Jennings Capital Report Oct. 7, 2011

October 7, 2011
EXPLORATION ORBITE V.S.P.A. INC. (TSXV-ORT.A C$2.09) INITIATING COVERAGE: POISED TO REVOLUTIONIZE THE ALUMINUM INDUSTRY
A New, More Environmentally Friendly Method to Produce Alumina: Orbite has patented a process to extract alumina from aluminous clay. If the method is proven to be economic and consistently meets smelter specifications, Orbites method will be the first alternative to the 124-year old Bayer method. Alumina is an essential ingredient in the manufacturing of aluminum and it takes approximately two tonnes of alumina for every tonne of aluminum. Exceptional Logistics: The blue sky potential of this story is augmented by outstanding logistics: Orbites aluminous clay deposit is within 20 km from a ship loading facility situated on tidal waters and within a 30 km radius of 10 aluminum smelters in Qubec (plus two more in New York State), representing an alumina market of approximately 5.5 million tonnes, or 12% of global aluminum consumption. These smelters currently import alumina from such distant countries as Australia, Jamaica and Brazil. Initial Batches of High-Purity and Metallurgical Alumina Appear to Meet Industry Specifications: Both metallurgical and high-purity alumina have been produced at Orbites industry-scale Cap-Chat facility since it was commissioned in January 2011. According to Orbite, its high-purity alumina is well suited for the high growth LED market and its metallurgical alumina has been used to manufacture aluminum by two separate, independent laboratories. Other Potential Revenue Streams: Orbites process appears to have several applications for the recovery of valuable elements in addition to alumina, which include the production of rare earths, scandium, gallium, hematite, silica, and magnesium oxide. These by-products could potentially be produced at virtually no incremental cost. Furthermore, Orbite has considerable potential to generate patent revenues for its alumina extraction method, and pending patents for the extraction of rare earth oxides and hematite. Valuation: We are initiating coverage on Exploration Orbite with a SPECULATIVE BUY recommendation and a 12-month target price of C$8.00. Our target price is based on a blend of: (1) Our NAV model for high-purity and metallurgical alumina risked at 30%; and (2) A 7.0x multiple applied to our F2013 CFPS estimate for high-purity alumina alone, which is C$1.25.
Recommendation: SPECULATIVE BUY 12-Month Target: C$8.00 Risk Rating: ABOVE AVERAGE
Sector: Analyst:
e-mail: Tel:
SPECIAL SITUATIONS KEN CHERNIN, MBA

[email protected] (902) 496-7007 Fax: (902) 496-7599
Associate:
e-mail: Tel:
Company Statistics Potential Return-To-Target 52-Week Range Basic Shares O/S Fully Diluted O/S Basic Market Cap Cash (10-5-2010) Working Capital (10-4-2010) Total Debt Ent. Value Earnings Summary FYE: Dec Annual Production High-Purity Alumina Metallurgical Alumin Revenues EBITDA EPS (FD) CFPS (FD) EV/EBITDA P/E (FD) P/FCF (FD)
BILL MANTZOUTSOS, MBA

[email protected] (416) 304-2184 Fax: (416) 214-0177
283% C$0.40 - C$5.69 167.7 MM 199.8 MM C$350.4 MM C$71.0 MM C$71.0 MM C$2.1 MM C$281.5 MM
2010 E na na na na na na na na na
2011E na na na na na na na na na
2012 E 350 t/y na US$88 MM US$83 MM US$0.19 US$0.28 3.4x 11.3x 7.6x
2013 E 1,400 t/y 145,000 t/y US$408 MM US$365 MM US$0.98 US$1.30 0.8x 2.1x 1.6x
Exploration Orbite V.S.P.A. Inc. is a Qubec-based resource company whose two flagship assets consist of: a patent pending process to extract metallurgical and specialty high-purity alumina from aluminous clays; and its 6,441-hectare Grande-Valle property situated in Qubecs Gasp Peninsula, which contains a sizable aluminous clay deposit. Company Website: http://www.explorationorbite.com
Please see important disclosures on pages 35 and 36.
TABLE OF CONTENTS
INVESTMENT THESIS ................................................................................................................... 3 COMPANY OVERVIEW AND PROJECT HISTORY ............................................................................. 5 PROJECT DESCRIPTION .............................................................................................................. 6 THE PROCESS ............................................................................................................................ 7 THE GRANDE-VALLE PROPERTY: SIZABLE ALUMINOUS CLAY RESOURCE ................................ 11 QUANTIFYING THE UPSIDE: NUMEROUS BLUE SKY SCENARIOS .................................................. 13 DEVELOPMENT SCHEDULE AND CATALYSTS .............................................................................. 21 BALANCE SHEET, RECENT FINANCINGS, AND PROJECT FINANCING ............................................ 22 KEY INVESTMENT RISKS ........................................................................................................... 24 VALUATION AND RECOMMENDATION ......................................................................................... 25 APPENDIX A: TYPICAL EXTRACTION RATES FOR ALUMINUM & IRON AND THE COMPOSITION OF THE GRAND VALLE CLAY ................................................................................................... 26 APPENDIX B: APPENDIX C: ORBITES PATENTS AND PENDING PATENTS.................................................... 27 SELECT RARE EARTH OXIDE HISTORICAL PRICES ........................................... 28
APPENDIX D: HISTORICAL METALLURGICAL ALUMINA AND ALUMINUM PRICES .......................... 29 APPENDIX E: SENIOR MANAGEMENT ........................................................................................ 30 APPENDIX F: BOARD OF DIRECTORS ........................................................................................ 32 APPENDIX F: BOARD OF DIRECTORS ........................................................................................ 32 APPENDIX G: PRODUCTION ASSUMPTIONS ............................................................................... 33 APPENDIX H: PROJECTED INCOME AND FREE CASH FLOW........................................................ 34 APPENDIX I: LIST OF GLOBAL ALUMINA SMELTERS .................................................................. 35 Jennings Capital Inc. Research Disclosures .................................................................... 36 Company Specific Disclosures .......................................................................................... 37
The information contained in this report was obtained from sources we believe to be reliable. We do not represent that such information is accurate of complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings Capital Inc. and/or employees from time to time may hold shares, options or warrants on any issue included in this report and may buy or sell such securities. This report is not to be construed as an offer to sell or solicitation to buy securities. Member CIPF. Jennings Capital (USA) Inc. is a member of SIPC.
INVESTMENT THESIS
We are initiating coverage on Exploration Orbite V.S.P.A. Inc. (Orbite or the Company) with a SPECULATIVE BUY recommendation and 12-month target price of C$8.00. Orbite has developed, and is in the process of commercializing, a method to extract alumina from aluminous clay for the production of both high-purity and metallurgical grade alumina. If Orbite successfully demonstrates that its process can economically and consistently produce these alumina grades at industry standards/specifications, the Company will have unleashed the means to exploit the ~215 million tonnes (assuming a 90% recovery rate) of Aluminum Oxide (Al2O3) strategically situated within 20 km of a ship loading facility on tidal waters and supported by good infrastructure. High-Purity Alumina: Orbite plans to commence commercial production of highpurity alumina during Q2 or Q3 of 2012, at its commissioned Cap-Chat pilot plant, at an initial rate of 1 tonne per day. The Company expects to expand the plants capacity to 3 tonnes per day during Q4/12 and then to 5 tonnes per day during Q1/13. High-purity alumina can fetch up to US$750 per kilogram, depending upon the quality and grain size. It is a fast growing market, largely because it is an essential element in the manufacturing of light-emitting diodes (LEDs). Metallurgical Alumina: Metallurgical smelter-grade alumina is an essential ingredient in the production of aluminum (approximately two tonnes of alumina is required to produce one tonne of aluminum). Qubec is home to 10 alumina smelters that account for approximately 12% of the global aluminum market. This translates into approximately 5.5 million tonnes of alumina annually, and based on current smelter-grade alumina prices, this local market represents C$2.5 billion annually. Furthermore, there are two aluminum smelters in New York State, for a total of 12 smelters along the St. Lawrence River. Qubecs aluminum smelters are currently supplied with alumina imported from countries such as Australia, Jamaica and Brazil. Alumina from neighbouring Orbite would be an attractive alternative for the Qubec smelters, given that transportation-associated costs are highly correlated with the price of fuel and account for approximately 25% of aluminas fob price; therefore, Orbite could afford substantial cost savings to these smelters.
Considerable resource and tremendous exploration potential Our model indicates that Orbite could supply these smelters for ~40 years, based on the most recent NI 43-101 compliant resource estimate. This resource estimate is based on only ~1% of Orbites Grand-Valle aluminous clay property. Given that the deposit appears to be very homogenous, it has considerable exploration potential. but the blue-sky potential of this story does not end in Qubec If the Company proves its process can economically produce metallurgical alumina on a commercial scale, Orbite holds international patents (certain patents are still pending) which could unlock the value of other non-bauxite aluminous ores, such as clays or kaolin, in other countries including China, Russia and Australia (according to Australia Minerals & Mining Group Limited, it has sent kaolin samples to Orbite for testing). In 2010, approximately 82 million tonnes of metallurgical alumina was produced, representing a market of approximately $37 billion.
and it does not end with aluminous clay Although in the early stages, Orbite is conducting laboratory tests using its proprietary technology to process bauxite, and according to the Company, the alumina extraction rate compares favourably with that of its Grande-Valle alumina clay. This indicates that Orbites process could be used to extract alumina from bauxite and could possibly be a viable substitute for the 124-year old Bayer process with significant ecological advantages. The Bayer process, which is the principal means used globally to extract alumina from bauxite, has remained virtually unchanged since its invention in 1887, and on average, produces approximately 1.75 tonnes of a toxic red mud for every tonne of alumina produced. The production of this environmentally hazardous by-product has drawn considerable scrutiny following a tailings damn failure at Magyar Aluminum in Hungary in October 2010, which resulted in the flooding of several villages and caused 10 deaths and 150 injuries. In contrast, Orbites process does not produce red mud, and it is expected that better than 99.7% of the acid used in Orbites leaching process will be recovered, which opens the possibility of using the waste material as backfill at the mine site. Furthermore, although still in the experimental stages, Orbites process has the potential to substantially lower operating costs relative to the Bayer process, owing to considerably lower energy consumption (Orbites process is exothermic), because of the high acid recovery rate and the absence of calcination needed prior to processing. nor does it end with alumina. Orbites process appears to have several applications for the recovery of valuable elements in addition to alumina, which include rare earth oxide, scandium, hematite, silica and magnesium oxide. Earlier this year, the Company filed a provisional U.S. patent application extending protection for its existing patented technology to the extraction of scandium, gallium and other rare earth elements from aluminous clay. As we understand it, these by-products could be extracted from the Grand Valle clay during the alumina production process, at virtually no additional cost.
COMPANY OVERVIEW AND PROJECT HISTORY

