CALGARY, ALBERTA -- (Marketwire) -- 03/21/13 -- Maxim Power Corp. (TSX: MXG) ("MAXIM" or the "Corporation") announced today the release of financial and operating results for its fourth quarter and year ended December 31, 2012. The audited financial statements, accompanying notes and Management Discussion and Analysis will be available on SEDAR and on MAXIM's website on March 22, 2013. All figures reported herein are Canadian dollars unless otherwise stated.
Three Months Ended Twelve Months Ended December 31, December 31,($ in thousands except per share amounts) 2012 2011 2012 2011Net revenue (1) $ 51,155 $ 44,816 $ 156,609 $ 155,290Adjusted EBITDA (1) 9,642 11,304 34,901 38,826Adjusted net income (1) 566 4,191 10,513 10,164 Per share - basic and diluted $ 0.01 $ 0.08 $ 0.19 $ 0.19Net income attributable to shareholders 1,372 (1,555) 3,625 15,316 Per share - basic and diluted $ 0.03 $ (0.03) $ 0.07 $ 0.28Funds from operations (2) 8,270 11,489 33,936 38,801 Per share - basic and diluted $ 0.15 $ 0.21 $ 0.63 $ 0.72Electricity Deliveries (MWh) 321,530 295,420 1,156,522 1,203,227Net Generation Capacity (MW) (3) 804 815 804 815Average Alberta Power Prices ($ per MWh) $ 78.70 $ 76.07 $ 64.31 $ 76.21Average Milner Realized Electricity Price ($ per MWh) $ 98.21 $ 89.12 $ 90.78 $ 80.12(1) Select financial information was derived from the audited consolidated financial statements and is prepared in accordance with Part 1 of the Canadian Institute of Chartered Accountants Handbook ("GAAP"), except net revenue, adjusted EBITDA, and adjusted net income. Net revenue is provided to highlight revenue net of any gains or losses realized on commodity swaps. 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. Adjusted net income is used to compare MAXIM's results among reporting periods without consideration of unrealized gains and losses and to evaluate MAXIM's performance. Net revenue, adjusted EBITDA, and adjusted net income do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies.(2) Funds from operations is an Additional GAAP measure provided to assist management and investors in determining the Corporation's cash flows generated by operations before the cash impact of working capital fluctuations.(3) Generation capacity is manufacturer's nameplate capacity net of minority ownership interests of third parties.
During the fourth quarter of 2012, net revenue increased primarily due to increased demand in the Northeast US as well as continued growth in France. Net income attributable to shareholders further increased primarily due to recognizing an unrealized gain on the derivative coal contract in 2012 as opposed to a loss in 2011.
Adjusted EBITDA, adjusted net income and funds from operations decreased in the fourth quarter of 2012 compared to 2011. The decrease is primarily due to remarketing coal from Milner for a gain on the derivative coal contract in 2011 as opposed to nil in 2012.
On a year to date basis, net revenue and adjusted net income improved in 2012 when compared to 2011. The increases in these financial measures are primarily due to the same factors impacting the fourth quarter.
On a year to date basis, adjusted EBITDA, funds from operations and net income attributable to shareholders declined in 2012 when compared to 2011. The decrease in these financial measures is primarily due to the same factors impacting the fourth quarter. Net income attributable to shareholders further decreased primarily due to recognizing an unrealized loss on the derivative coal contract in 2012 as opposed to a gain in 2011.
During the fourth quarter of 2012, MAXIM appointed financial advisors to review the Corporation's investments in the United States and France in order to identify options to maximize shareholder value. Credit Suisse Securities (USA) LLC has been engaged as financial advisor with respect to MAXIM's investments in the United States and HSBC Bank plc has been engaged as financial advisor with respect to MAXIM's investments in France. The evaluation of these initiatives is ongoing.
Summit Coal Limited Partnership ("SUMMIT") Mine 14 Project
During 2012, SUMMIT acquired two additional coal leases adjacent to its Mine 14 project, which is located north of Grande Cache, Alberta, advanced the development all of the Mine 14 project, and acquired an additional coal lease for a potential new property, Mine 16S. SUMMIT's lease holdings increased by 140% to 6,669 hectares following these additions. SUMMIT has since completed the 2012 exploration program for Mine 14 and reported the results in an updated NI 43-101 Technical Report filed on SEDAR on March 21, 2013. Current estimates for Mine 14, which includes the two additional adjacent leases, are 18.9 million tonnes of low-mid volatile metallurgical coal reserves with a mine life of 17 years. Mine 16S is located 30 kilometers northwest of the Mine 14 leases and represents 1,792 hectares or 29% of SUMMIT's total area of leases. An NI 43-101 Technical Report has not been prepared for the Mine 16S property.
