Maxim Power Corp.
TSX : MXG

Maxim Power Corp.

November 11, 2005 09:21 ET

Maxim Power Corp. Reports Results for the Third Quarter of 2005

CALGARY, ALBERTA--(CCNMatthews - Nov. 11, 2005) - Maxim Power Corp. (TSX:MXG) ("MAXIM") today announced results for the third quarter of 2005.

Financial Highlights

For accounting purposes, the Milner Power Limited Partnership ("Milner") is considered to have acquired MAXIM under a reverse takeover ("RTO") at March 31, 2005. As a result, the 2005 operating results and funds from operations reflect those of Milner for the nine months ended September 30, 2005 plus the other operations of MAXIM for the six months ended September 30, 2005. Comparative amounts for 2004 represent only Milner's operations from January 29, 2004, the date of acquisition of Milner, to September 30, 2004.



Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004(1)
------------------------------------------------------------------------
($ in thousands except
per share amounts)
Revenue $ 12,000 $ 10,970 $ 41,290 $ 33,861
EBITDA(2) (212) 1,748 6,440 9,681
Operating Income (loss) (1,601) 1093 3,213 8,295
Net Income (loss) (2,554) 1,151 1,700 8,372
Per share-basic and diluted ($0.01) $ 0.01 $ 0.01 $ 0.04
Funds from (used in)
Operations (791) 1,827 5,536 9,779
Per share-basic and diluted(1) ($0.00) $ 0.01 $ 0.02 $ 0.04

Electricity Deliveries (MWh) 173,751 205,029 672,759 615,822
Net Generation Capacity (MW) 317.7 144.0 317.7 144.0
Average Milner Prices
($ per MWh) $ 54.00 $ 54.00 $ 52.00 $ 55.00

(1) Year to date 2004 results reflect eight months of operations at
Milner from the date of acquisition on January 29, 2004 to
September 30, 2004.

(2) Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") and Funds from Operations per share are not measures
under Canadian Generally Accepted Accounting Principles ("GAAP")
and may not be comparable to similar measures presented by other
companies.


Operating Results

Electricity deliveries, revenue and net income are down in the third quarter of 2005 compared with 2004. During Milner's annual plant turnaround of three weeks, it became apparent that further repairs were necessary and desirable. An additional two weeks were required to complete the turnaround primarily due to delays in equipment deliveries and related testing. Electricity deliveries at Milner were down from 205,029 MWh in Q3 of 2004 to 132,973 MWh for the same period of 2005. Milner realized $54 MWh in both periods.

The Milner plant resumed operations on September 19, and began to realize significantly higher pool prices which more than offset the lost revenue from the extended turnaround in the third quarter. October was a record revenue month for Milner with average Alberta pool prices settling at $122/MWh.

With higher prices in Alberta, Maxim is evaluating several power sales opportunities which may result in short-term Power Purchase Agreements ("PPA's") to sell physical power from the Milner power plant on a "fully unit contingent basis". This means that Maxim would have the obligation to deliver power if, and only if, Milner is running.

Maxim recently announced that it has entered into a one-year PPA for 2006 with respect to Milner. The PPA is structured to sell 138,000 MWh or an approximate equivalent of 18.5 MW of power to Prairie Power Ltd. over the period January 1, 2006 to December 31, 2006 on a fully contingent basis.

Despite Milner's lower production in the third quarter, overall production increased reflecting the inclusion of the operating results from MAXIM's other projects as follows:



Nine Months Ended September 30
2005 2004
MWh Revenue MWh Revenue
------------------------------------------------------------------------
($ in thousands)
Milner 588,112 $30,413 615,822 $33,861
MAXIM's other projects (1)
Alberta 17,728 2,242 - -
British Columbia 27,460 1,509 - -
Europe 12,606 686 - -
Cambodia 26,853 6,440 - -
------------------------------------------------------------------------
Sub-total 84,647 10,877 - -

Total 672,759 41,290 615,822 33,861

(1) No comparatives for 2004 under RTO accounting principles


MAXIM's other projects are not reflected in the first quarter 2005 or in 2004 due to RTO accounting. However, those projects generated electricity deliveries of 49,299 MWh and revenue of $6,151 in the third quarter 2004.