Exploration Orbite V.S.P.A. Inc. is a Montreal-based research/resource-focused company incorporated in 1983. Orbite was originally focused on exploration for diamonds and gold, primarily within the Abitibi area in Canada. Began to focus on alumina: Orbite essentially reinvented itself in the summer of 2005, when it acquired the Grande-Valle property (11,672 acres at that time) in the Gasp Peninsula, Quebc, from Poly-Vein Exploration Inc. (private company). Work undertaken in 2001 indicated that the Grande-Valle property had considerable potential, with aluminous clay averaging a grade of 24.25% Al2O3. Conceive an economical process to produce alumina from aluminous clay: Now armed with a potentially sizable aluminous clay deposit, Orbite was faced with the very formidable challenge of developing a process for the economic extraction of alumina from the clay. Although it had been known for decades that alumina could be produced from aluminous clay, the production costs of these processes were so great that they rendered the methods uneconomical. Furthermore, the alumina quality was inferior compared to alumina produced by conventional methods (the Bayer process is discussed below). However, before purchasing the property, Orbite reviewed tests conducted in 2004 by researchers at Laval University, who performed 25 extraction trials using acid-dissolution methods, followed by a process of pyrohydrolysis at a high temperature. These tests were part of a doctoral thesis published in 2004 by Valrie Ouellet, titled Extraction of alumina from clay from the Murdochville region of Qubec, Canada. The results of the tests were very encouraging: Eight trials were conducted on burned clays, which enabled the extraction of 97% Al2O3, with recovery rates ranging between 99% and 100%. An additional 17 trials were conducted on unburned clays, which yielded lower extraction rates (95% Al2O3) but similar recovery rates. Within a month of acquiring the Grande-Valle property, Orbite hired current President and CEO, Richard Boudreault, as senior Vice President, Strategy and Technology. Mr. Boudreault was charged with leading the Companys newly formed six-member Scientific Advisory Board, created to focus on developing an economical process to produce high-quality alumina from the Grande-Valle clays. Mr. Boudreaults team immediately focused on the Laval laboratory tests and in 2006, Orbite awarded a contract to the Centre d'tudes des procds chimiques du Qubec (CPROCQ) to develop a propriety alumina extraction process, which was based on Orbites research. Success in a laboratory environment - filed first patent: The results from the CPROCQ work were extremely encouraging: More than one kilogram of high-purity alumina was produced in a laboratory at an extraction rate of 80%. Orbite sent samples of the high-purity alumina to several companies with aluminum smelting operations as well as the companies involved in the aluminum products sector. The Company filed a patent application to protect the intellectual property rights associated with the inventions contained within the process. Formed strategic partnerships: In 2007, Orbite sent samples of both metallurgical and high-purity alumina produced in a laboratory-based environment to potential customers. According to Orbite, the samples were deemed to be of such high quality that Aluminerie Alouette Inc. and the Amalgamated Metal Corporation signed agreements with Orbite. Proved viability in full-scale pilot plant environment: In January 2011, Orbite commissioned its Cap-Chat pilot plant to produce both high-purity and metallurgical alumina. In mid-February 2011, Orbite produced its first tonne of high-purity alumina
both on schedule and on budget, proving its process was suitable for large scale, commercial production. In late-May 2011, Orbite announced it had produced the first samples of aluminum from its metallurgical alumina at the Institute of Scientific Research - Energy, Materials and Communications, confirming the quality of Orbites metallurgical alumina. In late June, Orbite announced it had successfully produced a large scale aluminum metal ingot from its metallurgical grade alumina (following a continuous 50-hour electrolysis test) in a large-scale laboratory test conducted at the Norwegian-based leading independent international research organization SINTEF, which is used by all the major aluminum companies for research, development and testing.
PROJECT DESCRIPTION
Orbites flagship asset consists of two equally important components: (i) The Companys 100%-owned 15,916-acre Grande-Valle property, which contains a sizable aluminous clay deposit and is situated in Qubecs Gasp Peninsula, some 20 km from tidal waters, and; (ii) The Companys patented and patent pending processes to extract metallurgical and specialty high-purity alumina from aluminous clays, as well as scandium and rare earths. Exhibit 1: Orbites Cap-Chat Pilot Plant
Source: Company website
Orbite has 100% ownership of a 28,000 sq. ft. commissioned production pilot plant in Cap-Chat, Qubec (see picture above), where the Company is currently alternating between the production of high-purity and metallurgical alumina.
After proving it could successfully produce alumina in a laboratory, Orbite formed two strategic partnerships: Aluminerie Alouette: In 2008, Orbite and Aluminerie Alouette executed a collaboration letter agreement intended to allow Orbite to optimize its process, as well as to be used to develop technical specifications for the pilot plant. In late 2009/early 2010, Alouette contributed $1 million dollars toward Orbites experimental pilot plant in Cap-Chat, Qubec. The $1 million investment consisted of two convertible notes in the principal amount of $500,000, bearing interest at a rate of 2.25% per annum and maturing in November 2015. The notes can be converted at Alouettes option, after November 17, 2011, for Class A Shares. Aluminerie Alouette owns and operates the largest and most modern aluminum smelter in North America, which is situated across the St. Lawrence from Orbites aluminous clay property in Sept-les. Aluminerie Alouette is a consortium comprised of five partners: (1) Rio Tinto Alcan; (2) Investissement Qubec; (3) Hydro Aluminum Canada Inc.; (4) Marubeni American Corporation; and (5) Aluminum Austria Metall Qubec Inc. Amalgamated Metal Corporation: In 2007, A letter of intent was signed with Amalgamated Metal Corporation PLC subsidiary, Amalgamet Canada Limited, related to the potential distribution of Orbites ultra-pure alumina. The Amalgamated Metal Group is a worldwide supplier of raw materials and intermediate products, with a focus on non-ferrous metals, steel and construction materials for a broad range of industrial applications.
THE PROCESS
Orbite is not the first entity to design a process to extract alumina from aluminous clay. In fact, the United States Bureau of Mines conducted extensive research in the 1940s, aimed at finding alternative sources of alumina to bauxite, driven by concerns of bauxite supply security. However, the research was unsuccessful in developing an economical process, and the alumina that was produced did not meet industry standards (in actuality there is no second tier for metallurgical alumina: it either makes the grade or it is essentially worthless). As we discuss in greater detail, below, Orbites method for producing alumina from aluminous clay entails a slightly high pressurized hydrochloric acid (HCI) leaching, followed by ion precipitation and calcination. Orbite has produced metallurgical and highpurity alumina grades in a laboratory setting and in its pilot plant in Cap-Chat, Qubec, using its proprietary technology. From the commissioning of the pilot plant on January 15, 2011, through to August 21, 2011, a total of 40 production lots consisting of 850 kilograms of clay per lot have been processed, and thus far, the results have been very encouraging: Orbites metallurgical grade alumina meets Aluminerie Alouettes smelter alumina content standard of an Al2O3 content greater than 98.35 wt%; The metallurgical alumina produced at Orbites Cap-Chat plant has been used to make aluminum by two different independent entities: (1) Qubecs National Institute of Scientific Research, in May 2011; and (2) SINTEF (the largest independent research organization in Scandinavia), in June 2011.
According to Orbite, high-purity samples tested to date have met specifications for LED applications. Currently, production at the pilot plant is largely focused on optimizing the process parameters and on gaining a better understanding of the kinetics of reaction, which includes adjusting the ratio of acid-to-clay, temperature and pressures. The results from the pilot plant are to be used in a comprehensive study to demonstrate the feasibility of the ore and process before construction of the metallurgical plant. Patent Protected Orbites process is protected by a portfolio of patents and pending patents in Canada and the United States (20-year patents), and the Company has obtained an international patent which protects the crucial components of the process. There are also patents pending in jurisdictions that the Company considers to be strategic, including Australia, Brazil, China, Hong Kong, Europe, India, Japan and Russia. A second U.S. patent application, covering process enhancements to improve productivity through higher yield and lower production costs, is also pending. The U.S. patent protection includes a unique signature for alumina and aluminum produced using the Orbite process, thereby guarding against patent infringers marketing in the United States. Orbite has filed four additional U.S. patent applications, covering alumina process enhancements to improve the productivity through higher yields, coupled with lower production costs, the extraction of rare earths and the production of hematite. Overview of the Process As discussed, Orbites method for producing metallurgical alumina from aluminous clay entails a high pressure hydrochloric acid leaching, followed by ion precipitation and calcination. Below, we provide an overview of the four primary steps involved in Orbites alumina extraction process. Although Orbites primary focus has been on the economic extraction of alumina from its aluminous clay deposit, the Companys research has yielded other potentially lucrative applications, which include the extraction of rare earth oxides and scandium. 1. Preparation of the clay: Like Orbites process, past attempts were aimed at producing alumina from aluminous clays based on acid leaching, whereas bauxite is produced with alkaline leaching. However, Orbites process differs from previous attempts, in that Orbite mechanically crushes the clay to a specific particle size prior to acid leaching. The crushing of the clay shortens the reaction time in the leaching stage, and the smaller clay particles are less abrasive on the reactors. Acid leaching: This process entails leaching the crushed clay with HCI under a pressure which causes an exothermic reaction and thus produces heat to a temperature of approximately 150oC. The elevated heat accelerates the reaction time. This is different from the Bayer process because the Bayer method calls for leaching with sulphuric acid at a temperature of approximately 270oC and 90 psi. Furthermore, unlike Orbites process, a substantial amount of energy is needed to achieve the high temperatures because the Bayer leaching process is endothermic. The leaching phase takes approximately two hours, at which time there remains: A liquid (or leachate) containing the aluminum chloride and rare earth elements, as wells as impurities such as iron in the form of hematite, calcium, sodium and titanium; and
2.
A dry material, which is essentially the remnant clay, of which approximately 50% is high-purity silica (the silica is not soluble); therefore, there is potential for it to be sold as a by-product. It could also likely be used as backfill at the mine site (in the Bayer process, the alumina component absorbs the silica, which remains in the final alumina product). The leachate is separated from the dry remnants by decantation or filtration and then washed with water. The residual leachate can be washed multiple times in order to lower the acidity and to reduce quantities of sodium hydroxide (NaOH), which is used to adjust pH levels during the iron removal stage (discussed below). At this point, the rare earth elements and scandium can be removed from the leachate (the rare earths are absorbed in the carbon and can be dissolved in nitric acid). 3. Hematite precipitation: Hematite is the mineral form of iron oxide (Fe2O3). The liberation of hematite or iron (as well as other unwanted impurities) from the clay has been one of the most significant challenges in past attempts to economically produce alumina from clay (the Bayer process discards the iron by precipitating during leaching thus creating the red mud). Higher levels of iron are undesirable in the final alumina because they can reduce the ductility of the aluminum and aluminum alloys, as well as degrade the castability. Furthermore, Orbites method does not produce toxic red mud like the Bayer method. Orbites process removes the iron by precipitating the leachate in the NaOH base, by rapidly increasing the pH level to approximately 12 (Alumina is soluble, whereas the iron is not; therefore, the iron precipitates). The solid portion is then separated from the liquid portion (which contains the aluminum) via filtration or decantation, and the solid is then rinsed. Iron can also be removed using a liquid-liquid refining step, or using a hollow fibre membrane and an extracting agent. 4. Aluminum recovery: The aluminum is recovered from the liquid solution by adding NaOH to the leachate, which decreases the pH level to approximately 9 (internally Orbite refers to this drastic change in pH levels as teleportation), in order to precipitate the aluminum hydroxide. The semi-liquid mixture is then washed and filtered in order to isolate the aluminum hydroxide (in liquid form). Finally, the liquid aluminum hydroxide is dried and heated at high temperatures to reach the crystal form desired by the aluminum smelters.
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Exhibit 2: Orbites Process for Extracting Aluminum from Aluminous Ores
Source: Canadian Intellectual Property Office, Processes for Extracting Aluminum and Iron from Aluminous Ores: Owner: Exploration Orbite, 12, 2010 (Modified by Jennings Capital Inc.)
The final residual volume represents between 10% and 20% of the initial clay volume, and approximately 99.7% of the acid is recovered. The acid can be reused after adjusting its concentration. The extraction rate for the aluminous clay from the GrandValle site has averaged approximately 90% (see Appendix A); however, extraction rates as high as 95% have been achieved.
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THE GRANDE-VALLE PROPERTY: SIZABLE ALUMINOUS CLAY RESOURCE

The Grande-Valle property encompasses 15,916 acres and Orbite owns 100% of the mining rights through 115 registered contiguous mining claims (Orbite has recently completed the application for mining permits). The clay currently being used to produce metallurgical and high-purity alumina at the Cap-Chat plant was mined under the permission of the Ministry of Natural Resources, which, in October 2010, authorized the extraction of a maximum 500 tonnes of clay, and a second bulk sample was awarded in 2011 for 3,000 tonnes. Exhibit 3: Location of the Grande-Valle Property
Marin Sector
Source: Company presentation and Jennings Capital Inc.
Orbite has subdivided the Grand-Valle property into three zones or sectors: (1) The Marin (east side); (2) The Madeleine (centre); and (3) The Simoneau (west side). Orbites Alumina resources are all within the Marin, and although exploration to date has been primarily focused on this sector, the deposit appears to be highly homogeneous, which implies that the property has considerable exploration upside. The Marin sector extends over 4 km in length and ranges from 500 to 1,000 metres in width, with a volume of 400 to 500 million cubic metres (see Exhibit 3, above). Approximately 1,770 acres within the Marin section are not held by the Company. Furthermore, an additional 1,670 acres are subject to a 3% net profit interest (before taxes and amortization) from the production derived from 12 map-designated claims that were acquired from Poly-Vein Exploration Inc. (private company), in August 2005. Orbite has the option to repurchase this royalty interest for $500,000 after a five-year operating period. Local Infrastructure The property is 18 km inland from the town of Grande Valle (population of ~1,000) and accessible from the town of Murdochville (population of ~800) via secondary roads. Grand-Valle has a 150-metre long wharf, which can accommodate self-loading barges as large as 1,000 tons. The mining claims are on Crown property, and the forests on the lands are relatively sparse owing to their heavy exploitation. Numerous streams intersect
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the property and flow into the Madeleine River and the Grand-Valle River. There is limited access to the property via poorly serviced forest roads, which are largely unsuitable for road vehicles. A 69-kilovolt power line is located approximately 4 km from the propertys border. The Geology The property covers a sizable portion of the Cambro-Ordovician L'Orignal Formation. The alumina content from these clays ranged from 17wt% to 23wt%, and iron content ranged between 7wt% and 8wt%. The most recent NI 43-101 (amended August 31, 2011) divided the deposit into two groups: Aluminous red claystones which are referred to as argillite (very soft sedimentary rock) and have Al2O3 grades greater than 23%; and Red and green mudstones (harder than the claystones) with AL2O3 grades ranging between 18% and 23%. In aggregate, Orbite has drilled 7,118 metres consisting of 43 holes, to test the claystone and mudstone, but the unconsolidated red clay deposits have been the primary focus. They have an average grade of 23.13% of Al2O3 and are found at depths ranging from surface to over 100 metres. There are indications that grades improve with depth.
Exhibit 4: Overall Characteristics of Mudstone and Claystone Samples

