For the For the
Three Months Three Months For the Nine For the Nine
Ended Ended Months Ended Months Ended
(All figures in September 30, September 30, September 30, September 30,
U.S. dollars) 2010 2009 2010 2009
------------ ------------ ------------ ------------
Total revenue $ 996,227 $ 1,239,603 $ 3,052,189 $ 3,611,983
Direct cost of
energy production (371,283) (418,027) (1,274,606) (993,926)
Expenses (5,671,797) (3,527,033) (16,179,757) (6,147,378)
Other income (loss) (1,656,636) (13,072,487) (3,418,942) (19,212,341)
Income tax and
non-controlling
interest 112,275 70,500 739,883 77,659
Net loss 6,591,214 15,707,444 (17,081,233) (21,999,408)
Loss per share (0.04) (0.16) (0.12) (0.26)
As at As at
September 30, December 31,
2010 2009
------------ ------------
Total assets 447,851,705 370,298,161
Long-term debt, net
of debt discount 45,569,253 849,688
Total liabilities 93,476,575 28,515,147
Cash and short term
investments 42,684,091 123,341,372
Working capital 21,428,017 115,150,121
For the purpose of this summary, the results of Polaris Geothermal Inc. for
the three and nine months ended September 30, 2009 are used as comparatives
because, for accounting purposes, the financial statements of the Company
are deemed to be a continuation of the financial statements of Polaris
Geothermal Inc.
For the third quarter ended September 30, 2010, the Company reported a net
loss of approximately $6.6 million ($0.04 per share). On a cash basis, for
the same period, the Company had a negative cash flow of about $4.5 million
from operating activities and spent approximately $51.4 million on
additions to geothermal properties and capital assets, including
approximately $40 million on the Phase I and II San Jacinto-Tizate
expansions and approximately $9.1 million on the Orita Project. At
September 30, 2010, the Company had cash and short term investments of
approximately $42.6 million, and long-term (non recourse) debt, net of debt
discount, of approximately $45.6 million.
Phase I & II Expansions of San Jacinto-Tizate
Phase I Expansion:
Construction continued during the third quarter on the Phase I 36 MW
expansion of the current operating facility to increase the production
capacity to 46 MW with an anticipated commercial operation date in the
second quarter of 2011. There is certified production and injection well
capacity to support the planned production increase. The Company is using a
combination of equity and a $77 million credit facility to fund the $152
million cost of the expansion. The Company had $120 million in accumulated
costs, including accruals, related to the Phase I expansion as of September
30, 2010. As of September 30, 2010, the Company satisfied the equity
investment requirement for the credit facility and had drawn $47 million of
the $77 million available under the facility. The Company held $16.5
million in cash as of September 30, 2010 to be used for payment of the
$14.5 million of accounts payable and accruals at period end and other
costs related to the Phase I expansion. The additional $2 million of cash
on hand and the remaining $30 million to be drawn on the credit facility
will be used to fund the remaining $32 million of the Phase I expansion.
Phase II Expansion:
Construction and Financing: Construction continued during the third quarter
on the Phase II expansion from 46 MW to 72MW of capacity with an
anticipated commercial operation date at the end of the fourth quarter of
2011. On November 4, 2010, the Company entered into a credit facility with
a group of development banks led by International Finance Corporation and
Inter-American Development Bank to provide the debt financing for the Phase
II expansion. The financing consists of $140 million in senior construction
and term loans and $20 million in subordinated debt which is available for
Phase II contingencies and for general corporate purposes. Phase II is
being constructed in parallel to Phase I, and is being financed with cash
on hand until the Company can draw on the Phase II credit facility, which
is expected to occur in the fourth quarter of 2010. As of September 30,
2010, the Company had invested equity of approximately $37 million in
accumulated costs related to the Phase II expansion. Upon the funding of
the Phase II Credit Agreement, the Company expects to receive back under
conditions precedent approximately $20 million in equity. With the
certification of additional geothermal resources for Phase II, the Company
will be entitled to draw on the credit facility to recover the remaining
portion of its equity investment in Phase II.
