(under IFRS and all amounts in US dollars unless otherwise stated)
TSX : AXY
VANCOUVER, March 28, 2012 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) (the "Company") today provided an update on its operations and reported its financial and operating results for the six month fiscal period ended December 31, 2011 (the "six month period"). The Company changed its fiscal year end from June 30 to December 31, and as a result, the Company is reporting on a short fiscal year from July 1, 2011 to December 31, 2011. For further information, please see the Company's Audited Consolidated Financial Statements and Management's Discussion and Analysis.
Alterra continues to consolidate 100% of HS Orka and the Soda Lake operations, and under International Financial Reporting Standards (IFRS), Alterra's interests in the Toba Montrose run of river hydro facility ("Toba Montrose") and the Dokie wind facility ("Dokie 1") are now accounted for as equity investments. In certain statements in this news release, the Company's results are disclosed as Alterra's "net interest", which means the effective portion of results that Alterra would have reported if each of HS Orka (75%), Toba Montrose (40%), Dokie 1 (51%) and Soda Lake (100%) had been reported in accordance with the Company's actual share ownership during the six month period and at December 31, 2011.
Highlights for the period include:
- Power production from Alterra's six power plants was at 102% of forecast (1,300,566 MWh); Alterra's net interest in generation totalled 777,610 MWh, or 60% of the total.
- Alterra's net interest in revenue for the six months was $54.9 million.
- The Company's net interest in EBITDA for the six months was $23.3 million.
- The Company received its first cash distribution of $5.1 million from its 40% ownership interest in Toba Montrose.
- Toba Montrose achieved "Final Completion" and subsequent to the period, Dokie 1 also achieved Final Completion, formally marking completion of all construction activities.
- An operating permit was granted for the planned 80 MW expansions at the Reykjanes geothermal power plant in Iceland.
- The Company received the results from an arbitration proceeding concerning the validity of a power purchase agreement ("PPA") between HS Orka and a subsidiary of Century Aluminum Co. The results of the arbitration were mixed, and the parties are currently engaged in negotiations on a new PPA to support planned expansions.
- Alterra signed an Impact Benefit Agreement with the Homalco First Nation to advance the Bute Inlet hydro power project, which lies within their traditional territories.
"Alterra achieved an important milestone at the end of 2011 when we received our first dividend, on time, from the Toba Montrose hydro project," said John Carson, Alterra's Chief Executive Officer. "The continued strong performance of our operating portfolio provides us a solid platform for our growth plans as we prepare for construction of our next group of run of river hydro, wind and geothermal projects."
The Company began reporting under IFRS beginning July 1, 2011. Comparative numbers at July 1, 2010 have been restated to reflect the change in accounting standards. Material changes under IFRS include the accounting for the Company's interest in Toba Montrose and Dokie general partnerships, which are now equity accounted, but which had previously under Canadian GAAP been proportionately consolidated.
The period ended December 31, 2011 is a short fiscal year from July 1 to December 31, 2011. The comparative period of the twelve months ended June 30, 2011 (the "prior year") only includes the consolidated results of HS Orka since August 17, 2010, and of Plutonic Power Corporation from May 13, 2011, the dates on which the Company acquired control. The six month period results are therefore not comparable with the prior period. The Company's next full fiscal year commenced on January 1, 2012.
The following table shows the Company's net interest in select operating and financial results for the six month period, in addition to key financial information extracted from the December 31, 2011 Audited Consolidated Financial Statements ("consolidated results"). The consolidated results are based on 100% of HS Orka and Soda Lake. The net interest results reflect the Company's actual interest in all of its operating assets.
(expressed in thousands of US dollars, except for production)
| HS Orka
|Cash and Cash Equivalents||22,239|
(a) EBITDA is defined by the Company as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for other gains and losses, amortization of below market contracts, and value assigned to options granted. 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-IFRS 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 reported in the consolidated results for the six month period was $34.7 million, while Alterra's net interest in revenue was $54.9 million. Dokie 1 revenue was higher than normal due to generation running at 127% of plan for the period due to strong winds. The Toba Montrose revenue was lower than normal due to the commencement of warranty-covered penstock re-coating, which was scheduled for a period when water flows are seasonally low. If the work had not been required, the Company would have recorded an additional $0.7 million share of revenue that would have been included in equity income.