Silicon Dioxide
(SiO2)
Aluminium oxide
(Al2O3)
Iron Oxide
(Fe2O3)
Calcium oxide
(CaO)
Magnesium oxide Sodium oxide

(MgO) (Na2O)
Potassium Oxide
(K2O)
Titanium Dioxide
(TiO2)
Mean Maximum Minimum
53.3% 63.9% 47.9%
22.8% 26.9% 15.6%
8.4% 13.0% 3.2%
0.7% 8.1% 0.2%
1.7% 3.2% 1.1%
1.4% 3.1% 0.3%
3.4% 4.8% 2.0%
1.0% 1.5% 0.6%
Source: 2010 Field Work, Grand Valle Property, NI 43-101 Technical Report and Jennings Capital Inc.
The high-purity and metallurgical trials at the pilot plant were conducted using approximately 365 tonnes of material consisting of four different clay families: (1) 46 tonnes of black clay; (2) 46 tonnes of green clay from the periphery of property; (3) 182 tonnes of healthy clay from what appears to be the most prospective area of the site; and (4) 91 tonnes of degraded clay from the surface area. The most promising clay is from the healthy and degraded clay.
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QUANTIFYING THE UPSIDE: NUMEROUS BLUE SKY SCENARIOS

A. Current valuation is easily supported by the anticipated initial 2012 high-purity alumina production. Orbites pilot plant currently has the capacity to produce approximately 1 tonne of highpurity alumina per day, and management plans to expand the capacity to 3 tonnes per day in late 2012/early 2013. Working under the assumption that Orbites high-purity alumina does, in fact, consistently meet industry specifications, and the Company is able to sell its entire output, and using the lowest published high-purity price (given that we do not have sufficient information on the quality, consistency or grain size of Orbites highpurity product), we estimate that Orbite could generate approximately C$50 million in EBITDA in its planned first commercial production in 2012, which translates into only 5.6x Orbites enterprise value. Our valuation is based on a high-purity price of $250 per kilogram, which yields 2012 EBITDA of C$83 million, which is 3.4x the Companys current enterprise value. Orbites valuation based on high-purity in isolation is even more compelling when we look forward to 2013. The Company anticipates high-purity production of 5 tonnes per day in 2013, which equates to approximately $307 million in EBITDA or 0.9x enterprise value. Exhibit 5: Select High-Purity Alumina Prices
Description Alpha-Al2O3 Alpha-Al2O3 Alpha-Al2O3 Alpha-Al2O3 Alpha-Al2O3 Gamma-Al2O3 Gamma-Al2O3 Gamma-Al2O3 Purity 99.999% 99.9% 99.99% 99.99% 99.99% 99.90% 99.99% Particle Size 0.5-10 nm 50.0 nm 0.3-0.8 um 1.5-3.5 um Price US$396 / KG US$221 / KG US$155 / KG US$142 / KG
3.5-15 um US$141 / KG Alpha Average: US$211 / KG 5.0 nm 20.0 nm US$456 / KG US$151 / KG
99.99% 0.4-1.5 um US$153 / KG Gamma Average: US$243 / KG Group Average: Group Median: US$227 / KG US$154 / KG
Source: SkySpring Nanomaterials website (as at September 21, 2011) and Jennings Capital Inc.
Recall that Orbite has produced high-purity in both a lab environment and in its 100%owned pilot plant. According to the Company, the high-purity it has produced meets industry standards for LEDs There is very limited information about the size of the global high purity alumina market; however, the global non-metallurgical market is estimated to be approximately 5.5 million to 5.8 million tonnes per year, and approximately 2.8 million tonnes are considered to be specialty grades (the majority of specialty or premium grade alumina is used in the ceramics and refractory industries). There are numerous existing methods used to produce high-purity alumina, which include thermal decomposition of ammonium alum, thermal decomposition of ammonium aluminum carbonate hydroxide, underwater spark discharge with aluminum, vapor-phase oxidation, and hydrolysis of aluminum alkoxide. However, Orbites method could prove to be the most cost efficient method. It is also worth noting, one of the more beneficial aspects of Orbites process is that it eliminates
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most of the residual iron and other unwanted impurities, which enables the production of high-purity alumina. High-purity alumina demand should benefit from LED growth: High-purity alumina is used in applications requiring high ductility or conductivity. These properties are why high-purity alumina is a key ingredient in sapphire wafers and liquid-crystal polymer, which are key components used in the production of LEDs. In 2010, the global market for LEDs was more than US$10 billion, and it is expected to increase by at least a 20% CAGR between 2011 and 2015. Furthermore, the high-purity alumina required for the sapphire wafers is available from only a handful of producers, which has resulted in exorbitant prices for high-purity alumina with the required density, form factors and purity. Other uses for high-purity alumina include fillers for magnetic media, ceramic substrates and components in semiconductor manufacturing devices. Furthermore, high-purity alumina is also used as a coating in lithium-ion secondary batteries and battery electrodes. Therefore, demand for high-purity alumina could very well be bolstered by growth in demand for electric vehicles and/or hybrid vehicles. B. Metallurgical Alumina; Within 30 km of a 5.5 million tpy market, representing a C$2.5 billion market Orbite expects the first plant to be operational in 2013. As discussed above, Orbites Grand-Valle aluminous clay deposit is within 20 km from a ship loading facility, situated on tidal waters, within a 30 km radius of 10 aluminum smelters in Qubec (not to mentioned two more in upper New York State located on the St. Lawrence Seaway), representing an alumina market of approximately 5.5 million tonnes or 12% of global metallurgical consumption. Exhibit 6: Exploration Orbites Grande-Valle Property Relative to Qubecs 10 Aluminum Smelters
Location of Alumina Smelters
GrandeValle Property
Source: Canadian Minerals Yearbook (2006), Natural Resources Canada, Company reports, and Jennings Capital Inc.
15
Exhibit 7: Alumina Smelters in Qubec

Map Reference Smelter Company Aluminum Capacity Potential Alumina Market
1 2 3 4 5 6 7 8 9 10
Beauharnois Bcancour Shawinigan Lauralco Deschambault Grande-Baie Laterrire Alma Arvida, Jonquire Baie-Comeau Sept-les
Rio Tinto Alcan A.B.I. Rio Tinto Alcan Alcoa-Aluminerie Lauralco Inc. Rio Tinto Alcan Rio Tinto Alcan Rio Tinto Alcan Rio Tinto Alcan Canadian Reynolds Metals (Alcoa) Alouette Total
5,200 t 409,000 t 99,000 t 255,000 t 207,000 t 228,000 t 415,000 t 166,000 t 438,000 t 572,000 t 2,794,200 t
10,400 t 818,000 t 198,000 t 510,000 t 414,000 t 456,000 t 830,000 t 332,000 t 876,000 t 1,144,000 t 5,588,400 t
Source: Canadian Minerals Yearbook (2006) and Jennings Capital Inc.
Having an alumina source in the same province, versus importing from Australia, Brazil and Jamaica, would result in lower alumina costs for the smelters, given that transportation costs can account for as much as 25% of the fob alumina cost, which is currently around $450 per tonne. Exhibit 8: Major Global Sources of Bauxite
Source: Global Alumina Corp. and Jennings Capital Inc.
Given that alumina typically accounts for 38% of the cost to manufacture aluminum (see below), Qubec aluminum smelters could increase their margins by ~9.5% if they sourced Orbites alumina in place of imports (the average aluminum smelter profit margin is approximately 20%). This estimate does not consider the potential saving arising from lower working capital requirements, which would likely result from smelters requiring lower inventory levels. As we have discussed above, samples of Orbites metallurgical alumina have met Aluminerie Alouettes smelter grade alumina content standard of 98.35 wt%, and were used to make aluminum by two different independent entities: (1) Qubecs National Institute of Scientific Research, in May 2011; and (2) SINTEF (the largest independent research organization in Scandinavia) in June 2011.
16
Gauging the Economics We are faced with two significant wildcards in assessing the economic potential of commercial production of smelter-grade alumina employing Orbites technique: The cost of a metallurgical plant and the operating costs. Given that Orbite does not expect to complete a feasibility study until Q2/2012, coupled with the fact that there are no comparable projects which could serve as a proxy, we are forced to make some considerable assumptions. Capex Looking at fairly recent Bayer alumina refinery expansions and greenfield operations, we can see that the average cost per tonne of annual alumina capacity is approximately $900 (see table below). This is consistent with Light Metals 2011, by the Minerals Metals & Materials Society, which states that a typical greenfield bauxite-fed alumina refinery costs approximately $1,100 per tonne of annual capacity. Exhibit 9: Recent Alumina Refinery Expansions and Greenfield Projects
Company Expansion Project Alcoa Rio Tinto Greenfield Project Vale Global Alumina Project Status Capex Initial / Incremental Production 2.0 MM tonnes / year 2.0 MM tonnes / year 1.9 MM tonnes / year 3.3 MM tonnes / year Capex $/tonne
Alumar expansion (Brazil) Yarwun expansion (Australia) CAP (Brazil) Guinea, (Republic of Guinea)
Started Announced Completed Announced
$2.20 Bln $1.90 Bln $2.20 Bln $1.33 Bln
$1,100 per tonne $950 per tonne $1,183 per tonne $404 per tonne
Source: Company news releases and presentations and Jennings Capital Inc.
We expect an Orbite metallurgical plant (including supporting infrastructure) to be considerably lower than these estimates. Our belief is based on our understanding that a commercial scale plant would essentially be a larger scale version of the Cap-Chat pilot plant, and as we understand it, the Cap-Chat plant essentially consists of off the shelf processing components (including reactors). Exhibit 10: Cost Breakdown of Production of One Tonne of Aluminum by Key Inputs
Other Materials, 13%
Carbon, 12%
Labour, 10% Capital Maintenance, 2%
In Aggregate, Alumina and Energy Account for ~63% of the Cost to Produce Aluminum
Energy, 25%
Alumina, 38%
Note: Does not include depreciation and overhead costs. Source: CRU, analyse SECOR and Jennings Capital Inc.
17
Furthermore, Orbites process will not produce toxic red mud and, therefore, costs related to tailings facilities would likely be substantially lower than those of a Bayer process refinery, which are likely to increase in the aftermath of the Ajka alumina plant disaster in October 2010. In our model, we assume that a metallurgical plant employing Orbites process would cost between $750 and $800 per tonne of annual capacity (including the infrastructure costs). Orbite anticipates that a typical metallurgical grade processing plant will have an annual capacity of 580,000 tonnes per year (based on a 350-day year). This translates to a plant costing between C$435 million and C$465 million. Opex We believe that Orbite has the potential to produce metallurgical alumina at a cash cost that is lower than the industrys average cash cost of approximately $230 per tonne. Our reasoning is based on the assumption that Orbites process will require significantly lower energy because of the lower temperatures for leaching (in the Bayer method, the bauxite is leached at ~270o compared to Orbites process which requires only ~150o), coupled with the fact that Orbites process is exothermic. As we have discussed, Orbite expects to have a 99.7% recycling rate of its HCl. Furthermore, Orbites process has the potential to yield numerous valuable by-products, which, if successfully produced and marketed, could completely offset the metallurgical production costs; however, they are not considered in the following valuation. Based on the assumptions discussed above and listed in the table below, and assuming a 20-year plant life, our model indicates that an Orbite metallurgical alumina plant has an NPV10% of approximately C$375 billion and an IRR of 30%. At a metallurgical alumina price of C$450 per tonne, our model yields an NPV10% of $C565 million and an IRR of 44%. Exhibit 11: Key Metallurgical Modeling Assumptions
Met Plant Capacity Price - Metallurgical Prod. Cost - Metallurgical Met Plant Capex Grade (Al2O3) Recovery Debt-to-Equity 580,000 tpa C$400/t C$230/t C$449.0 MM 23.13% 95% 67% Days / year Discount Rate Maintence capex SG&A Mining cost Tax rate Blended CCA Rate 350 days 10% C$2.0 MM C$2.0 MM $2.00 t 35% 25%
Source: Jennings Capital Inc.
Note that a single metallurgical plant with an annual capacity of 580,000 tonnes of alumina represents only ~10% of Qubecs alumina requirement (based on aluminum smelter capacity) and 0.6% of the global alumina requirement. Assuming Orbite captures one-quarter of the Qubec alumina market (a conservative assumption, given the considerable transportation-related cost advantages), Orbite could eventually have as many as three metallurgical plants operating in Qubec. C. Other Potential Revenue Streams Orbites process appears to have several applications for the recovery of valuable elements in addition to alumina, which include the production of rare earths, scandium, gallium, hematite, silica, magnesium oxide and potential patent revenues. With the
18
exception of rare earth oxides/scandium and patent revenue, our model indicates that these by-products or peripheral revenue streams are marginal compared to Orbites overall topline potential. However, the extraction of these commodities through Orbites process will likely come at essentially no additional cost (excluding marketing, storage and handling associated costs).
Exhibit 12: Breakdown of Orbites Potential Revenue Streams