Drilling and Exploration: The first exploration/production well, SJ 12-1,
completed in July 2010 to the depth of 5,400 ft. had a bottom hole
temperature of approximately 500° Fahrenheit with good permeability. Over
the past 90 days the well has been undergoing a cleaning process whereby a
high-pressure air cap is applied to the well and then intermittently
released. The process has been successful in removing drilling debris and
improving the overall production quality of the well. The Company
anticipates testing and certification of this well in the fourth quarter of
2010. A second production well, SJ 9-3, was completed on August 21, 2010 to
a depth of 6,158 ft. A short term flow test was done and the well was
deemed a commercial well of 8 MW gross. The Company is currently conducting
a long-term flow test on well SJ 9-3 which involves the connection of the
well to the project's production piping. The results of this testing will
be certified by GeothermEx, Inc. in the fourth quarter of 2010. Drilling
of a third production well, SJ 9-2 was started in September 2010 and
consisted of the re-drilling of the previously non-commercial SJ 9-2 well.
The well was directionally drilled to intersect identified fracture
targets. The well was completed to a depth of 6,245 ft. in November 2010
and indicated a very high bottom hole temperature with good permeability.
The well is currently being cleaned and tested with the results expected in
the fourth quarter 2010.
Geysers Project Update
The Company has been diligently working on finalizing a strategy for the
Geysers Project. The project has four completed wells which have an
estimated initial resource capacity of 26.1 MW. From August 2009 through
June 2010, the Company was approached by two unrelated parties that were
interested in either purchasing the resource or entering into a sale of
steam from the existing steam field. However, the Company has decided in
order to fully maximize the resource it will develop the project
internally. Currently, the Company is actively pursuing project financing
and is in discussions with engineering, procurement, and a construction
contractor for the development of the Geysers Project. It is expected that
financing will close in early 2011 with construction to follow. The
Company expects the Geysers Project to be completed by 2013.
Orita Exploration Activities
During the quarter ended September 30, 2010, the Company continued its
Orita drilling and exploration. As previously disclosed, drilling on the
Orita No. 2 well was suspended in July 2010 at a depth of 9,267 ft due to
mechanical problems and the well was lined with perforated casing, cleaned
and tested. A flow test produced fluids that confirmed the desired
low-salinity benign chemistry but only marginal permeability at this depth.
The Company, in October 2010 has commenced the partial re-drilling of this
well. The drilling plan calls for a drilling depth of up to 14,000 ft. to
test known zones of high permeability previously encountered in the
Emanuelli #1 well.
In July 2010 drilling commenced on Orita No. 3 well and it was drilled to
the targeted depth of approximately 11,800 ft. As of September 2010, the
well was completed to the targeted depth and showed significant
hydrothermal alteration and had intercepted a major fault controlled
low-resistivity zone with loss circulation. Bottom hole temperature of the
well was in excess of 450° Fahrenheit. The well was successfully cased to
9,198 ft., however, the perforated liner was damaged during installation
and productivity testing could not be successfully completed. The Company
will re-evaluate this well once it has the results from the re-drill and
testing of Orita No. 2 well.
Mr. Ram concluded, "I am pleased at what we accomplished in the quarter,
and continue to be excited about the future for Ram Power. We will
continue to develop our San Jacinto-Tizate project, which will deliver
clean, renewable geothermal power to the citizens of Nicaragua for the
foreseeable future. Our decision to move forward with financing and
constructing the Geysers project will greatly enhance our future production
and cash-flow. Finally, we continue to be very optimistic about the
continued development of our pipeline projects including Orita and our
projects in Nevada."
Ram Power, Corp. will hold its earnings call to discuss the Third Quarter
2010 financial and operating results on Tuesday, November 16, 2010 at
10:30am EST (7:30am PST). To listen to the call, please dial
1-866-696-5910 with participant pass code 6454353, or on the web at
http://www.bellwebcasting.ca/audience/index.asp?eventid=53644960.
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 interests in geothermal projects in the United States,
Canada, and Latin America.
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 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 this news release. 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, Corp. assumes no
obligation to update or revise such forward-looking information to reflect
new events or circumstances.
Contact Information: Steven Scott Director of Investor Relations Ram Power, Corp. Phone: 775-398-3711 Email: www.ram-power.com