SUMMIT has previously entered into a ten-year terminal services agreement with Ridley Terminals Inc., commencing January 1, 2015. This agreement provides SUMMIT with firm terminal capacity and terminal processing services to enable SUMMIT's proposed coal production to access the valuable seaborne metallurgical coal market. Signing this agreement reduces development risk as SUMMIT advances to the construction phase of its Mine 14 project. In addition to this, SUMMIT has secured firm 2014 delivery dates for critical mining equipment. During the fourth quarter of 2012, SUMMIT amended the agreement with the mining equipment supplier to allow for an extension for delivery to 2014.
SUMMIT plans to spend additional funds in 2013 on a further deposit for mining equipment and approvals to construct and operate a coal beneficiation plant as well as amend the existing ERCB mine license in order to increase annual coal production. SUMMIT anticipates receiving the mine license amendment and coal beneficiation plant approvals in the second quarter of 2013.
The Corporation considers the advancement of the M14 and M16S development projects strategic for MAXIM in part because of the value of metallurgical coal and in part due to Milner's ability to utilize tailings and lower quality fuels, which are by-products of the beneficiation of coal, to produce electricity. Despite the recent drop in quarterly pricing for metallurgical coal, the long-run average price forecast is expected to remain strong, which will allow for the economically viable development of SUMMIT.
Deerland Peaking Station ("D1")
MAXIM is actively pursuing commercial arrangements that will allow for the construction of the 190 MW D1 Station to commence during 2013. In the second quarter of 2012, MAXIM entered into an agreement to secure firm natural gas transportation services for D1. MAXIM had previously received regulatory approvals to construct and operate D1. The D1 site is located near Bruderheim in Alberta's Industrial Heartland, and it is in close proximity to the entry point of the proposed Gateway pipeline and adjacent to the existing Deerland high voltage substation. This area is expected to experience significant growth in electrical demand. D1 is the only permitted peaking development project in the province of Alberta as at the date of this press release. This project is attractive due to an anticipated contraction of reliable base load supply in the Alberta power market. As such, MAXIM expects peaking requirements across Alberta to continue to grow to meet increasing demand and to provide firm backup for additional intermittent wind resources.
Milner Expansion ("M2")
The AUC has granted MAXIM approval to develop a 500 MW generating facility adjacent to the existing 150 MW generating facility ("M1"). A lengthy public consultation and regulatory process culminated in the project's final approval by the AUC on August 10, 2011. On September 12, 2012 the Government of Canada enacted new greenhouse gas legislation that limits the amount of carbon dioxide emitted by coal-fired generation facilities. MAXIM is examining ways to meet the new standards including a natural-gas fired facility. All aspects are presently being studied to determine the most viable and effective course of action. The Corporation incurred costs in 2012 related to engineering studies and consulting costs for the Milner expansion. Additional funds will be incurred in 2013 on AESO studies, consulting costs, and permit amendments.
Buffalo Atlee ("B1")
MAXIM acquired the B1 Power Project, situated near Brooks, Alberta, through an amalgamation with EarthFirst Canada Inc. This project has the potential for development of over 200 MW of wind generation capacity. Wind data has been collected on the site for approximately five years and supports project development based on higher power prices than those realized during recent months. MAXIM holds an exploratory Crown land permit with a term of five years, expiring on January 1, 2016. The addition of wind generation to MAXIM's existing portfolio of assets will diversify MAXIM's generation fuel types and provide the potential to offset the impact of the new greenhouse gas legislation.
CONFERENCE CALL FOR 2012 RESULTS
MAXIM will host a conference call for analysts and investors on Wednesday, March 27, 2013 at 10:00 am MT. The call will be hosted by John Bobenic, MAXIM's President and Chief Executive Officer, and by Mike Mayder, Vice President, Finance and Chief Financial Officer. To participate in this conference call, please dial (877) 240-9772 or (416) 340-8530 in the Toronto area. It is recommended that participants call at least ten minutes prior to start time.
A recording of the conference call will be available from March 23, 2013 to March 29, 2013. To access the replay, dial (800) 408-3053 or (905) 694-9451 followed by the passcode 6268053. In addition, the recording will be available commencing March 23, 2013 in the Investor Relations section of MAXIM's website at www.maximpowercorp.com.
Based in Calgary, Alberta, MAXIM is an independent power producer, which acquires or develops, owns and operates innovative and environmentally responsible power and power related projects. MAXIM currently owns and operates 41 power plants in western Canada, the United States and France, having 806 MW of electric generating capacity. MAXIM trades on the TSX under the symbol "MXG". For more information about MAXIM, visit our website at www.maximpowercorp.com.
Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions and will update such forward-looking statements as required pursuant to applicable securities laws.
Maxim Power Corp.
John R. Bobenic
President and CEO
Maxim Power Corp.
Michael R. Mayder
Vice President, Finance and CFO