C$4,500 MM
C$4,000 MM
Patent Revenues (Bauxite) Magnesium Oxide Silica Revenues Hematite Revenues
C$3,500 MM
Peripheral Revenues
Rare Earths & Scandium Revenues
C$3,000 MM
C$2,500 MM
Metallurgical Alumina Revenues

C$2,000 MM
C$1,500 MM
Core Revenues
High Purity Alumina Revenues
C$1,000 MM
C$500 MM
C$0 MM
Rare Earth Oxides and Scandium Rare earths and scandium, on the other hand, have the potential to bolster Orbites revenue and EBITDA, if they can be successfully extracted and marketed. Our modelling indicates that rare earths and scandium could potentially contribute up to $200 million per year for each 580,000-tonne per year plant in revenue, based on the grades disclosed in Orbites press releases, a 75% recovery rate and our rare earth and scandium price assumptions. However, the rare earth/scandium element of the Orbite story is largely dependent upon the metallurgical alumina plant coming into fruition; because the grades of both rare earths and scandium are so low, significant clay throughput would be required in order to generate meaningful quantities. Our modelling indicates that this is the case, despite the fact that these elements could potentially be produced at no extra cost.
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Exhibit 13: Aluminous Clay throughput versus Rare Earths and Scandium Revenue
C$18.0 MM 45,000 t/y
C$16.0 MM
40,000 t/y
C$14.0 MM
35,000 t/y
C$12.0 MM
30,000 t/y
Estimate of Rare Earth Revenues
C$10.0 MM
25,000 t/y
C$8.0 MM
20,000 t/y
C$6.0 MM
15,000 t/y
C$4.0 MM
REs & Scandium Revenues Clay Throughput
10,000 t/y
C$2.0 MM
5,000 t/y
C$0.0 MM
t/y
Source: Jennings Capital estimates
Our model indicates that based on expected clay throughput for the production of highpurity alumina in isolation, the production and marketing of the rare earths elements listed in the above table (and of scandium) yield an incremental NPV10% of approximately C$19 million, or a mere C$0.09 per fully diluted share. On the other hand, the construction and subsequent commissioning of a 580,000 tonne per year metallurgical plant paints a very different picture for the contribution of the rare earths and scandium. Assuming a top-end clay throughput of 7.9 million tonnes per year (6,300 tonnes per year of high-purity alumina and 1.74 million tonnes per year of metallurgical alumina), our model indicates that rare earth and scandium production would yield an incremental NPV of approximately C$3.9 billion dollars. After accounting for shareholder dilution estimated to have resulted from financing the construction of three, 580,000-tonne per year capacity metallurgical plants (recall we estimate each plant will cost approximately C$450 million dollars), and assuming a debt-to-equity ratio target of 67%, we estimate that rare earths and scandium could represent an incremental C$13.50 per fully diluted share. Interestingly, if the rare earth and scandium price assumptions listed in the table above come to fruition, we believe that the production of rare earths has the potential to be more economically beneficial than the production of metallurgical alumina. Orbite could derive significant patent revenue Aluminous clay deposits are found in Russia and China, and other aluminous-bearing deposits such as kaolin are found throughout the World in countries such as Australia. If Orbites process can be applied to these deposits for the production of alumina, the Company could derive significant patent revenue. Furthermore, Orbite is conducting pre-pilot tests using its proprietary technology to process bauxite, and although this work is still in early stages, according to the Company, the alumina extraction rate compared favourably with that of its Grande-Valle aluminous clay. This indicates that Orbites patented process could be used to extract
Aluminuos Clay Throughput
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alumina from bauxite and could possibly be a viable substitute for the Bayer process. Economical extraction of alumina from bauxite using an alternative method to the Bayer process has considerable potential, if it can significantly reduce the environmental footprint left by the Bayer process. Waste from Orbites process contains mixed oxides and approximately 50% of this dry material is high-purity silica. It is believed that the silica would require very little treatment before being used as backfill at the mine site, or it could actually be sold as a by-product (Orbite expects to sell the silica at 96% and 99.9% levels of purity). In contrast, the Bayer method creates 1.5 tonnes of a toxic red residue for every tonne of alumina produced. The production of Bayer red mud (70 million tonnes are estimated to be generated annually) has come under considerable scrutiny after the Ajka, Hungary alumina plants tailings reservoir burst in October 2010, causing flooding of the toxic red mud in several villages and resulted in the death of 10 people and 150 injuries. Recently, the Ajka alumina plants owner, Magyar Aluminum, was fined US$648 million for the red mud disaster, and it has been called the worst ecological disaster in Hungarys history. Furthermore, the storage of Bayer red mud is likely to be more challenging given the expected higher levels of aluminum production coupled with declining ore grades. According to Industrial Minerals, there is currently an estimated 3 billion cubic metres of red mud waste, and this is expected to increase to 4 billion cubic metres by 2020. In addition, the Bayer process uses large quantities of electricity because of the higher temperatures during leaching, versus Orbites process, and Orbites process is exothermic. Gauging the Potential Market Patent revenue could range between 3% and 10% of the users top line, if the technology is deemed crucial. We believe that the potential market for existing plant conversions from the Bayer method to Orbites process is limited given the considerable up-front costs, but that the potential for greenfield operations is significant. Currently, approximately half of the worlds alumina smelting capacity is in China, and according to CRU Strategies, the country is expected to account for approximately 43% of alumina refinery capacity. Therefore, there will likely be a need for capacity outside of China. According to alumina industry participants, alumina demand is expected to outstrip supply by 2015, at which time it is estimated that an incremental 4 million tonnes of alumina capacity will be required annually. Based on the current process, this represents an additional C$1.8 billion in industry revenue per year. Assuming a 5% patent fee and a 25% penetration rate, Orbites share would be C$22.5 million per year based on new capacity alone.
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DEVELOPMENT SCHEDULE AND CATALYSTS

High-Purity Alumina Orbite expects to begin commercial production of high-purity alumina during Q3/12, at an initial rate of 1 tonne per day, and this is expected to increase to 3 tonnes per day by the end of Q2/12. Based on the growing market for LEDs and the limited number of high-purity suppliers currently in the market, Orbite anticipates a capacity expansion from 3 tonnes per day to 5 tonnes per day in Q3/13, followed by another expansion to 9 tonnes per day in mid2014. Metallurgical Alumina Orbite recently announced that it selected SMS Siemag AG to perform analyses and process design for the acid recovery portion of the Orbite patented metallurgical process, which is key in the design and subsequent construction of a commercial-scale metallurgical plant. Orbite has also recently issued a call for tender related to the NI 43-101 Feasibility Study for a metallurgical-grade alumina plant. Orbites goal is to have the feasibility study completed by Q2/12. Assuming this goal is achieved, Orbite believes a commercial scale metallurgical plant could be operational by Q3/13. A significant potential catalyst for Orbites stock price is a definitive strategic agreement with an aluminum producer. Given that there are 12 alumina smelters operating in Orbites backyard (10 in Qubec and two in New York State) who currently import their alumina, we believe this is a very real and likely possibility. Exhibit 14: Estimate of Orbites Timeline
2011
Q1 Commissioned Cap-Chat Pilot Plant Produced 1st tonne of High-Purity Alumina Orbite Upgrades Ni 43-101 1st Production of Alumina from ORT Metilurgical 2nd Production of Alumina from ORT Metallurgical Announces C$57.5 MM equity financing Produced Metallurgical Alumina from Bauxite Complete Metallurgical Plant Feasibility Study Initial High-Purity Production (1 TPA) Initial High-Purity Production (3 TPA) Initial High-Purity Production (5 TPA) Initial High-Purity Production (9 TPA) First Metallurgical Alumina Plant Operational Q2 Q3 Q4 Q1
2012
Q2 Q3 Q4 Q1
2013
Q2 Q3 Q4 Q1
2014
Q2 Q3 Q4
Expect to Begin Generating Cash Flow
Source: Company press releases, discussions with management, and Jennings Capital Inc. estimates.
22
BALANCE SHEET, RECENT FINANCINGS, AND PROJECT FINANCING

Balance Sheet As at June 30, 2011, Orbite had 149.7 million Class A common shares outstanding, and issued an additional 17.9 million Class A common shares on July 7, 2011. In aggregate, Orbite has approximately 167.6 million shares outstanding, representing a market capitalization of approximately $350.4 million. As at June 30, 2011, the Company had 13.3 million warrants outstanding with an average exercise price of $0.73, expiring in November 2011 and November 2012. An additional 8.9 million warrants were issued with the July 7, 2011, equity issue. These warrants have an exercise price of C$4.50 and expire in July 2012. As at the end of Q2/2011, Orbite also had approximately 9.9 million options outstanding with an average exercise price of $0.72 and a weighted-average life of approximately four years. Orbite is authorized to issue three classes of shares, although only one class, Class A Shares, is issued and outstanding: Class A shares: Voting, participating, dividend determined by the Companys Board of Directors; Class B shares: 25 votes per share, non-participating, dividend determined by the Companys Board of Directors; Class C shares: To be issued in series. The directors will define the rights and privileges upon issuance. As at June 30, 2011, Orbite had approximately C$2 million in debt (summary provided in the table below). Approximately C$300,000 of the Companys debt is in convertible debentures issued to Aluminerie Alouette under the strategic agreement discussed above. The debentures mature in 2015, and can be converted into Class A shares between November 2011 and November 2014, at the market price less a 15% to 25% discount (minimum conversion price is C$0.75. Orbite also received interest-free loans from both the Qubec government and the Canadian federal government. The Provincial loan is repayable 36 months after the disbursement of the proceeds and the Federal loan is repayable over a five year period following the completion of the Cap-Chat pilot plant. Exhibit 15: Summary of Orbites Debt
Convertible Debentures Government Loans Secured Loans Short-term Proportion of Long-term Debt
Source: Company reports and Jennings Capital Inc.
C$0.304 MM C$1.69 MM C$0.02 MM (C$0.01 MM) C$2.00 MM
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Recent Financings Since August 2010, Orbite has raised approximately C$72 million in equity. Prior to the most recent financing discussed below, Orbite had approximately C$18.5 million in cash (C$17.2 million of which was in short-term investments). We estimate that the Company currently has C$71 million in working capital. July 7, 2011: Orbite issued 17.9 million special warrants (including an exercised 15% overallotment options), at C$3.20 per special warrant, for gross proceeds of approximately C$57.5 million. Each special warrant consists of one class A share and one-half share purchase warrant. Full warrants have an exercise price of C$4.50 per Class A share and expire on July 7, 2012 (if the volume weighted average price of the Class A shares exceeds C$7.50 for a consecutive ten-day trading period at the end of the four-month and one day hold period, Orbite has the option to force the conversion). November 23, 2010: Orbite issued 3,371,111 units through a private placement financing at C$0.45 per unit, for gross proceeds of approximately C$1.5 million. Each unit consisted of one Class A share and one-half purchase warrant with an exercise price of C$0.75 per warrant for 12 months following closing of the financing, or C$0.85 over the 12 month period thereafter. On November 5, 2010: Orbite issued 27 million units through a private placement financing at C$0.45 per unit, for gross proceeds of approximately C$12.2 million. Each unit consisted of one Class A share and one-half purchase warrant with an exercise price of C$0.75 if exercised 12 months following closing, or C$0.85 over the 12 month period thereafter. August 16, 2010: Orbite issued 470 units through a private placement financing at C$1,500 per unit, for gross proceeds of C$705,000. Each unit consisted of 8,000 flow-through Class A shares (C$0.15 per share), 2,000 non flow-through Class A shares (C$0.15 per share), and 5,000 full purchase share warrants with a C$0.21 exercise price and 12-month expiration. Project Financing Orbite intends to use approximately C$20 million to convert its Cap-Chat pilot plant into a commercial facility for the production of high-purity alumina. This C$20 million is expected to be allocated in 2011 and the first half of 2012. Given the sizable margins we expect the high-purity to yield (even using very conservative pricing assumptions), we anticipate Orbites Cap-Chat plant to be cash flow positive almost at the outset of commercial production, which we expect to commence in Q3 or Q4 of 2012. This essentially leaves Orbite with approximately C$50 million in cash (including cash equivalents) for the preparation of its planned metallurgical alumina plant. As we discussed above, we estimate that a metallurgical plant with 580,000 tonne per year capacity will cost between C$435 million and C$465 million, which includes all related infrastructure.
24
KEY INVESTMENT RISKS

