Alterra Power Announces 2011 Year End Results

Sep 16, 2011, 19:47 ET from Alterra Power Corp.


(All amounts in US dollars unless otherwise stated)

VANCOUVER, Sept. 16, 2011 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) (the "Company" or "Alterra") today reported its financial and operating results for the 2011 fiscal year ended June 30, 2011 and provided an update on its operations. For further information on the annual and fourth quarter results, please see the Company's 2011 Audited Annual Consolidated Financial Statements and Management's Discussion and Analysis.

Highlights of the year were:

  • Magma Energy Corp. and Plutonic Power Corp. ("Plutonic") merged to create Alterra.
  • Alterra sold 25% of HS Orka hf ("HS Orka") to 14 Icelandic pension funds for $70.1 million, and now holds 75%.
  • The 144 MW Dokie wind farm commenced commercial operations.
  • The 235 MW Toba Montrose run of river hydro power plants commenced commercial operations.
  • Power production increased to 1,463,529 MWh from 62,073 MWh in 2010.
  • Gross revenue increased to $70.8 million from $5.1 million in 2010.
  • EBITDA increased to $12.7 million from ($7.2) million in 2010.
  • Cash and short-term investments at June 30, 2011 increased to $73.7 million from $25.3 million at June 30, 2010.

John Carson, Alterra's Chief Executive Officer, commented, "These financial results reflect the accounting complications resulting from our rapid growth in 2011 through our increased interest in HS Orka and our acquisition of Plutonic. We now have exceptional wind, hydro and geothermal power management teams, and all six of our operating plants are running as planned. We expect our share of production for the ensuing fiscal year will be 1,518,000 MWh of clean power, providing over $100 million in revenue and over $50 million in EBITDA. Our healthy cash position and strong asset base plus our outstanding portfolio of growth projects will deliver further production and revenue increases in years ahead. I am very excited about our future."

Financial Results

The following financial information has been prepared in accordance with Canadian GAAP and is reported in United States dollars. The financial results for fiscal 2011 include the results of HS Orka since August 17, 2010, the date the Company acquired control, and the results of Plutonic (including the proportionate results from the Toba Montrose General Partnership and the Dokie General Partnership) from May 13, 2011.  Therefore, the results for fiscal 2011 are not fully reflective of future financial results and are not comparable with prior periods.

The Company will be reporting under International Financial Reporting Standards ("IFRS") beginning with the first quarter ended September 30, 2011, and also intends to change its year end from June 30 to December 31.  As a result, the Company will have a short fiscal year from July 1, 2011 to December 31, 2011 and its next full fiscal year will then commence on January 1, 2012.

Summary Financial Results

(expressed in thousands of US dollars, except for production and per share amounts)  
        For the Three Months Ended June 30, 2011       For the Three Months Ended June 30, 2010       For the Year Ended June 30, 2011       For the Year Ended June 30, 2010
Production (MWh)       544,113       17,268       1,463,529       62,073
Total revenue       25,406       1,347       70,832       5,056
Gross profit       10,609       (6)       23,693       422
Other expenses       (36,956)       (8,459)       (34,877)       (16,868)
Loss attributable to owners of the Company       (20,654)       (8,674)       (14,243)       (16,446)
Loss per common share attributable to owners of the Company, basic & diluted       (0.07)       (0.04)       (0.05)       (0.07)
EBITDA (a)       504       (2,191)       12,667       (6,799)
Total assets       1,124,791       198,703       1,124,791       198,703
Total long-term liabilities       658,261       51,505       658,261       51,505
Cash and cash equivalents       73,690       25,343       73,690       25,343
Working capital       47,471       21,426       47,471       21,426

(a) EBITDA is defined by the Company as earnings before interest, taxes, foreign exchange, equity income (loss), depreciation and amortization, as well as before deductions for non-cash charges including employee compensation, loss on remeasurement of investments and changes to the balance sheet carrying value of long-term debt and embedded derivatives. The Company discloses EBITDA as it is a measure used by analysts and by management to evaluate the Company's performance. As EBITDA is a non-GAAP measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider net earnings in evaluating the Company's performance.