Production costs reported in the consolidated results were $26.0 million, while Alterra's net interest in production costs was $29.2 million.
General and administrative expenses included in the consolidated results were $9.8 million, including full consolidation of HS Orka's $3.4 million of general and administrative expenses, of which $1.8 million relates to non-recurring arbitration costs.
Equity income reported in the consolidated results for the six month period was $7.8 million, and included the Company's net interest in Toba Montrose and Dokie 1.
Net other losses included in the consolidated results for the six month period were $23.9 million, primarily due to a number of non-cash items more fully described in our financial statements, including a $24.5 million loss related to a change in the marked-to-market value of HS Orka's aluminum-linked PPAs due to a downward move in the future prices of aluminum during the period. Aluminum spot prices declined 21.3% in the six month period, from $2,503 to $1,971 per tonne (as at March 27, 2012, the aluminum price had risen to $2,137 per tonne). Following the expiry in October 2011 of one of the PPAs with aluminum-linked pricing, now only 36% of HS Orka's power sales are indexed to the price of aluminum, as compared to 46% at June 30, 2011.
The Company recorded a net loss of $13.8 million in the consolidated results ($0.03 per common share) in the six month period, compared to a net loss of $11.5 million ($0.04 per common share) in the prior year.
Alterra's net interest in EBITDA for the six month period totalled $23.3 million, reflecting, among other things, the strong generation performance of its operating assets (102% of budget).
At December 31, 2011, the Company had consolidated cash and cash equivalents of $22.2 million (June 30, 2011: $68.3 million), while the Company's net interest in cash and cash equivalents was $32.0 million. The Company ended the period with consolidated working capital of $4.6 million compared to $40.5 million at June 30, 2011, and with a net interest in working capital of $13.4 million. The changes from the prior period in both cash and working capital included investment of $6.8 million in plant and equipment, development costs of $4.4 million, and repayment of $23.5 million of the Company's working capital facility. The Company's new facility is for C$20.0 million and has been extended to December 2012.
In February 2012, the company's 25% partner at HS Orka (a group of Icelandic pension funds) increased their stake to 33.4% by investing Icelandic Kronar 4.7 billion (approximately $38 million) in HS Orka, resulting in the Company owning a 66.6% interest in HS Orka. The newly invested funds are currently being held at HS Orka in preparation for the Reykjanes expansion project.
Iceland Operations (75% Interest at December 31, 2011)
The 100 MW Reykjanes plant generated 380,834 MWh of electricity, 99% of budget, and the 72 MW Svartsengi plant generated 228,618 MWh of electricity, 98% of budget, and continued to supply 150 MW of thermal energy for district heating.
In early 2012, the capacity of the Svartsengi plant was revised from 74.4 MW to 72.0 MW with the retirement of two 1.2 MW air-cooled binary turbine generators. This has no impact on plant energy output as the geothermal resource has been redirected to other turbines at Svartsengi, and the retirement reduces both maintenance and capital replacement costs.
Toba Montrose Operations (40% Interest)
The 89 MW Montrose Creek and the 146 MW East Toba River run of river hydro plants generated 440,398 MWh of electricity in the period, which was 93% of budget. Pursuant to an agreement reached at Final Completion with the lead contractor, the penstock coatings at both the East Toba and Montrose Creek facilities were inspected and repaired by the contractor, requiring curtailment of both facilities from November 2011 to March 2012, a time when water flows and project revenues are seasonally low. The repairs were planned and budgeted, and have been completed. Both facilities will be ready for full operations when water flows increase.
The firm energy allotment under Toba Montrose's PPA was increased by 10% and as a result annual revenue at Toba Montrose is expected to increase by 2.4%.