Market for Both High-Purity and Metallurgical Alumina At the time this report was authored, Orbite did not have definitive sale agreements. Until Orbite has an agreement in place and/or has begun selling its products, we feel there is a considerable risk regarding the quality and consistency for both of Orbites alumina grades. Furthermore, although market prices for high-purity alumina currently average $396 per kilogram, from the limited data available there appears to be considerable variability, which is dependent upon the quality of the alumina and grain size. Market Price for Both High-Purity and Metallurgical Alumina Historically, the price of alumina has been highly positively correlated to the price of aluminum. Although many aluminum and alumina producers are now pricing alumina based on an index related to alumina spot market sales as well as long-term contracts versus the historical practice of alumina prices being pegged to aluminum metal prices, lower aluminum prices could have a negative impact on the price of metallurgical alumina. As discussed above, the price paid for high-purity alumina is dependent on quality and grain size. Mineral Exploration and Mining Associated Risks The economic value of Orbites Grand-Valle property hinges upon the Companys success in commercially producing high-purity and/or metallurgical alumina. Although the property appears to be highly homogenous, one of three sections has been the primary focus of exploration to date. Furthermore, Orbite completed an application for mining permits on September 14, 2011. Although the Qubec Government has been very supportive of the project, there can be no assurances that these permits will be granted. Financial Risk Although Orbite currently has C$71 million in working capital, we estimate a 580,000tonne per year metallurgical alumina plant will cost between C$435 and C$465 million. Therefore, Orbite will be dependent upon the capital markets to finance a proportion of its first (and likely second) planned plant. Furthermore, although we anticipate that Orbite will begin generating cash flow during the third or fourth quarter of 2013, there is always the chance this will not materialize and Orbite would then be dependent upon the capital markets to fund its daily operations. Regulatory Compliance, Permitting Risks and Environmental Liability As with all exploration, development and mining activities, Orbites operations are subject to both federal and provincial laws and regulations. The costs associated with acting in accordance with these laws and regulations are significant. Furthermore, delays associated with compliance with these laws and regulations could result in Orbite not being able to proceed with the development of its operations. Environmental The industry is also subject to environmental regulation under federal, provincial and local jurisdictions. Legislation can require significant expenditures, and any breach of specified restriction or prohibition may result in fines and/or penalties. Furthermore, as environmental legislation evolves, it is possible that stricter standards and enforcements may be implemented. This could potentially result in larger fines and liabilities, which could increase capital expenditures and operating costs.
25
VALUATION AND RECOMMENDATION

We are initiating coverage on Exploration Orbite with a SPECULATIVE BUY recommendation and 12-month target price of C$8.00. Our target price is based on a blend of: (1) Our NAV10% estimate of C$30.00 per fully diluted share for high-purity and metallurgical alumina risked at 30%; and (2) A 7.0x multiple applied to our FY2013 CFPS estimate for high-purity alumina alone, which is C$0.1.25. Our NAV valuation is based on high-purity and metallurgical alumina. Based on high-purity and metallurgical production alone, our model yields a net asset value per fully diluted share (including shareholder dilution arising from expected future financings) of C$30.00. If we include the potential revenues from rare earth oxides, scandium, patents, hematite, silica and magnesium oxide, our model yields a net asset value per fully diluted share of C$46.00. Our NAV model is based on a top-end high-purity alumina capacity of 18 tonnes per day or 6,300 tonnes annually, which we expect to be achieved in 2017, and a total of three 580,000-tonne per year capacity metallurgical plants in operation by 2017 (this represents approximately 30% of Qubecs annual alumina requirement). Cash flow-based valuation is based on our F2013 estimate for high-purity alumina production alone. Although Orbite anticipates commercially producing metallurgical alumina during 2013, production is not expected to commence until the fourth quarter. Given the early stages of this large scale development (the Company only recently issued a call for tender related to the NI 43-101 Feasibility Study for a metallurgical-grade alumina plant), we have only included high-purity for F2013. If Orbites alumina extraction process produces a consistent, high-quality product meeting industry specifications for a sufficient period at lower operating costs, the upside to this story is nothing short of huge, as the Company could very well revolutionize the aluminum industry $37 billion per year industry - which appears to be searching for a remedy to the production of Bayer red mud.
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APPENDIX A: TYPICAL EXTRACTION RATES FOR ALUMINUM & IRON AND THE COMPOSITION OF THE GRAND VALLE CLAY
Exhibit A1: Typical Extraction Rates for Alumina and Iron from Grand Valle Aluminous Clay
Note: Based on production from Orbites pilot line. Source: Grand Valle property NI 43-101 Technical Report (modified by Jennings Capital Inc.)
Exhibit A2: Composition of the Clay

Al2O3 mol
Kaolinite Argilites vertes Argilites rouges Illite Muscovite Argilites mixtes Argilites noiratres Argilites brunatres Argilites fragmentaires rouges
Feldspath
Smectites
Chlorites
Olivine Px
CaO+Na2O+K2 O mol.
FeO*+MgO mol.
Source: Company presentation
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APPENDIX B: ORBITES PATENTS AND PENDING PATENTS

Date Issued / Filed
Description
Patent / Application
Pending Jurisdictions
Processes for extracting aluminum and iron from aluminums ores Improvements to Orbite's alumina preparation process Processes for extracting rare earth elements from aluminous-bearing ores Process fro extracting rare earths from various minerals New technological process related to the production of hematite from iron Separation methods used for iron-aluminum mixtures
US 7837961 CA 268696 US 91/415,473
Nov-10 Nov-10 Nov-10
Australia, Brazil, China, Europe, India, Japan, Russia and Hong Kong
Patent may be filed in other jurisdictions
US 61/454,211
Apr-11
Patent may be filed in other jurisdictions
US 61/482,253
May-11
na
US 61/493, 018
Jun-11
na
US 61/508,950
Jul-11
na
Source: Company reports and press releases and Jennings Capital Inc.
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APPENDIX C: SELECT RARE EARTH OXIDE HISTORICAL PRICES

Exhibit C1: Gallium 99.99%, China Domestic Market
US$500
Exhibit C2: Dysprosium Oxide 99.5% 99.9%, China Domestic Market

US$1,000
Low
US$450
US$900
Low High
US$800
High
US$400
US$350
US$700
US$300
US$600
USD / lb
USD / lb
US$250
US$500
US$200
US$400
US$150
US$300
US$200
US$100
US$100
US$50
US$0
US$0
Exhibit C3: Yttrium Oxide 99.99% - 99.999%, China Domestic Market

US$40
Exhibit C4: Neodymium Oxide, China Domestic Market

US$120
Low Low
US$35
High
US$30
US$100
High
US$80 US$25
USD / lb
USD / lb
US$20
US$60
US$15 US$40
US$10 US$20 US$5
US$0
US$0
Exhibit C5: Praseodymium Oxide, China Domestic Market

US$90
Exhibit C6: Lanthanum Oxide, China Domestic Market

US$14
Low
US$80
Low
US$12
High High
US$70 US$10 US$60
USD / lb
US$40
USD / lb
US$50
US$8
US$6
US$30 US$4 US$20 US$2 US$10
US$0
US$0
Source: MetalPrices.com and Jennings Capital Inc.

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APPENDIX D: HISTORICAL METALLURGICAL ALUMINA AND ALUMINUM PRICES

Exhibit D1: Historical Alumina Prices, Chinese Metallurgical
US$650 US$600
US$550
US$500
USD / tonne
USD / tonne
US$450
US$400
US$350
US$300
US$250
US$200
Source: Bloomberg, Metals Bulletin, and Jennings Capital Inc.
Appendix D2: Historical Aluminum Prices- LME Cash Official

US$3,500
US$3,000
US$2,500
US$2,000
US$1,500
US$1,000
Source: MetalPrices.com and Jennings Capital Inc.
30
APPENDIX E: SENIOR MANAGEMENT

Mr. Richard Boudreault, M.Eng, MBA, Adm.A., President, CEO, and Director: Richard Boudreault has been President of Orbite since 2007. He has had considerable experience with start-up and growth companies in the new materials sector. He has a Master of Engineering degree from Cornell University and an MBA from Universit de Sherbrooke. Over the years, Mr. Boudreault has worked in technology-related positions for numerous companies, such as SOFINOV (a subsidiary of the Caisse de dpt et placement du Qubec), Oerlikon Aerospace and the Canadian Space Agency. Mr. Jacques Bdard, Vice President of Finance and CFO: Jacques Bdard is a senior executive officer with more than 25 years of international financial management experience in the high technology, multimedia and medical devices sector. His rsum includes terms as Vice President Finance and CFO for companies such as Softimage and ART, and he has also held senior financial management positions with Microsoft, among others. He has been with Orbite since November 24, 2010, as Vice President of Finance and Chief Financial Officer. Dr. Jol Fournier, Vice President of Technology and CTO: Jol Fournier is responsible for all aspects related to the development, scaling and implementation of Orbite technologies. He has a Ph.D. in physical chemistry from Universit de Sherbrooke and a post doctorate degree from the INRS Energy and Materials Institute. Over the past fifteen years, Dr. Fournier has published close to forty papers, has authored four patents and has completed more than thirty industrial research projects. Within numerous industrial projects, Dr Fournier has been involved in those related to new technologies for aluminum production. Prior to joining Orbite, Dr. Fournier was CEO of the CEPROCQ research centre, participating in Orbites technology development. Dr. Marc Filion, PhD, MBA, Eng., Executive Strategic Advisor: Dr. Filion was president and Chief Operating Officer of SGF Mineral Inc. from 1998 to 2004, and Senior Vice President, Investments for Mines, Minerals and Materials for "Socit Gnrale de Financement du Qubec" (SGF) from 2004 to 2006. He was also actively involved in promoting the development, financing and construction of Phase II of the Alouette aluminum smelter, and brings in-depth knowledge of the alumina/aluminum industry to Orbite. Dr. Filion holds a B.Sc. in geology from cole Polytechnique at the University of Montral, a Ph.D. in economic geology and geostatistics from the Royal School of Mines, Imperial College, London, England, and an MBA from cole des Hautes tudes Commerciales in Montral, Qubec. Pierre Desprs, LL.L., Advisor: Mr. Desprs holds a law degree from Universit Laval and advises Orbite on public affairs issues. Mr. Desprs is a seasoned public affairs and communications expert. He held the position of Vice-President, Communications, at Alcoa Global Primary Products, and has served on various boards of directors of business associations such as the Conseil du Patronat du Qubec and the Fdration des chambres de commerce du Qubec. Guy Boucher, LL.L, Legal Counsel and Head of Sustainable Development: Mr. Boucher has extensive experience in legal affairs and sustainable development as a senior executive. Prior to joining Orbite, Mr. Boucher worked for Domtar, where he held top executive positions such as Vice President, Sustainable Development and Vice President, Legal Services and Environmental Affairs. Mr. Boucher holds a licence in civil law from the Barreau du Qubec and a Bachelor of Business Administration (B.B.A.) from the University of Ottawa.
31
Mr. Denis Primeau, MBA, Chief Engineer: Mr. Primeau has more than 30 years experience in the chemical and petrochemical industries, and has been involved in the construction, commissioning, and optimization of various chemical processes. He was an important member of Rio Tintos team during the construction and commissioning of a plant for the enrichment of minerals and in the recycling of hydrochloric-based materials. Mr. Primeau is a Member of the Ordre des ingnieurs du Qubec, and holds a Bachelor of Science in chemical engineering and a Master of Business Administration from the University of Sherbrooke.
32
APPENDIX F: BOARD OF DIRECTORS