Revenue totaled $70.8 million for the 2011 fiscal year compared to $5.1 million in fiscal 2010, due to consolidation of HS Orka and acquisition of Plutonic. Total costs of production for the year were $36.6 million compared to $3.0 million in fiscal 2010. This included costs for labour, repairs and maintenance, supplies, and all other operating costs, including plant general and administrative expenses. Gross profit from operations was $23.7 million for 2011 fiscal year compared to $0.4 million in fiscal 2010.

Total operating expenses for 2011 fiscal year were $19.3 million compared to $8.3 million in fiscal 2010, including $4.9 million of non-recurring costs due to the Norðurál arbitration and Plutonic merger. The Company is on track to realize $2.2 million in annual cost savings from the Magma-Plutonic merger.

Total other expenses for 2011 fiscal year were $15.5 million compared to total other expenses of $8.5 million in fiscal 2010, the increase due mostly to the consolidation of HS Orka, including a number of significant non-cash items more fully described in our financial statements.

For 2011 fiscal year, the Company recorded a net loss of $14.2 million ($0.05 per common share), compared to a net loss of $16.4 million ($0.07 per common share) in fiscal 2010.

EBITDA for fiscal 2011 totaled $12.7 million, compared to ($6.8) million in fiscal 2010, and included:

i.   HS Orka operations - $21.8 million from August 17, 2010 to June 30, 2011 (2010: nil).
ii.    Toba Montrose - $5.6 million 40% share from May 13 to June 30, 2011 (2010: nil).
iii.    Dokie - $0.6 million 51% share from May 13 to June 30, 2011 (2010: nil).
iv.    Soda Lake - $0.7 million in fiscal 2011 (2010: ($0.5) million).

At June 30, 2011, the Company had cash and cash equivalents of $73.7 million (June 30, 2010: $25.3 million). The Company ended the year with consolidated working capital of $47.5 million compared to $21.4 million at June 30, 2010.

HS Orka Operations (75% Interest)

HS Orka produced at projected levels during the year. The 100 MW Reykjanes plant and 75 MW Svartsengi plant generated 796,182 and 448,710 MWh of electricity respectively. Svartsengi also continued to supply 150 MW of thermal energy for district heating. A new Power Purchase Agreement ("PPA") was signed in February, 2011 committing 30 MW of capacity to Iceland Silica Corporation beginning in 2013. In May, an arbitration hearing was held to determine the validity of a PPA entered into in 2007. Arbitration results are expected in the fourth quarter of 2011. From July 1 to August 31, 2011, Reykjanes and Svartsengi produced 196,665 MWh of electricity, or 102% of budget.

Toba Montrose Operations (40% Interest)

The 235 MW Toba Montrose hydro project commenced commercial operation on November 1, 2010 with expected annual generation of 727,000 MWh. Production to June 30, 2011 was 215,268 MWh, somewhat lower than projections due to cool winter and spring weather and some non-recurring outages typical for initial-stage operations. From July 1 to August 31, 2011, the Toba Montrose facility generated 297,745 MWh, or 99% of budget.

Dokie Operations (51% Interest)

The 144 MW Dokie wind farm commenced commercial operation on February 17, 2011 with expected annual generation of 330,000 MWh. Production to June 30, 2011 was 75,629 MWh. From July 1 to August 31, 2011, the Dokie facility generated 53,625 MWh, or 122% of budget.

Soda Lake Operations (100% Interest)

During the year the Company completed a Phase I expansion at Soda Lake that increased annual net output from 60,000 to 73,000 MWh. Additional near-term output increases are expected to increase capacity by up to 2 MW. A grant application is being submitted for reimbursement of 10% to 30%, or approximately $2 million to $6 million, of the eligible project costs. A Phase II seismic and drilling program has begun, funded in part from a $5 million DOE grant. Two deep slim holes are now in progress to test new zones. From July 1 to August 31, 2011, Soda Lake generated 9,603 MWh, or 93.5% of budget.