Growth Initiatives

On November 9, 2005, Maxim announced the acquisition of a 67 MW natural gas-fired combined cycle cogeneration plant located in Pawtucket, Rhode Island, USA. MAXIM is currently evaluating short to medium term PPA's with several counterparties in the New England Power Pool market ("NEPOOL"). Given that the NEPOOL market generation supply mix is approximately 65% natural gas and oil fired, MAXIM believes that current market heat rates are unsustainably low. MAXIM also believes that the New England market has very positive fundamentals and that this facility will prove to be a very low-cost high impact acquisition in MAXIM's portfolio of generating facilities.

The 52 MW Basin Creek Project in Montana is under construction with $35.1 million spent (or 75% complete) to September 30, 2005. This project, which will represent a net 50.2 MW of natural gas fired generating capacity to MAXIM, is expected to be in commercial operation by January, 2006, at which time, it will sell power under a fixed price contract.

Maxim has invested approximately $0.3 million to September 30, 2005 on the development of Milner's coal lease, which has an estimated 13 million tonnes of recoverable coal reserves. The marketing review has been completed and the transportation study and detailed mine design are underway. The environmental fieldwork is 75% complete. Exploration permitting approvals for the field program are expected within the next 3-6 months.

MAXIM has completed construction of it's 5.6 MW Bataneres Cogeneration Project in France which commenced commercial operations on November 1, 2005. With the completion of Bataneres and the acquisition of seven power plants in 2005, MAXIM now has 10 power plants in France having a total net generating capacity of 63 MW electric and 27 MW thermal.

MAXIM has initiated the expansion of the Vancouver Landfill Project from its current 5.6 MW (electric) and 6.7 MW (thermal) capacity to a plant capacity of 7.4 MW (electric) and 8.9 MW (thermal). The existing powerhouse was designed to accept the fourth cogeneration unit, and MAXIM expects to complete the expansion by May 2006.

Operational and Financial Outlook

Revenue and EBITDA estimates for the balance of 2005 now reflect higher power prices currently being experienced and projected over the balance of the year for Alberta. As a result, MAXIM's financial outlook for 2005 is currently as follows:



Recorded Outlook
-------------------------------------------------------
9 Months Ended 3 Months Ended 12 Months Ended
($ in Thousands) September 30, 2005 Dec. 31, 2005 Dec. 31, 2005
------------------------------------------------------------------------
Electricity
Deliveries (MWh) 672,759 321,000-382,000 994,000-1,054,000
Revenue $41,290 $37,500-41,500 $78,800-82,800
EBITDA $ 6,440 $13,600-14,600 $20,000-21,000


With the 67 MW power plant acquisition in Rhode Island, USA, and completion of the Basin Creek Power Plant in Montana, USA, MAXIM will have a total of 385 MW electric and 45 MW of thermal net installed generating capacity by the end of 2005. This will represent an 85% increase in installed electric capacity from year end 2004. MAXIM will continue to execute on its strategy as an Independent Power Producer and is targeting significant growth through acquisitions, development and rationalization of power projects which utilize hydrocarbon based fuels and renewables in the markets of North America and Europe.

About MAXIM Power Corp.

Based in Calgary, Alberta, MAXIM is an Independent Power Producer, which acquires or develops, owns and operates innovative and environmentally responsible power projects. MAXIM currently owns and operates 24 power plants in Western Canada, United States, Continental Europe and Cambodia, having 334 MW of electric and 45 MW of thermal net generating capacity with another 52 MW under construction. MAXIM trades on the TSX under the symbol "MXG". For more information about MAXIM, visit our website at www.maximpowercorp.com.

Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of the press release.

Contact Information

  • Maxim Power Corp.
    John R. Bobenic
    President and CEO
    (403) 750-9300
    or
    Maxim Power Corp.
    Victor S. Dusik
    Vice President, Finance and CFO
    (403) 750-9319
    Website: www.maximpowercorp.com