SOURCE: Ram Power, Corp. (US)

Ram Power, Corp. (US)

November 13, 2014 17:53 ET

Ram Power Announces 2014 Third Quarter Results

RENO, NV--(Marketwired - 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.com and have been posted on SEDAR at www.sedar.com.

HIGHLIGHTS

San Jacinto-Tizate Project Overview

  • 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

  • Minimum required electricity generation
  • 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. 
  • 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.
  • Concession Extension for San Jacinto-Tizate
  • 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

  • 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."

FINANCIAL OVERVIEW
The financial results of Ram Power for the three and nine months ended September 30, 2014 and 2013 are summarized below:

  Three months ended  Six months ended  
(all figures in U.S dollars) September 30, 2014  September 30, 2013  September 30, 2014  September 30, 2013  
Total revenue $12,882,768  $11,241,582  $35,326,399  $36,341,952  
Other direct costs  (1,816,726 ) (1,814,764 ) (5,028,535 ) (4,517,831 )
Depreciation and amortization of plant assets  (6,607,355 ) (6,119,558 ) (19,536,407 ) (18,379,078 )
General and administrative expenses  (1,468,128 ) (2,043,338 ) (4,900,179 ) (7,647,583 )
Other operating costs  (555,690 ) (428,305 ) (846,264 ) (390,972 )
Operating income  2,434,869   835,617   5,015,014   5,406,488  
Loss on impairment  -   315,000   2,615,342   (18,348,852 )
Gain on warrant liability valuation  431,098   2,592,864   652,514   422,258  
Gain on prepayment option valuation  -   3,026,544   (1,357,000 ) (4,583,518 )
Other gains (losses)  1,359,077   (12,542,464 ) 1,879,298   (498,345 )
Current and deferred tax expense  (1,870,731 ) (2,056,107 ) (5,622,508 ) (6,168,323 )
Total loss and comprehensive loss  (3,636,423 ) (13,930,986 ) (15,993,975 ) (45,849,449 )
Total loss and comprehensive loss per share  ($0.01 ) ($0.05 ) ($0.04 ) ($0.15 )
              
        As at September 30, 2014  As at December 31, 2013  
Total assets         $430,739,646  $457,959,404  
Long-term debt          44,226,795   239,841,360  
Total liabilities          284,175,796   295,537,930  
Cash          16,845,286   22,549,994  
Working capital          (183,900,668 ) 6,329,850  

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.

About Ram Power, Corp.

Ram Power is a renewable energy company engaged in the business of acquiring, exploring, developing, and operating geothermal properties, and has interests in geothermal projects in the United States, Canada, and Latin America. 

USE OF NON-GAAP MEASURES

Certain non-GAAP measures referenced in this news release have no standardized meaning under International Financial Reporting Standards ("IFRS") and, therefore, are unlikely to be comparable to similar measures presented by other issuers. Where we reference non-GAAP measures, we provide definitions. For example, EBITDA is commonly defined as earnings before interest, taxes, depreciation and amortization. EBITDA is most directly comparable to the GAAP measure operating income or loss, except depreciation and amortization expenses of plant assets are excluded in the calculation of EBITDA. Accordingly, where EBITDA measures are disclosed by the Company, they equal operating income or loss plus depreciation and amortization of plant assets. Although a non-GAAP measure, management believes users of the Company's financial information find EBITDA useful in assessing the Company's financial performance. In the Company's earnings releases, consolidated financial statements and MD&As, unless otherwise noted, all financial data is prepared in accordance with IFRS.

Cautionary Statements 

This news release contains certain "forward-looking information" which may include, but is not limited to, statements with respect to future events or future performance, management's expectations regarding the Company's growth, results of operations, estimated future revenue, requirements for additional capital, revenue and production costs, future demand for and prices of electricity, business prospects and opportunities. In addition, statements relating to estimates of recoverable geothermal energy "reserves" or "resources" or energy generation are forward-looking information, as they involve implied assessment, based on certain estimates and assumptions, that the geothermal resources and reserves described can be profitably produced in the future. Such forward-looking information reflects management's current beliefs and is based on information currently available to management. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "predicts", "intends", "targets", "aims", "anticipates" or "believes" or variations (including negative variations) of such words and phrases or may be identified by statements to the effect that certain actions "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. A number of known and unknown risks, uncertainties and other factors may cause the actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current geothermal energy production, development and/or exploration activities and the accuracy of probability simulations prepared to predict prospective geothermal resources; changes in project parameters as plans continue to be refined; possible variations of production rates; failure of plant, equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the geothermal industry; political instability or insurrection or war; labor force availability and turnover; delays in obtaining governmental approvals or in the completion of development or construction activities, or in the commencement of operations; as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form. These factors should be considered carefully and readers of this news release should not place undue reliance on forward-looking information.

Although the forward-looking information contained in this news release is based upon what management believes to be reasonable assumptions, there can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The information in this news release, including such forward-looking information, is made as of the date of this news release and, other than as required by applicable securities laws, Ram Power assumes no obligation to update or revise such information to reflect new events or circumstances.

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