RENO, NV--(Marketwire - Aug 15, 2011) - Ram Power, Corp. (
Concurrent with today's release, Walt Higgins, Interim President and CEO of Ram Power, stated, "The second quarter and subsequent events leading to full access to the Phase II credit facility for the San Jacinto project represent a significant achievement for the management, employees and consultants of the Company. The resulting changes to our control procedures, organization and reporting structure combined with the use of outside experts to assist the Company through this period have been the catalyst to proving the resource and closing the Phase II credit facility. I am very happy with the results, and look forward to the future of the Company."
The financial results of Ram Power for the three and six months ended June 30, 2011 and 2010 are summarized below:
|For the three months ended||For the six months ended|
|(all figures in U.S dollars)||June 30, 2011||June 30, 2010||June 30, 2011||June 30, 2010|
|Direct cost of energy production||395,805||402,690||901,868||903,323|
|Loss on warrant liability valuation||2,511,120||-||2,511,120||-|
|Income tax recovery and non-controlling interest||734,818||656,388||1,571,482||695,767|
|Loss per share||$||(0.03||)||$||(0.04||)||$||(0.07||)||$||(0.06||)|
For the six months ended June 30, 2011, the Company reported a net loss of approximately $13.1 million ($0.07 per share). On a cash basis, for the same period, the Company had a negative cash flow of about $8.9 million from operating activities and spent approximately $103.3 million on additions to geothermal properties and capital assets, including approximately $81.6 million on the Phase I and II San Jacinto-Tizate expansions and approximately $19 million on the Orita Project. At June 30, 2011, the Company had free cash of approximately $32.7 million.
San Jacinto Project
The Phase I expansion at San Jacinto is scheduled to achieve commercial operation date (COD) in December 2011. The San Jacinto Exploitation Agreement (the concession from the Nicaraguan government) previously provided that the deadline for COD of Phase I was April 26, 2011. On April 29, 2011, the Nicaraguan Ministry of Energy and Mines (MEM) agreed to further extend the COD deadline of Phase I to October 28, 2011. Based on Nicaraguan Law and pursuant to the terms of such agreement, the Company has until on or about August 28, 2012 before MEM could start to take action to terminate the San Jacinto concession on the basis of failure to meet the Phase I COD.
In connection with this extension, the Company agreed to begin paying daily delay liquidated damages under the power purchase agreement with Disnorte-Dissur if Phase I is not completed by July 26, 2011 through its bank guaranty of $2.5 million, and then through an additional $1.1 million paid within three months of commercial operation of Phase I to be deducted from the Company's energy sales from the San Jacinto project. Liquidated damages will be payable at the rate of $40,000/day for each day Phase I is not complete past July 26, 2011, with a maximum penalty of $3.6 million.
The Phase II expansion at San Jacinto is scheduled to achieve COD in January 2013. The San Jacinto Exploitation Agreement provides that the deadline for COD of Phase II is August 2, 2012. Based on Nicaraguan Law and pursuant to the terms of such agreement, the Company has until on or about June 2, 2013 before MEM could start to take action to terminate the San Jacinto concession on the basis of failure to meet the Phase II COD.
Currently, the Company is evaluating various strategic options for the Geysers Project including development alternatives or monetization of its rights in the resource through a steam sale or sale of the Geysers Project.
In January 2011, the Company commenced drilling of the Orita No. 4 well at the previously drilled and proven Emanuelli #2 well location. The Orita No. 4 well was drilled to a depth of 14,325 ft. and initial flow testing shows fluid entries at 10,100 ft. and 11,500 ft. with 555ºF measured at 12,430 ft. under flowing conditions. A long-term flow test was terminated in late June 2011 due to bridging within the well. The well exhibited erratic and surging flow behavior with an inability to achieve completely stable conditions. The final flow was estimated to be around 3 MW at a flowing pressure of 120 psig, but was inconsistent and unstable. The Company is assessing its viability as a commercial well. Significant flow data measurements and fluid sampling were successfully conducted with this well that will be used for further analysis of the resource and assessment for the overall commercial viability of the project.
The Company plans to reevaluate the economics and feasibility and future resource development plan for the Orita Project, but due to capital constraints, the Company has chosen to postpone completion of the testing and full evaluation of the Orita Project until additional funds are available. In connection with this, the Company has withdrawn the project from the Imperial Irrigation District's (IID) interconnection queue for 2012 and 2013, and requested that the IID assign the project a queue position scheduled for 2014 and 2015. The Company has also initiated discussions with Southern California Edison (SCE) on a revised development plan for the project to extend the deadlines for certain milestone dates included in the power purchase agreement with SCE to enable the Company to continue development should the project prove feasible.
Once additional funds become available to the Company, further analysis and evaluation of the resource and project development potential will continue by Company personnel and independent parties GeothermEx and SKM. This analysis and evaluation will include structural geology and geophysical examination of the field results from the drilling experiences of the three Orita wells drilled to date. In conjunction with these studies and their results, the Company will determine whether completing the long term test of Orita No. 2 will be necessary in evaluating the resource and the viability of further project development. The testing of Orita No. 2 would involve injection into Orita No. 4, which may cause positive changes or improvements to the flow potential and behavior of Orita No. 4.
Corporate Credit Facility
The Company is in negotiations with the lenders under the Corporate Credit Facility to amend the agreement to eliminate mandatory prepayment provisions relating to distributions from the San Jacinto project and the potential early maturity of the facility on February 28, 2012 due to a failure to provide additional collateral to the lenders, and to cure certain non-compliance with the covenants related to post-closing collateral perfection requirements and deadlines.
Antony Mitchell, Executive Chairman of Ram Power, Corp., stated, "The events of the last seven months at Ram Power have certainly challenged our board, management, employees and consultants. Our Company remains committed to developing the San Jacinto project, and through that determination we have had our recent success with our drilling program and the closing of the Phase II credit facility. Our commitment to developing our pipeline of projects will continue to affirm investor confidence in Ram Power's ability to execute our business plan well into the future."
Ram Power, Corp. will hold its earnings call to discuss the second quarter ending June 30, 2011 financial and operating results on Tuesday, August 16, 2011 at 10:00am EDT (7:00am PDT). To listen to the call, please dial 1-866-696-5910 with participant pass code 5478131, or on the web at http://www.bellwebcasting.ca/audience/index.asp?eventid=74543397.
About Ram Power, Corp.
Ram Power is a renewable energy company based in Reno, Nevada, engaged in the business of acquiring, exploring, developing, and operating geothermal properties and has an interest in geothermal projects, primarily in the United States, Canada, and Latin America.
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 revenues, requirements for additional capital, production costs and revenue, 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. 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 forward-looking information to reflect new events or circumstances.
Director of Investor Relations
Ram Power, Corp.