Mr. Lionel Lveill, Chairman of the Board of Directors: Mr. Lveill was President and CEO of Adacel Inc. from February 2001 to July 2005. He has held numerous positions in both the military and aerospace industries, including President of Raytheon Canada and Vice-President of Bombardier and of Oerlikon Aerospace. Mr. Richard Boudreault, M.Eng, MBA, Adm.A. President, CEO, and Director: See above biography. Mr. Charles Chevrette MBA, Director: Mr. Chevrette is a lawyer and member of the Qubec Bar. He also has an MBA from the University of Ottawa. Mr. Chevrette is an Associate of McMillan SENCRL. Throughout his career, he has worked on numerous corporate financings, mergers-acquisitions and transfers of technology, acting for private companies, institutional investors and university entities. More specifically, he has been involved in several industrial-technology enhancement projects. Mr. Chevrette also served in the Cabinet of Qubec under Premier Lucien Bouchard. Dr. Toby Gilsig, Director: Dr. Gilsig has a degree in electrical engineering from McGill University and a doctorate from the Imperial College of the University of London, where he received an Athlone research grant. He is a member of the Qubec Order of Engineers, an honorary member of the IEEE and a Fellow of the Canadian Academy of Engineering, in addition to having received the Manning Award for Innovation in 1995. Previously, he was CEO of M3i Systems Inc., which he co-founded, and prior to this he held a number of management posts at Hydro-Qubec, including Vice-President of Research and Director of the Institut de rchrche dHydro-Qubec. Mr. Pierre Meunier, Director: Mr. Meunier is a lawyer and an Associate and Strategic Consultant at Fasken Martineau S.E.N.C.R.L., s.r.l. He held several senior posts at the Government of Qubec, including Vice-President and founder of the Commission des Services Juridiques, Director of the Centre Communautaire de l'aide Juridique de Montral, President of the Office de la Protection du Consommateur, acting Deputy Minister for the Ministry of Housing and Consumer Protection, and acting Deputy Minister for the Ministre de l'Environnement. Mr. Meunier is Chairman of the Board of Directors of the Fondation des Musums nature de Montral, member of the Board of Directors of the Institut de Rchrche en Biologie Vgtale (IRBV), part of the Universit de Montral, and member of the Board of Directors and Treasurer of ditions Protgez-Vous. Mr. Christian Van Houtte, Director: Mr. Van Houtte was the President and Chief Executive Officer of the Aluminum Association of Canada for 18 years. He previously held various executive positions in the aluminum industry, including Senior Vice President of the Bcancour Smelter (ABI) facility. He has also held senior management positions for a number of major organizations, including Canadair, the Cliche Commission, Northern Telecom and the Socit de Dveloppement de la Baie James. Mr. Stphane Bertrand, Director: Mr. Bertrand assumed the role of Chief Executive Officer for the World Energy Congress Montral 2010 in November 2007. From 2003 through 2007, he was Chief of Staff for the Premier of Qubec. Prior to his role as Chief of Staff, Mr. Bertrand was an executive with Gaz Mtro Inc.
33
APPENDIX G: PRODUCTION ASSUMPTIONS

Exploration Orbite (TSX.ORT.A) Fiscal Year End: Dec. 31 Year 1 2011 Year 2 2012 Year 3 2013 Year 4 2014 Year 5 2015 Year 10 2020 Year 15 2025 Year 20 2030 Year 25 2035 Year 30 2040 Year 35 2045 Year 40 2050 Year 43 2053
Aluminums Clay
Reserves / Resource: Opening Balance Ending Balance Clay Mined: High Purity Metallurgical Total: Production: High Purity
Y/Y Change
1,000 MM t 1,000 MM t 0.00 MM t 0.00 MM t 0.0 MM t t/y

na
1,000 MM t 1,000 MM t 0.00 MM t 0.00 MM t 0.0 MM t 350 t/y

# DIV/0!
1,000 MM t 999 MM t 0.01 MM t 0.66 MM t 0.7 MM t 1,400 t/y

300%
999 MM t 997 MM t 0.01 MM t 2.64 MM t 2.7 MM t 3,150 t/y

1 25%

44%

0%

0%

0%

0%

0%

0%

0%

0%
Metallurgical
Y/Y Change
0 t/y
na
t/y
na
145,000 t/y
na
580,000 t/y
300%
870,000 t/y
50%
1,740,000 t/y
0%
1,740,000 t/y
0%
1,740,000 t/y
0%
1,740,000 t/y
0%
1,740,000 t/y
0%
1,740,000 t/y
0%
1,740,000 t/y
0%
1,740,000 t/y
0%
Pricing: High Purity / Kg Metallurgical
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
C$250,000/t C$250/Kg C$400/t
Rare earth and Scandium

Clay Throughput per day Recovery Grades Gallium Scandium Dysprosium Yttrium Neodymium Praseodymium Lanthanum Output Gallium Scandium Dysprosium Yttrium Neodymium Praseodymium Lanthanum Pricing Gallium Scandium Dysprosium Yttrium Neodymium Praseodymium Lanthanum 0 MM t 0 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t kg kg kg kg kg kg kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 0 MM t 0 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t kg kg kg kg kg kg kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 1 MM t 1,904 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 18,863 kg 9,184 kg 4,964 kg 23,828 kg 33,508 kg 9,184 kg 37,727 kg g C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 3 MM t 7,583 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 75,636 kg 36,823 kg 19,904 kg 95,540 kg 134,353 kg 36,823 kg 151,271 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 4 MM t 11,371 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 113,431 kg 55,223 kg 29,850 kg 143,281 kg 201,489 kg 55,223 kg 226,861 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg 8 MM t 22,707 / day 75% 38 g /t 19 g /t 10 g /t 48 g /t 68 g /t 19 g /t 76 g /t 226,498 kg 110,269 kg 59,605 kg 286,103 kg 402,332 kg 110,269 kg 452,996 kg C$759 /kg C$2,080 /kg C$1,550 /kg C$59 /kg C$181 /kg C$141 /kg C$22 /kg
Other - Patent (Bauxite)

Global Bauxite Market % used for Alumina Bauxite / Alumina Alumina price Potentail Market Orbite Penitration Rate Patentant Royalty 100 MM t 85% 85 MM t C$400/t C$34,000 MM 0% 5% 100 MM t 85% 85 MM t C$400/t C$34,000 MM 0% 5% 101 MM t 85% 86 MM t C$400/t C$34,340 MM 0% 5% 102 MM t 85% 87 MM t C$400/t C$34,683 MM 2% 5% 103 MM t 85% 88 MM t C$400/t C$35,030 MM 4% 5% 108 MM t 85% 92 MM t C$400/t C$36,817 MM 7.5% 5% 114 MM t 85% 97 MM t C$400/t C$38,695 MM 10.0% 5% 120 MM t 85% 102 MM t C$400/t C$40,669 MM 12.5% 5% 126 MM t 85% 107 MM t C$400/t C$42,744 MM 0.0% 5% 132 MM t 85% 112 MM t C$400/t C$44,924 MM 0.0% 5% 139 MM t 85% 118 MM t C$400/t C$47,215 MM 0.0% 5% 146 MM t 85% 124 MM t C$400/t C$49,624 MM 0.0% 5% 150 MM t 85% 128 MM t C$400/t C$51,128 MM 0.0% 5%
Other - Hematite
Grade Yield Output Price 9% 98% C$0/t C$200/t 9% 98% 0.0 MM t C$200/t 9% 98% 0.1 MM t C$200/t 9% 98% 0.2 MM t C$200/t 9% 98% 0.4 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t 9% 98% 0.7 MM t C$200/t
Other - Silica
Grade Recovery Output Price 50% 95% 0 MM t C$35/t 50% 95% 0 MM t C$35/t 50% 95% 0 MM t C$35/t 50% 95% 1 MM t C$35/t 50% 95% 2 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t 50% 95% 4 MM t C$35/t
Magnesium Oxide
Grade Recovery Output Price 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t 1.5% 98% 0 MM t C$35/t
34
APPENDIX H: PROJECTED INCOME AND FREE CASH FLOW

Exploration Orbite (TSX.ORT.A) Fiscal Year End: Dec. 31 Year 1 2011 Year 2 2012 Year 3 2013 Year 4 2014 Year 5 2015 Year 10 2020 Year 15 2025 Year 20 2030 Year 25 2035 Year 30 2040 Year 35 2045 Year 40 2050 Year 43 2053
Income Statement
Core Revenues: High Purity Metallurgical Sub-Total: Peripheral Revenues Rare earth and Scandium Patent - Bauxite Hematitte Silica Magnesium Oxide % of total revenue Total Revenues Expenses: Min. & Trans - High Purity Min. & Trans - Metallurgical Processing - High Purity Processing - Metallurgical Total: SG&A EBITDA
EB ITDA M argin - Co re EB ITDA M argin - To tal:
C$0.0 MM C$0.0 MM C$0 MM C$0.0 MM C$0.0 MM C$0.0 MM C$0.0 MM C$0.0 MM C$0 MM #DIV/0! C$0.0 MM C$0.0000MM C$0.00MM C$0.0MM C$0.0MM C$0.0MM (C$4.0 MM) (C$4.0 MM)
# DIV/0! # DIV/0!
C$87.5 MM C$0.0 MM C$88 MM C$0.0 MM C$0.0 MM C$0.0 MM C$0.0 MM C$0.0 MM C$0 MM 0.1% C$87.6 MM (C$0.00319 MM) C$0.00000MM (C$0.43750 MM) C$0.00000MM (C$0.4 MM) (C$4.0 MM) C$83.1MM
95.0% 94.9%
C$350.0 MM C$58.0 MM C$408 MM C$50.7 MM C$0 MM C$12 MM C$11 MM C$0 MM C$73.9 MM 15.3% C$481.9 MM (C$0.01 MM) (C$1.32 MM) (C$1.8 MM) (C$36.3 MM) (C$39.3 MM) (C$4.0 MM) C$438.5MM
89.4% 91 .0%
C$787.5 MM C$232.0 MM C$1,020 MM C$203.3 MM C$35 MM C$47 MM C$44 MM C$1 MM C$330 MM 24.5% C$1,349.8 MM (C$0.03 MM) (C$5.28 MM) (C$3.9 MM) (C$145.0 MM) (C$154.2 MM) (C$4.0 MM) C$1,191.5MM
84.5% 88.3% 3.8%
C$1,137.5 MM C$348.0 MM C$1,486 MM C$304.9 MM C$70 MM C$70 MM C$66 MM C$2 MM C$513 MM 25.7% C$1,998.8 MM (C$0.04 MM) (C$7.92 MM) (C$5.7 MM) (C$217.5 MM) (C$231.1 MM) (C$4.0 MM) C$1,763.7MM
84.2% 88.2% 4.1 %
C$1,575.0 MM C$696.0 MM C$2,271 MM C$608.7 MM C$138 MM C$140 MM C$132 MM C$4 MM C$1,023 MM 8.4% C$3,294.2 MM (C$0.06 MM) (C$15.84 MM) (C$7.9 MM) (C$435.0 MM) (C$458.8 MM) (C$4.0 MM) C$2,831.4MM
79.6% 86.0% 6.3%
79.6% 86.2% 6.6%
79.6% 86.4%
79.6% 85.3%
79.6% 85.3%
79.6% 85.3%
79.6% 85.3%
79.6% 85.3%
Depreciation / Depletion EBIT Interest Expense EBT Current Income Tax Future Income Tax Tax Rate Net Incom e EPS Operating Cash Flow CFPS
C$0.00 MM (C$4.0 MM) C$0.0 MM (C$4.0 MM) C$1.4 MM C$0.0 MM

35.0%
(C$0.00 MM) C$83.1 MM (C$0.1 MM) C$83.0 MM (C$27.7 MM) (C$1.4 MM)
35.0%
(C$0.56 MM) C$438.0 MM (C$5.3 MM) C$432.6 MM (C$141.4 MM) (C$10.0 MM)
35.0%
(C$4.19 MM) C$1,187.3 MM (C$10.0 MM) C$1,177.3 MM (C$385.0 MM) (C$27.0 MM)
35.0%
35.0%
35.0%
35.0%
(C$26.28 MM) C$2,921.3 MM C$0.0 MM C$2,921.3 MM (C$1,012.1 MM) (C$10.3 MM)

35.0%
(C$26.79 MM) C$2,666.6 MM C$0.0 MM C$2,666.6 MM (C$923.7 MM) (C$9.6 MM)

