Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX: MXG)
announced today the release of financial and operating results for
the second quarter ended June 30, 2020. The unaudited condensed
consolidated interim financial statements, accompanying notes and
Management’s Discussion and Analysis (“MD&A”) will be available
on SEDAR and on MAXIM's website on August 6, 2020. All figures
reported herein are Canadian dollars unless otherwise stated.
COMMISSIONING THE MILNER 2 DEVELOPMENT
PROJECT
MAXIM successfully commissioned its 204 MW
natural gas-fired power plant (“M2”) near Grande Cache, Alberta, on
the existing H.R. Milner (“Milner”) site. M2 began generating
electricity to the Alberta power grid on May 8, 2020. During
commissioning, M2 successfully demonstrated its maximum generating
capacity and environmental compliance. M2 has been operating as
expected.
MAXIM completed construction and commissioning
of M2 despite challenging construction conditions related to both
weather and the Coronavirus. This project represents an industry
leading 16-month construction duration and 21-month total project
horizon (from equipment procurement to project completion). M2 is
the largest simple cycle natural gas-fired power plant in
Alberta.
The M2 project is a testament to the Government
of Alberta’s ongoing commitment to promote economic development by
creating a stable and attractive investment climate. The project
created more than 120 jobs during construction and now provides
ongoing employment and support of local businesses in the Grande
Cache area of Alberta. The government's work to ensure federal
carbon policy does not inhibit investment and its introduction of
the made-in-Alberta Technology Innovation and Emissions Reduction
Regulation program are important to this project and to MAXIM’s
significant commitment to investing in Alberta’s power
infrastructure.
The existing Milner facility is currently
offline while MAXIM operates M2, however, Milner is permitted to
operate at an annual capacity factor of up to 9% until 2029, which
is approximately 113,500 MWh per annum.
AUC LOSS FACTOR DECISION
MAXIM continues to expect the Line Loss
Proceeding claim payment from the Alberta Electric System Operator
(“AESO”). The estimate of $53 million, comprised of $40 million of
overpayments and $13 million of interest, is based on information
currently available on the public record and the Corporation
expects to receive these funds over the next twelve months.
The AESO calculated and released a preliminary
adjustment, on July 7, 2020, related to years 2014, 2015 and 2016
of the Line Loss Proceeding, payable to Milner Power LP in the
amount of $6.5 million, which is in line with the Corporation’s
estimates. The AESO has disclosed that payment of the $6.5 million
is expected to occur before the end of 2020.
FINANCIAL HIGHLIGHTS
|
Three Months EndedJune 30, |
Six Months Ended June 30, |
($ in
thousands except per share amounts) |
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Revenue |
$ |
4,460 |
|
|
$ |
6,676 |
|
|
$ |
11,718 |
|
|
$ |
14,875 |
|
Adjusted EBITDA (1) |
|
(1,589 |
) |
|
|
(785 |
) |
|
|
606 |
|
|
|
(1,819 |
) |
Net income (loss) |
|
(1,167 |
) |
|
|
(4,087 |
) |
|
|
(161 |
) |
|
|
(5,881 |
) |
Net income (loss) per share – basic and
diluted |
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.11 |
) |
Total generation – Milner (MWh) |
|
- |
|
|
|
96,575 |
|
|
|
42,301 |
|
|
|
218,292 |
|
Total generation – M2 (MWh) (2) |
|
107,501 |
|
|
|
- |
|
|
|
107,501 |
|
|
|
- |
|
Average Alberta market power price ($ per
MWh) |
|
29.90 |
|
|
|
56.37 |
|
|
|
48.47 |
|
|
|
63.56 |
|
Average Milner realized power price ($ per
MWh) |
|
- |
|
|
|
69.08 |
|
|
|
171.45 |
|
|
|
68.08 |
|
Average M2 realized power price ($ per MWh)
(2) |
|
41.48 |
|
|
|
- |
|
|
|
41.48 |
|
|
|
- |
|
Total debt |
|
68,970 |
|
|
|
- |
|
|
|
68,970 |
|
|
|
- |
|
Total assets |
$ |
241,896 |
|
|
$ |
168,599 |
|
|
$ |
241,896 |
|
|
$ |
168,599 |
|
(1) |
Select financial information was derived from the unaudited
condensed consolidated interim financial statements and is prepared
in accordance with GAAP, except adjusted earnings before interest,
taxes, depreciation and amortization ("EBITDA”). Adjusted EBITDA is
provided to assist management and investors in determining the
Corporation's approximate operating cash flows before interest,
income taxes, and depreciation and amortization and certain other
income and expenses. |
(2) |
Generation and realized power prices for M2 relate to June 2020
only as the asset was commissioned on June 1. |
OPERATING RESULTS
During the second quarter of 2020, Adjusted
EBITDA decreased as compared to 2019, primarily due to lower
revenues as a result of commissioning M2, which reduced both M2 and
Milner’s ability to operate during the second quarter of 2020 and
higher per unit fuel costs, partially offset by carbon tax savings
from the operation of M2 and lower operations and maintenance
(“O&M”) costs. Net loss decreased in the second quarter of
2020, primarily due to the recognition of a future tax benefit,
partially offset by the higher operating costs, one-time costs to
restructure operations and finance expenses.
