/EINPresswire.com/ -- MONTREAL, QUEBEC--(Marketwired - May 15, 2017) - Orbite Technologies Inc. (TSX:ORT)(OTCQX:EORBF) ("Orbite", or the "Company") reports its financial and operating results for the first quarter ended March 31, 2017.

FIRST QUARTER HIGHLIGHTS

Summary of Operations

In early 2017, close to 2 tonnes of the first 4N5+ high purity alumina ("HPA") were produced entirely from the Company's HPA plant thereby validating the Orbite process. Ramp-up of production at the HPA plant continued during the first quarter of 2017.

However, late in the quarter, operations had difficulty in continuing the ramp-up and maintaining consistent and continuous crystal feed rates at the 1 tonne per day ("tpd") level and experienced issues with the electrical heating element system of the decomposer and calciner.

These and other developments led Orbite to conclude that the present decomposer and calciner electrical heating system is not robust enough to reliably achieve the 3 tpd design capacity of the calcination system, but is rather limited to approximately 1-1.2 tpd.

This is an equipment issue and not a process issue. The Orbite process has been proven; 5N+ equivalent aluminum chloride hexahydrate crystals have been produced and 4N7 HPA has been produced using 4N7 equivalent purity crystals.

On March 31, 2017, the Company therefore announced that there were material issues with the electrical heating system of the supplied calcination equipment at the Company's HPA plant and that it had a solution to solve these issues which required additional external capital costs and time to implement. The Company also announced the suspension of its operations at its HPA plant, the anticipated default under the Company's credit facilities, and the ensuing existence of material uncertainty about the Company's ability to continue as a going concern.

On April 3, 2017, the Company filed a Notice of Intention to make a proposal to its creditors under the Bankruptcy and Insolvency Act ("BIA"). Following this announcement, the Toronto Stock Exchange (the "TSX") suspended trading of the Company's common shares and commenced a delisting review as to whether Orbite continued to meet the TSX requirements for continued listing.

On April 17, 2017, the TSX announced the de-listing of Orbite's securities effective as of the close of business on May 16, 2017 for failure to meet the continued listing requirements of the TSX.

On May 1, 2017, the Company announced that it had successfully migrated from creditor protection under the BIA to protection under the Companies' Creditors Arrangement Act ("CCAA") and that the initial order provided for a stay of all proceedings until May 29, 2017. It also announced that:

• Following a meeting with its calcination equipment provider, both parties agreed to set up a task force approach and action plan to resolve the issues identified with the calcination equipment in the most expeditious fashion possible;
• Investissement Québec and Canada Economic Development (as announced on May 5, 2017) both confirmed they intended to maintain the loan agreements in place under the current terms and were willing to support Orbite in its restructuring efforts;
• The Cap-Chat plant was now under care, maintenance and control and in an effort to further limit its cash outflows approximately 39 full time employee equivalents, out of 81, were temporarily laid-off.

On May 5, 2017, the Company announced it had entered into an amendment to the credit facilities with MidCap Financial ("MidCap") which essentially pushes back the Company's obligations under the credit facilities into early 2018, in return for the release to MidCap of the USD 3 million in restricted cash, to be applied to the partial repayment of one of the term loans and the monthly debt service payments until January 1, 2018. The amendment also provides for the forbearance by MidCap from exercising its rights and remedies under the credit facilities, provided certain conditions are met.

FINANCIAL HIGHLIGHTS

(Compared to Q1, 2016, all dollar amounts are in Canadian dollars unless stated otherwise)

The Company reported a loss before net finance expense of $4.1 million for the quarter, an increase from a loss of $2.6 million for the comparable quarter in the prior year.

The net loss increased by $2.2 million to $3.9 million due principally to a $1.1 million increase in HPA Plant operation costs and a decrease of $0.5 million in other income and $0.7 million in net finance expense. The increase in HPA plant operation expenses is mainly due to a general increase in operating costs due to the production ramp-up as well as repairs and maintenance on the supplied calcination equipment.

As at March 31, 2017, the Company had an aggregate cash and short-term investments balance of $3.5 million, and negative working capital (current assets minus current liabilities) of $2.5 million ($6.5 million excluding restricted cash on the MidCap credit facilities).