35.0%

35.0%

35.0%

35.0%

35.0%
(C$2.6 MM) (C$0.01) (C$2.6 MM) (C$0.01)
C$54.1 MM C$0.19 C$55.4 MM C$0.28
C$286.5 MM C$0.98 C$297.1 MM C$1.30
C$775.3 MM C$2.66 C$806.5 MM C$3.23
C$1,145.3 MM C$3.93 C$1,194.9 MM C$4.49
C$1,828.8 MM C$6.27 C$1,878.7 MM C$6.45
C$1,860.3 MM C$6.38 C$1,899.4 MM C$6.52
C$1,898.8 MM C$6.51 C$1,935.5 MM C$6.64
C$1,733.3 MM C$5.95 C$1,769.7 MM C$6.07
C$1,732.9 MM C$5.94 C$1,770.0 MM C$6.07
C$1,731.2 MM C$5.94 C$1,772.6 MM C$6.08
C$1,724.2 MM C$5.92 C$1,781.5 MM C$6.11
C$1,698.2 MM C$5.83 C$1,810.6 MM C$6.21
Free Cash Flow (C$M)

Free Cash Flow to Equity Net Income Future Income Taxes Depreciation CAPEX Change in Net WC Net Debt Issue (Repayment) Free Cash Flow to Equity FCEPS Free Cash Flow to Firm EBITDA Current Taxes CAPEX Change in Net WC Free Cash Flow to Firm FCFPS (C$4.0 MM) C$1.4 MM C$9.5 MM (C$0.4 MM) C$6.6 MM C$83.1 MM (C$27.7 MM) C$14.5 MM (C$0.7 MM) C$69.3 MM C$438.5 MM (C$141.4 MM) C$235.5 MM (C$23.6 MM) C$509.0 MM C$1,191.5 MM (C$385.0 MM) C$231.5 MM (C$23.0 MM) C$1,015.1 MM C$1,763.7 MM (C$568.8 MM) C$229.5 MM (C$23.0 MM) C$1,401.4 MM C$2,831.4 MM (C$952.7 MM) C$0.0 MM C$0.0 MM C$1,878.7 MM C$2,886.9 MM (C$987.4 MM) C$0.0 MM C$0.0 MM C$1,899.4 MM C$2,947.6 MM (C$1,012.1 MM) C$0.0 MM C$0.0 MM C$1,935.5 MM C$2,693.4 MM (C$923.7 MM) C$0.0 MM C$0.0 MM C$1,769.7 MM C$2,693.4 MM (C$923.4 MM) C$0.0 MM C$22.5 MM C$1,792.5 MM C$2,693.4 MM (C$920.8 MM) C$5.0 MM C$0.0 MM C$1,777.6 MM C$2,693.4 MM (C$911.8 MM) C$10.0 MM C$0.0 MM C$1,791.5 MM C$2,693.4 MM (C$882.8 MM) C$13.0 MM C$117.1 MM C$1,940.7 MM
(C$2.6 MM) C$0.0 MM C$0.0 MM (C$9.5 MM) (C$0.4 MM) C$0.0 MM (C$12.5 MM)
C$54.1 MM C$1.4 MM C$0.0 MM (C$14.5 MM) (C$0.7 MM) C$1.3 MM C$41.6 MM
C$1,145.3 MM C$40.2 MM C$9.4 MM (C$229.5 MM) (C$23.0 MM) C$68.9 MM C$1,011.4 MM
C$1,828.8 MM C$24.3 MM C$25.6 MM C$0.0 MM C$0.0 MM (C$46.8 MM) C$1,831.9 MM
C$1,860.3 MM C$13.2 MM C$25.9 MM C$0.0 MM C$0.0 MM (C$22.1 MM) C$1,877.3 MM
C$1,898.8 MM C$10.3 MM C$26.3 MM C$0.0 MM C$0.0 MM C$0.0 MM C$1,935.5 MM
C$1,731.2 MM C$11.3 MM C$30.0 MM (C$5.0 MM) C$0.0 MM C$0.0 MM C$1,767.6 MM
35
APPENDIX I: LIST OF GLOBAL ALUMINA SMELTERS

Refinery Name Abbott Point Gove Alumina Kwinana Alumina Other Australia Ala Pinjarra Alumina QAL Alumina Rio Tinto Yarwun Wagerup Alumina Worsley Alumina Gjandia Alumina Birac Alumina Mostar Alumina ABC Alumina Project Alumar Alumina Alunorte Alumina Other Brazil Ala Ouro Preto Alumina Para Alumina Company (CAP) Pocos de Caldas Alumina Sorocaba Alumina Other Cameroon Ala Vaudreuil Alumina Chalco Chongqing Chalco Guangxi Huayin Chalco Guangxi Pingguo Alumina Chalco Guizhou Alumina Chalco Henan Zhengzhou Alumina Chalco Henan Zhongzhou Alumina Chalco Shandong Alumina Chalco Shanxi Alumina Chalco Xingxian Chalco Zhengzhou Light Metal Chalco Zunyi Chongqing Bosai Chongqing Dingtai Tuoyuan Guanlv Henan Dengfeng Henan Luoyang Dongyangguang Henan Luoyang Xiangjiang Wanji Henan Pingdingshan Huiyuan Henan Sanmenxia (Baotou) East Hope Henan Sanmenxia Kaiman (Coalmine) Henan Sanmenxia Yixiang Henan Yimei Hexiang Jinzhong (East Hope) Lubei Huagong Other China Ala Qingzhen Shandong Chiping Xinfa Huayu Shandong Nanshan Shandong Weiqiao Shanxi Jiaokou Alumina Shanxi Luneng Jinbei Shanxi Tongde Shanxi Wusheng Shanxi Yangquan Wenshan Alumina Wuchuan Xiaoyi Daxiaobao Xiaoyi Huaqing Country Australia Australia Australia Australia Australia Australia Australia Australia Australia Azerbaijan Bosnia & Herzegovina Bosnia & Herzegovina Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Cameroon Canada China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China China Owners Chalco AMP Limited, CSR Limited, and Rio Tinto Group Alcoa Inc, and Alumina Limited NA Alcoa Inc, and Alumina Limited (Private), Kaiser Aluminum Corp, Rio Tinto Group, and United Company Rusal Rio Tinto Group Alcoa Inc, and Alumina Limited Alcoa Inc, BHP Billiton Limited, Kobe Alumina Associates, and Sojitz Corporation Azeralyuminii Ukio Bankas AB Mostar Aluminium Chalco, and Vale S.A Alcoa Inc, Alumina Limited, BHP Billiton Limited, and Rio Tinto Group Japan Alunorte Investment Co, Mitsubishi Corporation, Mitsui & Co Ltd, Nippon Amazon Aluminium Co., Ltd., Norsk Hydro ASA, Vale S.A, and Votorantim Group NA Novelis Inc. Dubai Aluminium Co., Norsk Hydro ASA, and Vale S.A Alcoa Inc Votorantim Group NA Rio Tinto Group Chalco Chalco, China Minmetals Corporation, and Guangxi Investment Group Company Limited (Co., Ltd.) (Government), and Chalco (Government), and Chalco Chalco Chalco (Government), ArcelorMittal, and Chalco (Government), and Chalco National Aluminium Company Limited (NALCO) Chalco Chalco BOSAI Minerals Group Co., Ltd. (Private) NA NA (Private) NA NA (Private), East Hope Group, and Huanghe Aluminium & Power Group (Private) NA (Private) NA NA NA NA NA Chiping Xinfa Aluminium Product Co., Ltd. Shandong Nanshan Aluminium Co., Ltd. (Private) (Private) (Government), and (Private) NA NA Yankuang Group Co. Ltd. Yunnan Aluminum Co. Ltd. NA NA NA Refinery Name Xiaoyi Tianyuan Gardanne Alumina Stade Alumina Distomon Alumina Fria Alumina Sangaredi Ajka Alumina Magyarovar Alumina Aditya Country China France Germany Greece Guinea Guinea Hungary Hungary India Owners NA Rio Tinto Group Alcoa Inc, Dadco Alumina and Chemicals Ltd, and Norsk Hydro ASA Mytilineos Holdings S.A. (Government), ArcelorMittal, and United Company Rusal BHP Billiton Limited, Dubai Aluminium Co., Global Alumina Corporation, and Mubadala MAL Magyar Aluminium Termelo es Kereskedelmi Zrt. MAL Magyar Aluminium Termelo es Kereskedelmi Zrt. Hindalco Industries Ltd (Private) National Aluminium Company Limited (NALCO) (Private), and Hindalco Industries Ltd National Aluminium Company Limited (NALCO) (Government), and Vedanta Resources PLC (Government), and Vedanta Resources PLC (Government), and Vedanta Resources PLC (Private), and Hindalco Industries Ltd Vedanta Resources PLC NA Hindalco Industries Ltd Hindalco Industries Ltd Iran Alumina Company Glencore International AG, and United Company Rusal (Private), Glencore International AG, Rio Tinto Group, and United Company Rusal Glencore International AG, Kaiser Aluminum Corp, Norsk Hydro ASA, and United Company Rusal (Government), Glencore International AG, and United Company Rusal (Government), Alcoa Inc, and Alumina Limited (Government), Glencore International AG, and United Company Rusal Sumitomo Chemical Company Limited Showa Denko K.K Nippon Light Metal Co., Ltd. Eurasian Natural Resources Corporation PLC (Government), Kombinat Aluminijuma AD Podgorica, and United Company Rusal ArcelorMittal, and United Company Rusal (Private), and Vimetco NV ArcelorMittal, and United Company Rusal ArcelorMittal, and United Company Rusal Glencore International AG, and United Company Rusal United Company Rusal (Private), S.C. Neferal S.A., and United Company Rusal United Company Rusal NA (Private), Alcoa Inc, Alumina Limited, and Rio Tinto Group ZNSP (Government) Alcoa Inc, and Alumina Limited Alcoa Inc, Alumina Limited, and BHP Billiton Limited (Private), and Eti Mine Works (Government), (Private), and United Company Rusal (Government), ArcelorMittal, and United Company Rusal Rio Tinto Group LaRoche Chemical Co Ormet Corporation Century Aluminum Company, Kaiser Aluminum Corp, Noranda Aluminum Holding Corporation, and Xstrata plc Alcoa Inc, and Alumina Limited (Private), China Minmetals Corporation, and Glencore International AG Alcoa Inc, and Alumina Limited Corporacion Venezolana de Guayana (Government), and Vinacomin
Andra Pradesh (Jindal) Alumina Projec India Andrah Pradesh India Belgaum Alumina India Damanjodi Alumina India Korba Alumina India Lanjigarh Mettur Alumina Muri Alumina Orissa Other India Ala Renukoot Alumina Utkal Alumina Jajarm Alumina Aughinish Alumina Eurallumina Alpart Alumina Ewarton Alumina Jamalco Alumina Kirkvine Alumina Ehime Alumina SAL Yokohama Alumina Shimizu Alumina Pavlodar Alumina Podgorica Alumina Cemtrade Alumina Tulcea Alumina Achinsk Alumina Bogoslovsk Alumina Boksitogorsk Alumina Komi Alumina Project Pikalevo Alumina Uralsk Alumina Volkhov Alumina Ma'aden Alumina Ziar Alumina Talum Alumina San Ciprian Alumina Suralco Alumina Seydisehir Alumina Nikolayev Alumina Zaporozhsky Alumina Burntisland Alumina Baton Rouge Alumina Burnside Alumina Gramercy Alumina India India India India India India India Iran Ireland Italy Jamaica Jamaica Jamaica Jamaica Japan Japan Japan Kazakhstan Montenegro Romania Romania Russia Russia Russia Russia Russia Russia Russia Saudi Arabia Slovak Republic Slovenia Spain Suriname Turkey Ukraine Ukraine United Kingdom USA USA USA
Point Comfort Alumina USA Sherwin Alumina USA St. Croix Alumina USA Bauxilum Alumina Venezuela Lam Dong Alumina Project (Nam Dong)Vietnam
Source: AME Group and Jennings Capital Inc.

