This is a case of the shorts pounding the longs right now.
I think ORT is a company that is either extremely undervalued or is an outright fraud. It is hard for the individual investor to know which is which. The fact a company as big and powerful as Veolia has signed on with them and will fully fund the building of the first red mud remediation plant sometime in the next year at a site yet to be determined suggests they probably aren`t an outright fraud. They have obviously tested the technology and its feasibility before agreeing to put up $100M or so necessary to build the plant. That to me is worth more than a Wall Street analyst with a scientific background`s opinion of a technology he doesn`t understand and a plant that he has not visited.
This one has EXTREME VOLATILITY. If you can make quick trades on this one`s swings you could make a fortune if you guess right. If you guess wrong on the swings you will go broke.
To me the key that will really drive this company is once they show they can profitably produce 5N and 6N HPA. HPA is a rare substance on this planet right now and it is mostly made in China but the quality of the samples produced by the Chinese alumina industry is poor. This material is very important in many modern technological devices. ORT claims they can manufacture the stuff in a reliable and highly pure way in a direct fashion. They claim to have already produced a tonne of 4N HPA in their first batch at their commercial plant and sent samples around the world. The only problem is 4N is much less valuable than 5N and 6N. They are apparently working on doing a few tweaks to improve efficiency of operation and increase purity of HPA. If they can do this at reasonable cost they will probably corner the HPA market and become cash flow positive in a shockingly short period of time. This is the 3-bagger opportunity with the company. Maybe 5-bagger.
Now the potential 10-bagger is if they can profitably make SGA plants around the world utilizing their non-Bayer process at industry-leading low cost. If they can do it as they have suggested, they can pull out substantial amounts of rare metals ($$), hematite ($), rare earths ($$$) and silica (few cents) in addition to the alumina.
The potential 20-bagger out there is if they have solved the problem of extracting individual rare earths from ore. This is the biggest problem that plagues all the non-Chinese rare earth companies - how to profitably extract and separate the rare Earth oxides, especially the heavy rare Earth oxides. I know some people believe their process holds the key to this puzzle and could liberate the Western world from the threat of Chinese export limitations on rare earths which would decimate Western technology companies. Molycorp has fizzled and looks like they are on life support. There isn`t a really credible company out there right now that can produce substantial amounts of heavy rare earths outside of China.
This one is in the EXTREME SPECULATIVE risk category of your portfolio. This is your gambling money right here. Do you believe ORT`s management, Veolia`s vetting of the process, the awards that the company has received for technological innovation. Or are they just another big lie foisted upon us gullible Canucks like Bre-X and PSN. That is the question you have to answer as I don`t think there is any middle ground here. If it works as they suggest (or even close to what they suggest) this could be a dynasty being built on mining extraction technology.
Like I`ve said, this is like gambling when you invest in such a company. They are pre-revenue. They have no firm contracts yet for HPA. They have not built a SGA plant yet. Veolia has yet to build a red mud remediation plant. They do have a commercial HPA plant where they claim to have made a tonne of 4N HPA that has apparently been independently verified and samples have been sent around the world to the leading technology companies who employ its use.
This thing is a veritable roller coaster and soap opera.
For Quebec and Canada`s future as mining big wigs I really hope this company can do what they claim to be able to do. It would be a huge coup for us.
My own opinion is they probably can produce HPA. It has been verified by reputable outside sources. They just haven`t produced 5N yet out of the commercial plant but given the way they produce it I think they should be able to do it after a few refinements as they have suggested. I also think they can remediate red mud but I don`t know how profitable it will be and to what extent they may extract revenues for cleaning up the toxic sites in addition to the alumina and other substances they manage to extract from the red mud. The beauty about the red mud deal is they are basically licencing the technology to Veolia who will then invest all the capital to get these projects going around the world, starting with one initial pilot plant.
On the basis of that those two things I do believe the company is undervalued by a considerable amount at today`s market cap of $331M. I can easily see the company being worth considerably more than this on the above technologies.
I am not as sure about the SGA, rare earth and rare metal side of the operations. RUSAL seems to think it cannot be done profitably. No deal has been signed yet with anyone on a SGA plant. They don`t have a functioning SGA plant for anyone to visit and assess. I think this is why so many of the big wigs in the financial industry are betting against them. If the company is right about HPA but wrong about SGA and wastes a ton of capital and takes on a ton of debt to build a plant that can`t profitably generate smelter grade alumina then they could end up bankrupting themselves and going belly up despite the HPA and red mud remediation aspects of the business.
I know I`d be a lot more comfortable if they waited until their HPA plant was humming along and producing huge cash flows to fund the foray into SGA once everything was adquately vetted. This may be a case of the hubris of the CEO taking a whole company down if he is wrong. So I wish their vision wasn`t quite so grandiose just yet but that is who they are as a corporate entity I guess. Feast or famine.
High, high, high risk in this company.
Last edited by PMREdmonton; 2013-03-02 at 01:31 PM.
Reason: chose wrong word - can instead of cannot
Good summary Mr. Edmonton. I have followed the story on the sidelines so far. Like you, I believe it is a very high risk situation, nonetheless fascinating for its incredible potential. Thanks for your opinion.
doKtor edmonton, it's being rumoured around that the 2 principal construction companies have just smacked liens on your "game-changer" ORT plant being built up there in the gaspésie.
perhaps you could let us know what's going on? after all, you have promoted this stock frequently in this thread, saying you were buying at $2.80 only 6 months ago (message No. 10 upthread.)
since then, stock has plunged nearly 65% to 97 pennies.
as i mentioned upthread, the recent resignation of orbite chief scientific officer joel fournier, who had steered this project from its very inception, should have resonated with all investors.
What a shame, organized pump and dump designed for naive greedy investor
Share some similarities to:
doKtor has a huge string of truly shocking pumpster failures to his name in this forum.
it's true he was right on AM, but like they say, even a broken clock is right once a day ...