In December 2011 the Company received its first cash distribution of $5.1 million from its 40% interest in the operating subsidiary for Toba Montrose.
Dokie Operations (51% Interest)
The 48 turbine 144 MW Dokie wind farm generated 217,052 MWh of electricity for the period, or 127% of budget. The operating subsidiary for the wind farm also successfully reached agreement with its lenders for term conversion of its loans, with final maturity in 2030, and the first possibility for a dividend in June 2012.
Subsequent to the period, the firm energy allotment under Dokie 1's PPA was increased by 10% and as a result annual revenue at Dokie 1 is expected to increase by 1.2%.
Soda Lake Operations (100% Interest)
The 16 MW capacity Soda Lake geothermal plant generated a net 33,664 MWh of electricity for the period, which was 93% of forecast. Subsequent to the period, the US Department of the Treasury awarded the project a grant of $2.1 million under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009.
Expansion and Development Projects
Alterra's Icelandic subsidiary HS Orka plans to expand the Reykjanes plant's capacity to 180 MW in two phases of 50 MW and 30 MW and thereby increase annual average generation by nearly 700,000 MWh, subject to satisfactory resolution of all PPA issues and obtaining project financing. During the period, HS Orka received the operating permit required for the drilling of additional wells and other work necessary for the 50 MW expansion. The 30 MW expansion will not require any additional drilling as the utilized resource will be low pressure steam generated from current operations.
The Company is currently in negotiations on a partnership agreement for the Upper Toba Valley hydro project. The Company is currently optimizing plant design and preparing for the construction of the project, with a goal to complete all the steps required to commence construction by the end of 2012. The two proposed run of river hydro power plants would share much of the infrastructure already in place for Toba Montrose, and are currently configured to total 124 MW of capacity producing an average annual generation of 345,000 MWh. A 40 year PPA with BC Hydro is already in place.
Alterra holds a 51% interest in a potential expansion of the Dokie operations with a projected addition to capacity of approximately 156 MW and expected average annual production of 357,000 MWh. The project has received a BC Provincial Environmental Assessment Certificate. Data collection for a resource assessment of the project is scheduled to be completed by mid-year 2012, with a goal to complete all the steps required to commence construction by the first quarter of 2013.
Alterra has agreed to purchase for approximately $6 million, subject to a number of closing conditions, 10% of a 50 MW portfolio of five photovoltaic solar facilities to be built in Ontario ("ABW Solar") by First Solar, Inc. Alterra will serve as the managing partner of the partnership owning ABW Solar. First Solar has received all the required permits, and construction should begin in the second or third quarter of 2012.
New geothermal concessions were acquired in the Upper Lillooet region of southwestern British Columbia, and in southern Peru near Alterra's existing concessions. Certain less-promising concessions in Nevada were relinquished, and other concessions were sold. At the advanced-stage Mariposa project in Chile, the Company is actively reviewing a number of options for the next phase of exploration in 2012, including entering into a partnership to fund the remaining exploration and development costs.
The Company holds an early stage run of river hydro power project in the Bute Inlet area of British Columbia with an estimated potential annual generation of 2.9 million MWh. In July 2011, the Company signed an Impact Benefit Agreement to advance this project, which lies primarily within the traditional territories of the Homalco First Nation.
Ross Beaty, Alterra's Chairman, said, "All of Alterra's six operating plants are running well today and our three large growth projects in wind, hydro and geothermal are advancing on schedule for construction starting by early 2013. Our management team is strong and we have the financial capacity to support this near-term growth. I look forward with optimism to the year ahead as we build Alterra into a larger, stronger, global clean power company".
Alterra Power will host a conference call to discuss financial and operating results on Thursday, March 29, 2012 at 11:30 am ET (8:30 am PT). North American participants dial 1-888-231-8191 and International participants dial 1-647-427-7450, the conference ID is 6206 8808. The call will also be broadcast live on the Internet at http://www.newswire.ca/en/webcast/detail/936819/1002039. The call will be available for replay for one week after the call by dialing 1-416-849-0833 and entering replay pin number 6206 8808.
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.