Cash flows used in operating activities for the first quarter of 2017 was $5.1 million compared to $0.05 million for the same quarter a year ago. The increase is attributable mainly to the HPA plant operations charges and a decrease in accounts payable and accrued liabilities.

Cash flows from financing activities in the first quarter of 2017 increased by $2.7 million to $9.2 million due mainly to higher proceeds from the issuance of the February 2017 Convertible Debentures.

Cash flows used in investing activities during the first quarter of 2017 decreased by $3.5 million to $2.9 million attributable to reduced investments in the HPA plant.

Going Concern

The financial statements have been prepared on a going concern basis, meaning on the basis that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations.

The recent developments announced above indicate the existence of material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

The financial statements do not reflect adjustments that would be necessary if the going concern assumption was not appropriate. If the going concern assumption was not appropriate for these financial statements, adjustments to the carrying value of assets and liabilities, reported expenses and statement of financial position classifications would be necessary. Such adjustments could be material.

Quarterly Results Conference call

Orbite management will not be hosting its usual quarterly results conference call.

Notice to Reader

The information provided in this press release is entirely qualified by the disclosures in the Company's Unaudited Condensed Interim Financial Statements and Management Discussion & Analysis (MD&A) for the quarter ended March 31, 2017, which are available at www.orbitetech.com and under the Company's profile at www.sedar.com.

About Orbite

Orbite Technologies Inc. is a Canadian cleantech company whose innovative and proprietary processes are expected to produce alumina and other high-value products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, and in a sustainable fashion, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud, fly ash as well as serpentine residues from chrysotile processing sites. Orbite is currently in the process of finalizing its first commercial high-purity alumina (HPA) production plant in Cap-Chat, Québec and has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallée deposit. The Company's portfolio contains 15 intellectual property families, including 45 patents and 48 pending patent applications in 11 different countries and regions. The first intellectual property family is patented in Canada, USA, Australia, Japan and Russia. The Company also operates a state of the art technology development center in Laval, Québec, where its technologies are developed and validated.

Forward-looking statements

Certain information contained in this document may include "forward-looking information". Without limiting the foregoing, the information and any forward-looking information include statements regarding projects, costs, objectives and future returns of the Company or hypotheses underlying these items. In particular, statements concerning (i) the solution identified and believed to remedy the issues with the Cap-Chat calcination equipment, and (ii) the setting-up of a task force with the equipment supplier to resolve the issues observed with the Cap-Chat calcination equipment are all forward-looking statements. In this document, words such as "may"," confident", "would", "could", "will", "likely", "believe", "expect", "anticipate", "intend", "plan", "estimate" and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or the Company management's good-faith beliefs with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company's control. In particular, the solution identified to remedy the electrical heating system issues and increase the capacity of the decomposer to 5 tpd, and the costs and time required to implement such solution is based in particular on the Company's available data and experience to date and that the operation of the HPA plant will continue as experienced and anticipated, the costs of materials and labour remaining at current levels, and the ability to keep the operations relating to such equipment running in the normal course.
Factors that could impact the Company's expectations expressed in the forward looking statements include (i) with respect to costs and timing, an increase in the price of materials and/or labour costs, unavailability of qualified personnel, inability to operate in the normal course, breakdown or failure of equipment of processes, design errors, operator errors, non-performance by third party contractors and major incidents or catastrophic events such as fires and explosions; and (ii) with respect to the current discussions with its equipment supplier, the inability to provide technical solutions on terms and timelines acceptable to the Company; Risks, uncertainties and other factors that could affect anticipated results and future events also include, but are not limited to, those described in the section of the Management's Discussion and Analysis (MD&A) entitled "Risk and Uncertainties" as filed on May 15, 2017 on SEDAR, including those under the headings "Going Concerns", Commercial Operation of HPA Plant", "We will need to raise capital to continue our growth" and "Development Goals and Time Frames" which are described in the MD&A filed on March 31, 2017.

The Company does not intend, nor does it undertake, any obligation to update or revise any forward-looking information or statements contained in this document to reflect subsequent information, events or circumstances or otherwise, except as required by applicable laws.