November 13, 2014 - Ram Power, Corp. (TSX: RPG) ("Ram Power" or the "Company"), a renewable energy company focused on the development, production and sale of electricity from geothermal energy, is pleased to announce its operating results for the quarter ended September 30, 2014. This earnings release should be read in conjunction with Ram Power's financial statements, and management's discussion and analysis ("MD&A"), which are available on the Company's website at www.ram-power.comand have been posted on SEDAR at www.sedar.com.
HIGHLIGHTS
San Jacinto-Tizate Project Overview
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The San Jacinto-Tizate Power Plant generated 115,309 (net) MWh resulting in revenue of $12.9 million for the quarter ended September 30, 2014 (an increase of 15% over the same period in 2013) compared to revenue of $11.2 million in the third quarter 2013. Revenue for the nine months ended September 30, 2014 was $35.3 million compared with $36.3 million for the same period in 2013.
Nicaragua Government and Stakeholder Initiatives
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Minimum required electricity generation
o There is a requirement in the San Jacinto project exploitation agreement that the amount of electricity generated by the plant be at least above a minimum prescribed amount. Until November 10, 2014, that minimum prescribed amount was 90% of the 72 MW (net)/day capacity of the plant. The Company has been experiencing resource declines in certain of its wells at the San Jacinto project, and as a result has not been operating above the minimum capacity required by the exploitation agreement. On April 18, 2014, the Nicaragua government agreed that the failure to meet the minimum capacity was a result of a force majeure and accordingly the Company has been relieved until May 31, 2016 from any penalties that would otherwise be applicable on account of the failure to meet the minimum electricity production.
o On November 10, 2014, the power purchase agreement between the Company and Disnorte-Dissur was amended to modify the penalty formula described above by: (i) reducing the capacity factor from 90% to 70%; (ii) changing from a binomic charge to a mononic charge; and (iii) defining parasitic consumption as undelivered energy not attributable to the seller. As a result, as long as the amount of electricity generated by the plant at its San Jacinto project is above 45 MW (net)/day, the Company will not be in violation of the covenants in its exploitation agreement relating to production. However, this change does not affect the minimum electricity production required under the Company's credit agreements, which minimum is an average of 55 MW (net)/day.
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Concession Extension for San Jacinto-Tizate
o In October 2014, Reform Law No. 443 was passed by the Congress of Nicaragua which, among other things, results in the extension of the Company's concession period from 25 years to 30 years (with the ability to apply at the end of the concession period for a further 30 year extension). As a result, the expiry of the San Jacinto concession has now been extended from the year 2026 to 2031 (with the ability to apply for a further extension until the year 2061). In addition, the Company is entitled to an extension under its power purchase agreement to the year 2029 (and not until 2031 on account of the fact that the license of distribution company only runs through 2029).
Ram Power Corporate Update
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As previously disclosed, Ram Power formed a Mergers and Acquisitions Committee in November 2013 to explore and evaluate a broad range of strategic alternatives for the Company to enhance shareholder value. The Mergers and Acquisitions Committee is tasked with exploring opportunities to increase operational efficiencies, strategic partnerships, asset sales or purchases, joint ventures, the sale of the Company, alternative operating models, or continuing with the current business plan, among other potential alternatives.
"We continue to press forward with our interested parties in an effort to bring to a close our strategic Process for the Company," stated Antony Mitchell, Executive Chairman of Ram Power. "All parties have shown an absolute willingness to bring this process to a close with as much expediency as possible for the benefit of all our stakeholders."
For the quarter ended September 30, 2014, the Company reported revenue of $12.9 million and a total loss and comprehensive loss of $3.6 million, or $(0.01) per share, compared to revenue of $11.2 million and a total loss and comprehensive loss of $13.9 million, or $(0.05) per share, for third quarter 2013. The 15% increase in revenue resulted from wells offline for the drilling remediation program in 2013. Total loss and comprehensive loss for quarter ended September 30, 2014 was impacted by the non-cash depreciation and amortization expense of $6.6 million, deferred tax expense of $1.9 million, offset by unrealized foreign exchange gains on translation of the Company's debentures of $2.2 million.
The Company recognized a net loss of $16 million for the nine months ended September 30, 2014 compared to a net loss of $45.9 million for the same period in 2013, which resulted in a decreased loss of $29.9 million due to various factors, including $21 million decrease related to impairment losses on the Geysers project and $5.8 million decrease related to unrealized other gains and losses from foreign exchange and valuation of the Company's derivatives. Revenue for the nine months ended September 30, 2014 of $35.3 million was $1 million less than revenue for the same period in 2013 of $36.3 million. The drilling remediation program and turbine overhaul in 2014 contributed to the decline.
For the nine months ended September 30, 2014, the Company had net operating cash inflows of $7.6 million, net investing cash inflows of $0.5 million and net financing cash outflows of $13.8 million, which combined for a net decrease in cash of $5.7 million. The Company expended $6.7 million for additions to geothermal properties, principally related to San Jacinto drilling and turbine overhaul costs. At September 30, 2014, the Company had cash of $16.8 million, of which $14.3 million was held for current use in the San Jacinto project.
The Company had negative working capital of $183.9 million as at September 30, 2014 as a result of project debt compliance issues allowing the Company's lenders to accelerate the credit facilities at their discretion. Because of continuing losses and negative working capital, the Company's continuance as a going concern is dependent upon its ability to obtain waivers or restructure the San Jacinto project credit facilities (including by way of lowering the requirement to achieve a minimum level of electricity production at the San Jacinto project from the current minimum of 55 MW (net)/day), obtain the consent of the holders of its Debentures to delay the December 31, 2014 requirement to pay interest on the Debentures until such time as the Company has raised additional cash, and obtain adequate additional financing.
The Company will need to raise additional capital through the strategic process in order to continue funding operating and exploration and development expenditures. However, it is not possible to predict whether financing efforts will be successful on terms acceptable to the Company (or at all) or if the Company will attain profitable levels of operations. The unaudited interim condensed consolidated financial statements being released today do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern.
As a result of the continuing strategic process of the Company, there will not be a quarterly earnings call with management for the third quarter. The Company will provide an update with respect to the strategic process at such time as developments require disclosure in accordance with applicable securities laws.
[A full text of the release can be found as attached]