During the first six months of 2020, Adjusted
EBITDA increased as compared to 2019, primarily due to realizing
power prices of $171.45 per MWh at Milner in 2020, as compared to
$68.08 per MWh in 2019, fuel and carbon tax savings as a result of
lower generation volumes, lower O&M costs and gains from
commodity swaps. Net loss decreased, due to these same factors and
the recognition of a future tax benefit, partially offset by
one-time costs to restructure operations and finance expenses.
OTHER DEVELOPMENT PROJECTS
MAXIM has permits to construct and operate
electric power projects totalling 536 MW of generating capacity in
Alberta, which are in addition to M2. Of this amount, 346 MW of
generation capacity is at the Milner site and the remaining 190 MW
of generation capacity is for the peaking station at Deerland.
MAXIM also has a wind power development project, Buffalo Atlee,
which has the development potential of up to 200 MW of wind
generation capacity. As at the date of this press release, no
definitive commitments have been made on these projects.
About MAXIM
Based in Calgary, Alberta, MAXIM is one of
Canada’s largest truly independent power producers. MAXIM’s
focussing on power projects in Alberta. Its core assets includes,
the 204 MW natural gas-fired power plant near Grande Cache, AB,
commissioned in 2020, and the adjacent 150 MW H.R. Milner Plant.
MAXIM is exploring its option to increase the capacity of M2, in
conjunction with increasing the overall efficiency of the facility,
by upgrading M2 into a combined cycle plant. In addition, MAXIM
continues to explore development options, including its currently
permitted gas-fired generation capacity in Alberta and permitting
of its wind power generation project in Southern Alberta. MAXIM
trades on the TSX under the symbol “MXG”. For more information
about MAXIM, visit our website at www.maximpowercorp.com.
For further information please contact:
Hansine Ullberg, CFO, (403) 263-3021.
This press release contains forward-looking
statements and forward-looking information (collectively "forward
looking information") within the meaning of applicable securities
laws relating to MAXIM's plans and other aspects of MAXIM's
anticipated future operations, management focus, objectives,
strategies, financial, operating and production results.
Forward-looking information typically uses words such as
"anticipate", "believe", "project", "expect", "goal", "plan",
"intend", "may", "would", "could" or "will" or similar words
suggesting future outcomes, events or performance. The
forward-looking statements contained in this press release speak
only as of the date thereof and are expressly qualified by this
cautionary statement. Specifically, this press release contains
forward-looking statements relating to: anticipated profitable
earnings from development of generation capacity at the Milner
site, the anticipated time periods of continued generation of
electricity from Milner, the initial generation capacity of the
Corporation's new facility at its Milner site, current development
cost estimates to complete the same and anticipated completion
dates, the Corporation's current estimate of the proceeds payable
to the Corporation from the outstanding compliant relating to the
AESO Line Loss Proceeding and the timeline to potentially receive
any proceeds therefrom.
Forward-looking statements regarding MAXIM are
based on certain key expectations and assumptions of MAXIM
concerning, among other things, construction timelines and costs,
regulatory decisions (including with respect to the AESO Line Loss
Proceeding), the ability of MAXIM to reliably generate electricity
from its projects in the timelines and manners currently
contemplated, current and future commodity and electricity prices,
the price of MAXIM's common shares, regulatory developments, tax
laws, future operating costs, the performance of existing and new
facilities, the sufficiency and timing of budgeted capital
expenditures in carrying out planned activities, the availability
and cost of labor and services, the impact of increasing
competition, conditions in general economic and financial markets,
, effects of regulation by governmental agencies, the ability to
obtain financing on acceptable terms which are subject to change
based on commodity prices, market conditions, and potential timing
delays.
These forward-looking statements are subject to
numerous risks and uncertainties, certain of which are beyond
MAXIM's control. Such risks and uncertainties include, without
limitation: construction delays, cost overruns, adverse regulatory
decisions, the impact of general economic conditions; pandemics,
volatility in market prices electricity and other commodities such
as natural gas; industry conditions; currency fluctuations;
environmental risks; incorrect assessments of the value of
acquisitions; competition from other producers; the lack of
availability of qualified personnel, changes in income tax laws,
environmental laws or changes programs relating to the electricity
industry in Alberta; hazards such as fire, explosion, and ability
to access sufficient capital from internal and external
sources.
Management has included the forward-looking
statements above and a summary of assumptions and risks related to
forward-looking statements provided in this press release in order
to provide readers with a more complete perspective on MAXIM's
future plans and operations and such information may not be
appropriate for other purposes.
MAXIM's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits that MAXIM will derive there from.
Readers are cautioned that the foregoing lists of factors are not
exhaustive. These forward looking statements are made as of the
date of this press release and MAXIM disclaims any intent or
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or results or
otherwise, other than as required by applicable securities
laws.
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