36
Jennings Capital Inc. Research Disclosures Companies Exploration Orbit V.S.P.A. Inc. Ticker TSXV-ORT.A
I, Ken Chernin, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that I have not, am not, and will not receive, directly or indirectly, compensation in exchange for expressing the specific recommendations or views in this report. Note: This is our initiating coverage report on Exploration Orbit V.S.P.A. Inc. U.S. Client Disclosures This research report was prepared by Jennings Capital Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund and a Participating Organization of the Toronto Stock Exchange and the TSX Venture Exchange. Jennings Capital Inc. is an affiliate of Jennings Capital (USA) Inc. Jennings Capital (USA) Inc. accepts responsibility for the contents of this research report, subject to the terms and limitations as set out above. Jennings Capital (USA) Inc. is a registered broker-dealer with the Securities and Exchange Commission and a member of the National Association of Securities Dealers Inc. THE FIRM THAT PREPARED THIS REPORT MAY NOT BE SUBJECT TO U.S. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Any transaction in these securities by U.S. persons must be effected through either Westminster Securities Corporation, a U.S. broker-dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers Inc. and the New York Stock Exchange Inc. or through Jennings Capital (USA) Inc., A U.S. broker-dealer registered with the Securities and Exchange Commission and a member of the National Association of Securities Dealers Inc. U.S. PERSONS This research report was prepared by an affiliate of Jennings Capital (USA) Inc. or other person that may not be registered as a broker-dealer in the United States. The firm that prepared this report may not be subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Subject to the limitations on liability described above, Jennings Capital (USA) Inc. takes responsibility for the content of this research report in accordance with Rule 15a-6 under the U.S. Securities Exchange Act of 1934, as amended. All transactions by U.S. persons in securities discussed in this report must be performed through Jennings Capital (USA) Inc.
U.K. Client Disclosures This research report was prepared by Jennings Capital Inc., a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund and a Participating Organization of the Toronto Stock Exchange and the TSX Venture Exchange. JENNINGS CAPITAL IS NOT SUBJECT TO U.K. RULES WITH REGARD TO THE PREPARATION OF RESEARCH REPORTS AND THE INDEPENDENCE OF ANALYSTS. The contents hereof are intended solely for the use of, and may only be issued or passed onto persons described in part VI of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein.
Stock Ratings Speculative Buy: The stock is expected to provide a total return in excess of 10% over the current trading price over the next 12 months; however, there is material event risk associated with the investment. Buy: The stock is expected to provide a total return in excess of 10% over the current trading price over the next 12 months. Hold: The stock is expected to provide a total return of 0% to 10% over the current trading price over the next 12 months. Sell: The stock is expected to provide a negative total return over the next 12 months. Risk Ratings Low/Average Risk Stocks with less volatility than the market as a whole, with solid balance sheets and dependable earnings. Above Average Risk Stocks with more volatility than the market. Financial leverage is considerable but not threatening, earnings are more erratic, or other quality concerns regarding accounting, management track record, and similar issues. Speculative Stocks of unproven companies or ones with very high financial leverage, suspicious accounting, or with other significant quality concerns. A speculative risk rating implies at least the possibility of financial distress leading to a restructuring.
37
Distribution Ratings: Out of approximately 99 stocks in the Jennings Capital Inc. coverage universe, the ratings distribution is as follows:
BUY SPECULATIVE BUY HOLD SELL TENDER TO OFFER UNDER REVIEW RESTRICTED Revised Monthly
53% 41% 1% 0% 0% 5% 0%
Security Abbreviations: NVS (non-voting shares); RVS (restricted voting shares); RS (restricted shares); SVS (subordinate voting shares); MV (multiple voting shares). Quarterly Recommendation Hierarchy: Is a ranking distribution identifying the percentage of total, number, and the investment banking relationship (%) for all recommendation categories that can be found on the Jennings Capital Inc. website (www.JenningsCapital.com). Analyst Stock Holdings: Equity Research analysts, associates and members of their households are permitted to invest in securities covered by them. No Jennings Capital Inc. analyst, associate or employee involved in the preparation of an analyst report is permitted to effect a trade in the security of an issuer whereby there is an outstanding recommendation for a period of 30 calendar days before and 5 calendar days after issuance of the research report Compensation: The compensation of the analyst and/or associate who prepared this research report is based upon in part, the overall revenues and profitability of Jennings Capital Inc. Analysts are compensated on a salary and bonus system. Some factors affecting compensation including the productivity and quality of research, support to institutional, retail and investment bankers, net revenues to the equity and investment banking revenue as well as compensation levels for analysts at competing brokerage dealers. Analysts are not directly compensated for specific Investment Banking transactions. Jennings Capital Inc. Relationships: Jennings Capital Inc. may receive or seek compensation for investment banking services from all issuers under research coverage within the next 3 months. Jennings Capital Inc. or its officers, employees or affiliates may execute transactions in securities mentioned in this report that may not be consistent with the reports conclusions.
Company Specific Disclosures
Is this an issuer related or industry related publication?
Issuer
Industry
Does the Analyst or any member of the Analysts household have a financial interest in the securities of the subject issuer? If yes, nature of interest:
Yes
No
Is Jennings Capital Inc. or Jennings Capital (USA) Inc. a market maker in the issuers securities at the date of this report?
Yes
No
Do Jennings Capital Inc., Jennings Capital (USA) Inc. and their affiliates in the aggregate beneficially own more than 1% of any class of common equity of the issuer?
Yes
No
Does Jennings Capital Inc., Jennings Capital (USA) Inc. or the Analyst have any actual material conflicts of interest with the issuer?
Yes
No
Does the Analyst or household member serve as a Director or Officer or Advisory Board Member of the issuer?
Yes
No
Has the Analyst received any compensation from the subject company in the past 12 months?
Yes
No
Has Jennings Capital Inc., Jennings Capital (USA) Inc. and/or any affiliates managed or co-managed an offering of securities by the issuer in the past 12 months?
Yes
No
Has Jennings Capital Inc., Jennings Capital (USA) Inc. and/or any affiliates received compensation for investment banking and related services from the issuer in the past 12 months? Has the Analyst had an onsite visit with the Issuer? (The extent to which the analyst has viewed the material operations is available on request) Has the Analyst ever been compensated for travel expenses incurred as a result of an onsite visit with an Issuer?
Yes
No
Yes
No
Yes
No
NOTES:
NOTES:
Head Office-2700, 308 - 4th Avenue S.W., Calgary AB T2P 0H7 33 Yonge St., Suite 320, Toronto, ON M5E 1G4 Private Client Services-2700, 308 - 4th Avenue S.W., Calgary AB T2P 0H7 Private Client Services-33 Yonge St., Suite 320, Toronto, ON M5E 1G4 Private Client Services-313, 1 St. W. PO Box 5519, High River, AB T1V 1M6 Private Client Services-100, Pedway Level, Barrington Place, 1903 Barrington St., Halifax, NS B3J 3L7
T: 403.292-0970 T: 416.214.0600 T: 403.292.9328 T: 416.304-2190 T: 403.652.4032 T: 902.496.7580
F: 403.292.0979 F: 416.214.0177 F: 403.292.9329 F: 416.304.2195 F: 403.652.4278 F: 902.496.7599
Toll free: 1.888.292.0980 Toll free: 1.877.214.3303 Toll free: 1.877.292.0970 Toll free: 1.866.319.2573
Toll free: 1.800.565.8660
INSTITUTIONAL
Sales
Mark Knapp, PhD, MBA, Managing Director, Head of Institutional Sales [email protected] Michael Capobianco, Vice President, Institutional Sales [email protected] Gordon Fernandes, Institutional Sales [email protected] Michael Graham, Institutional Sales [email protected] David Beasley, MBA, CFA, Quantitative Trading Strategist [email protected] 416.214.0600 416.214.0600 416.214.0600 416.214.0600 416.214.0600
RESEARCH
Stephen Calderwood, P.Eng., MBA, Vice-President, Co-Head of Research [email protected] [email protected] 403.292.9483 416.304.2178 Russell Stanley, CFA, MBA, Vice-President, Co-Head of Research
Gold/Base Metals
Peter Campbell, P.Eng. [email protected] Stuart McDougall, B.Sc. [email protected] Alka Singh, CFA, MBA, B.Sc. [email protected] Ryan Walker, M.Sc. [email protected] 416.304.2194 416.304.3964 416.304.2176 416.304.3963
Trading
Doug Van Peteghem, Sr. Managing Director, Head of Trading [email protected] David Lawson, Branch Manager [email protected] Tim Fisher, MBA, Vice President, Institutional Trading [email protected] Earle D. McMaster, CFA, Sr. Institutional Trader, Managing Director [email protected] 416.214.0600 416.214.0600 416.214.0600 416.214.0600
Oil & Gas

Stephen Calderwood, P.Eng., MBA, Co-Head of Research [email protected] 403.292.9483 Gregory Chornoboy, B.Sc., P.Eng., MBA [email protected] James Humen, CA [email protected] 403.292.9487 403.292.9485
Special Situations
Russell Stanley, CFA, MBA, Vice-President, Co-Head of Research [email protected] 416.304.2178 902.496.7007 416.304.2191
INVESTMENT BANKING
Daryl Hodges, M.Sc., President & CEO, Head of Investment Banking [email protected] David Donato Sr. Managing Director, Investment Banking [email protected] David McGorman Sr. Managing Director, Investment Banking [email protected] 403.262.0900 416.304.2189 416.304.2174
Ken Chernin [email protected] Marc Charbin, CA, CFA [email protected]
Research Associates
Greg Doyle [email protected] Trenton Latos, P.Eng. [email protected] 403.292.9484 416.304.3894 416.304.2184 416.304.3961 Spencer Langley [email protected] 416.304.2171
Syndication
Christopher Syme, VP Syndication [email protected] 416.304.2177
Bill Mantzoutsos, MBA [email protected] Grace Vong, CA [email protected]
Research Coordinator
P. Lorelei Reid [email protected] 416.304.2175
Jennings Capital research is available on Bloomberg, Reuters, Thomson Financial and at www.jenningscapital.com
Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund Participating Organization of the Toronto Stock Exchange and the TSX Venture Exchange

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October 7, 2011

SPECIAL SITUATIONS KEN CHERNIN, MBA

BILL MANTZOUTSOS, MBA

Please see important disclosures on pages 35 and 36.

COMPANY OVERVIEW AND PROJECT HISTORY

Source: Company website

Exhibit 2: Orbites Process for Extracting Aluminum from Aluminous Ores

THE GRANDE-VALLE PROPERTY: SIZABLE ALUMINOUS CLAY RESOURCE

Source: Company presentation and Jennings Capital Inc.

Exhibit 4: Overall Characteristics of Mudstone and Claystone Samples

Magnesium oxide Sodium oxide

Mean Maximum Minimum

53.3% 63.9% 47.9%

22.8% 26.9% 15.6%

8.4% 13.0% 3.2%

0.7% 8.1% 0.2%

1.7% 3.2% 1.1%

1.4% 3.1% 0.3%

3.4% 4.8% 2.0%

1.0% 1.5% 0.6%

QUANTIFYING THE UPSIDE: NUMEROUS BLUE SKY SCENARIOS

3.5-15 um US$141 / KG Alpha Average: US$211 / KG 5.0 nm 20.0 nm US$456 / KG US$151 / KG

Location of Alumina Smelters

Exhibit 7: Alumina Smelters in Qubec

Source: Canadian Minerals Yearbook (2006) and Jennings Capital Inc.

Source: Global Alumina Corp. and Jennings Capital Inc.

Started Announced Completed Announced

$2.20 Bln $1.90 Bln $2.20 Bln $1.33 Bln

Labour, 10% Capital Maintenance, 2%

Source: Jennings Capital Inc.

Exhibit 12: Breakdown of Orbites Potential Revenue Streams

Patent Revenues (Bauxite) Magnesium Oxide Silica Revenues Hematite Revenues

Metallurgical Alumina Revenues

Source: Jennings Capital Inc.

Estimate of Rare Earth Revenues

REs & Scandium Revenues Clay Throughput

Source: Jennings Capital estimates

Aluminuos Clay Throughput

DEVELOPMENT SCHEDULE AND CATALYSTS

Expect to Begin Generating Cash Flow

BALANCE SHEET, RECENT FINANCINGS, AND PROJECT FINANCING

C$0.304 MM C$1.69 MM C$0.02 MM (C$0.01 MM) C$2.00 MM

KEY INVESTMENT RISKS

VALUATION AND RECOMMENDATION

Exhibit A2: Composition of the Clay

Source: Company presentation

APPENDIX B: ORBITES PATENTS AND PENDING PATENTS

US 7837961 CA 268696 US 91/415,473

Nov-10 Nov-10 Nov-10

Patent may be filed in other jurisdictions

Patent may be filed in other jurisdictions

APPENDIX C: SELECT RARE EARTH OXIDE HISTORICAL PRICES

Exhibit C2: Dysprosium Oxide 99.5% 99.9%, China Domestic Market

Exhibit C3: Yttrium Oxide 99.99% - 99.999%, China Domestic Market

Exhibit C4: Neodymium Oxide, China Domestic Market

US$10 US$20 US$5

Exhibit C5: Praseodymium Oxide, China Domestic Market

Exhibit C6: Lanthanum Oxide, China Domestic Market

US$70 US$10 US$60

US$30 US$4 US$20 US$2 US$10