Expansion and Development Projects

HS Orka plans to expand the Reykjanes plant's capacity to 180 MW in two phases of 50 MW and 30 MW, pending new PPAs with one or more power purchasers, increasing annual average generation by an estimated 686,000 MWh. The 30 MW expansion will not require any additional drilling as the utilized resource will be low pressure steam generated from current operations. The current budget for the 50 MW expansion is $131.0 million, of which approximately $46.5 million has already been invested. The remaining costs for the expansion are expected to be funded mainly from HS Orka's cash on hand and from project debt financing.

In 2010, a 40 year PPA was signed with BC Hydro for the Upper Toba Valley Project that includes two run of river projects with combined capacity of 124 MW and estimated annual average generation of 330,000 MWh. The Company and its partner are currently in the process of updating a feasibility study of the project.

The Company holds a 51% interest in potential expansions of the Dokie operations with a current projected addition to capacity of approximately 150 MW.  The project has received a BC Provincial Environmental Assessment Certificate. Data collection for a resource assessment is scheduled to be completed mid-year 2012.

In January 2011, Plutonic acquired an option to purchase for C$6 million 10% of a 50 MW portfolio of five photovoltaic solar facilities to be built in Ontario ("ABW Solar") by First Solar, Inc. If the option is exercised, the Company will serve as the managing partner. First Solar, Inc. is expected to begin construction of ABW Solar within the next six months, with completion of construction in 2012.

Exploration Projects

During the year the Company drilled geothermal exploration wells in Iceland, Nevada and Chile and acquired new geothermal concessions in Chile, Peru and Italy while relinquishing certain concessions in Nevada. At the advanced-stage Maule project in Chile, three slim holes were drilled with positive results. Further wide-diameter drilling is planned and a partner is being considered to fund this future work. In Nevada, exploratory drilling programs are planned or underway at the Soda Lake and McCoy geothermal fields. In Iceland, hole RN-30 was drilled earlier in 2011 and is being tested for use in the proposed Reykjanes expansion.

The Company holds an early stage run of river hydro power project in Bute Inlet of British Columbia, Canada with an estimated potential annual generation of 2.9 million MWh. In July 2011, the Company signed an Impact Benefit Agreement to advance the Bute Inlet project within the traditional territories of the Homalco First Nation.

During 2010, the Company's applications for a water licence and Crown Land tenure for a 1,000 MW pumped storage site in southwestern BC were accepted by the relevant ministries of the BC government.


"After only three years since our inception, Alterra is now firmly established as a premier renewable power producer," said Ross Beaty, Alterra's Chairman. "We have operations and growth projects in hydro, wind and geothermal energy, giving us diversity, size and significant new opportunities for growth. Our growing financial strength and our fine management team will support development of both our organic pipeline and new acquisitions and I look forward with great anticipation to continuing our strong and successful growth to date."

Alterra Power will host a conference call to discuss financial and operating results on Monday, September 19, 2010 at 11:30 am ET (8:30 am PT).  North American participants dial 1-888-231-8191 and International participants dial 1-647-427-7451, the conference ID is 9283 6431. The call will also be broadcast live on the Internet at The call will be available for replay for one week after the call by dialing 1-416-849-0833 and entering replay pin number 9283 6431.

Cautionary Note regarding Forward-Looking Statements and Information Certain statements included in this news release may contain information that is forward-looking within the meaning of certain securities laws, including information and statements regarding prospective results of operations, financial position, cash flows or growth potential.  These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. Alterra cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors include those set out in the management's discussion and analysis section of Alterra's most recent annual report and quarterly report, and in Alterra's Annual Information Form. Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, Alterra undertakes no obligation to update any forward-looking statements or information to reflect new information, subsequent or otherwise.


SOURCE Alterra Power Corp.