you have to extract all of the components in that feedstock to make the economics fly. If you are extracting only the alumina, it won't be economical. If you're extracting only the rare earth, it won't be economical.
That is one of the reasons behind, and that some people say necessity breeds innovation, that is what drove our chlorides process, where we selectively separate all of the constituents in the feedstock. So first thing, you have to separate the vast majority of what's in there. Second, you have to recover and recycle your asset, and the most important step in the process -- I'd like to demystify a little bit asset recovery from asset recycling. Asset recovery is low tech, it has been done for many years. We are doing it in the HPA facility, with CMI, off the decomposer, off the calciner and other steps. We are not recycling all of our asset in the HPA facility, because it’s non-economic for the moment. It will be, once the front-end is converted to the chlorides technology.
So it’s not a very difficult step in terms of recovery. In terms of recycling, the iron hydrolysis or the separation of the iron step is the critical one, and we are working with a partner there, SMS Siemag, with whom we have had relationships for many years now. They have tested this at scale, they have learnt some lessons and they have pushed their technology and developed it over the last two years; so we are very comfortable in what we are seeing, and we would not continue down this path, if we didn't think the chlorides technology was economical.
And I'd say, third answer, or third part of the answer, the economics will vary, based on what feedstock you're treating. We know, due to its constituents and due to what it has already gone through, that fly ash is probably the most economic feedstock, has less iron in it, has less other components that have to be separated. That doesn't mean red mud is not economical or our clays, it’s just each feedstock will have its own set of characteristics, that drive the economics in a different way.
Gary Carter - Private Investor
Thank you. I think that answers the question is that, when you look at a very narrow focus of the application, you can very easily conclude that it’s not economic, if you isolate what you're extracting. If you of course, as you said, broaden that to a number of other components out of the feedstock, then that's where the economics kick in?
Glenn Kelly - President and CEO
Yes definitely, and I would say I'd add one more thing to that Gary. The scale of what you're looking at, if you're looking at 5 tons per annum of feedstock versus 200,000 to 300,000 or 1 million tons per annum, the economies of scale will come into play. So if you are looking at a very small operation, where you're only pulling out, as you just mentioned, one product [e.g., HPA], the economics are going to be much tougher.
Gary Carter - Private Investor
And just in closing, is there any timeline, as far as cost estimates to complete the front end? I know that you have got a contingent $4 million. Is there any preliminary cost to get the front end going?
Glenn Kelly - President and CEO
Well, we have a $4.5 million grant from SDTC, and it’s specifically for our waste monetization project, which includes building the pilots that is underway right now at the technology development center. That will be used to design the changes we will make to the front end. As we have announced and stated in our documents, engineering or preliminary engineering and costing is underway now. We plan on finalizing that for the end of this year, and then doing the conversion of the front-end in 2016. So we'd be looking at end of 2016, beginning of 2017, to be operating the chlorides process on the front end. We'd love that to be quicker, we just like to take one bite at a time, get three tons per day of HPA being produced Q3 of this year. Five tons per day, our next scale-up and then the chlorides after that.
Unidentified Analyst - Private Investor
Well again, thank you very much for your time.
Glenn Kelly - President and CEO
Thank you.
Operator
Ladies and gentlemen, we have time for one more question, that question comes from Robert Gibbens with Montreal Gazette. Please go ahead.
Robert Gibbens - Montreal Gazette
Hi. Could you give me a rough number of how much money has gone into this project from the beginning, right to the time when you hope to start the HPA production in Q3 of this year? That's a round number, and might be well over 200 million.
Glenn Kelly - President and CEO
No it isn't. Mr. Gibbens, good to hear from you. As we have indicated in all of our disclosure, the HPA facility, once completed this year, will have caught the $117 million.
Peter Trapp - Bifrost Capital
But the number does not include the work that went in originally? On the exploration and development of the process and all the changes. I am just looking for a round number, that's all.
Glenn Kelly - President and CEO
The only number I can give you -- I mean, we are talking about different things here. The exploration -- those are mining expenses. There was a pilot facility that was built and operated in 2011 and 2012. The number I am giving you, is $117 million to build the commercially producing facility. Naturally, if you include all of the costs of Orbite since day one, it will be higher than that, but I'd have to get back to you on that front.
Operator
And this concludes the Q&A session for today's conference call. I will now turn the call back over to Mr. Kelly.
Glenn Kelly - President and CEO
Thank you and very quickly, I would thank all of the persons that are on this call, and definitely we look forward to continually updating you on our progress, and our next conference call which will be in about three months. So thanks very much and have a good day.