Ram Power updates on San Jacinto and $50m loan facility
Ram Power announces potential tariff increase for its San Jacinto-Tizate expansion project in Nicaragua with a potentially substantial annual revenue increase and discussions on a $50 million corporate credit facility.
Reported before the weekend, Ram Power Corp provided an update on its San Jacinto-Tizate project in Nicaragua and a corporate credit facility of $50 million.
For its project in Nicaragua, Ram Power reports ongoing dialogue with the electricity buyer of the project, Disnorte-Dissur, its parent company Gas Natural Fenosa, as well as a number of ministries within the Nicaraguan Government to increase the power sales tariff for the Project. The increase as contemplated by the initial Project concession will allow the Company to recover unanticipated Project costs associated with both the development of the resource and plant construction. A proposal in this regard is currently being discussed which would result in a power sales tariff increase of approximately 15% to 20% with an annual escalation for the life of the power purchase agreement. The new tariff would result in an annual increase of approximately $8 – $11 million of revenue upon the completion of the full 72 MW expansion.
The ongoing discussions cover a wide array of issues relevant to the interests of all Project stakeholders and, after this tariff increase, the Company will continue to provide the people of Nicaragua with base load renewable energy at a tariff rate approximately 30% to 35% lower than the current energy matrix which is dominated by oil fired power generation.
These discussions remain ongoing and the finalization of the tariff increase awaits the formal approval of the relevant ministries of the Nicaraguan Government.
The Project’s Phase II, 36 MW net expansion (the “Phase II expansion”) continues to be constructed on time and on budget, with construction-to-date approximately 75% complete. Construction of the Phase II expansion is expected to be completed in the fourth quarter of 2012, with a commercial operation date of December 2012.
Resource Development Activities
On May 25, 2012, production capacity of the Project has been confirmed by GeothermEx, Inc., a Schlumberger Company, (“GeothermEx”), the independent resource consultant for the lenders under the Phase II Credit Facility. The GeothermEx report concludes that existing production wells have sufficient capacity to run the Phase I and II expansions at full output. The report confirmed a resource capacity of 592 tonnes/hr of steam for the 72 MW net combined Phase I and II expansion of the Project.
The Company continues to develop its geothermal resource management plan and investigate ways to further expand the resource at San Jacinto-Tizate. Commencing the week of May 28, 2012 and continuing for the next several weeks, the Company is implementing a cost effective stimulation program of selected, existing production wells with the goal of further enhancing total steam flow. Ultimately, the integration of all existing production wells in the resource field into the steam collection manifold system will provide maximum flexibility in supplying steam to both phases of the Project expansion.
Corporate Credit Facility of $50 million
The Company is currently in discussions with Sprott Resource Lending Partnership, Exploration Capital Partners 2008 Limited Partnership and Newberry International Holdings Ltd. for a payment-in-kind of Company’s common stock in lieu of cash for fees and interest payable for the six month period from July1, 2012 through December 31, 2012 under the Corporate Credit Facility. The estimated interest and fees for the period is $4 million. The objective of the payment-in-kind is to substantially increase the cash liquidity of the Company, providing additional working capital flexibility and near-term capital to exploit the pipeline projects at both the Geysers Project in Northern California and the Casita Project in Nicaragua. An amendment to the Corporate Credit Facility to provide for this payment-in-kind of fees and interest is expected to close within 30 days, subject to mutually agreeable terms and Toronto Stock Exchange approval.
Ram Power’s COO of Latin America, Tono Rodriquez, stated, “With a majority of the engineering and construction completed, the Phase II expansion construction continues at a rapid pace. We fully expect the project to come in on time and on budget, with an expected on-line date in the fourth quarter of this year.”
“I continue to be pleased with the progress being made at the San Jacinto project site, and with our ongoing discussions with the Nicaraguan Government and our Corporate Credit Facility lenders”, stated Antony Mitchell, Executive Chairman of Ram Power, Corp. “The Company is continuing to deliver on its promises to its shareholders as well as solidifying its reputation as the provider of clean, renewable energy for the citizens of Nicaragua.”
Source: Company release