Almost six months after the Orca quarry on Vancouver Island, British Columbia, began production of sand and gravel, owner Polaris Minerals is looking back with pride on its early achievements and looking forward to an expansion of operations in the future. The quarry is on schedule to start seeing positive cash flow after its first year in production, Vancouver-based Polaris's management said in a second-quarter results conference call Aug. 17.

"The Orca quarry continues to perform extremely well and productivity is improving progressively, all according to plan," said Polaris's president and CEO, Marco Romero. "Product quality has been excellent and we are gradually building a reputation for this in the marketplace as customers become familiar with the unique characteristics of the Orca quarry products." The quarry has processed over 700,000 tons of aggregate since start-up and more than 90,000 man-hours have been worked there with no lost-time accidents.

Polaris is now a supplier to the San Francisco-Oakland Bay bridge, which is undergoing a replacement of its eastern span that is due to be completed in 2013. "This extraordinarily sophisticated structure is by any measure a world-class project where our excellent product quality is being showcased," Romero said. "We anticipate a great deal more infrastructure-related demand in the coming years."

Eagle Rock quarry under study

Polaris has recently resumed work on the feasibility study for its proposed Eagle Rock granite quarry, also on Vancouver Island, Romero added. "We remain confident that Eagle Rock will also one day become a major supplier of high-quality aggregates, focusing predominantly on the road construction business," he said.

The company's sales for the second quarter totaled US$4.4 million.

A loss of $1.2 million was incurred for the quarter, compared to a loss of $100,000 in the same period last year.

The cost of pilots and tugs has been higher than originally estimated for three reasons, Polaris's COO, Herb Wilson, said in the conference call.

"Firstly, the world shipping market has changed dramatically since our project was developed, thanks to the growth of the Chinese and Indian markets, and tugs are no longer so readily available.

Secondly, tug fuel costs have increased substantially.

And lastly, the provision of pilots, which is compulsory in British Columbia, is affected by timing windows imposed by the federal responsible agency."

Locally based tug planned

Polaris plans to address these issues through the provision of a locally based berthing tug, which will reduce hours traveled and fuel consumed, and the company also anticipates some eventual relaxation of the pilotage restrictions, Wilson said. "An increase in the number of vessels loaded as sales ramp up will also have a positive benefit," he added.

Orca has solved its problem of needing additional process water storage, as storage capacity on site was increased from around 55,000 gallons to 125,000 gallons in July, Wilson said. "In addition, a third borehole has just been drilled, which has proved to be very productive, but for now we're simply holding it in reserve," he added.

Construction of Polaris' terminal at the Port of Richmond, Calif., is continuing, and is due to be completed at the end of the third quarter. "The large storage building is essentially complete, and installation of the material handling components is advancing rapidly," Wilson said. "We have incurred a small increase in capital costs; it's less than $1 million, but we do anticipate that the overall terminal development will remain within our original cash plan, as we anticipate an offsetting reduction in California sales and use taxes."