2019 annual general meeting - maxim power · 2019 annual general meeting 1. forward-looking...
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2019 Annual General Meeting
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Forward-Looking Statements
This presentation may contain forward-looking statements, including statements regarding the business and anticipatedfinancial performance of Maxim Power Corp. (the "Company"). These statements reflect several material factors,expectations and assumptions including, without limitation: (i) power production levels; (ii) commodity prices, foreigncurrency exchange rates and interest rates; (iii) the Company’s capital expenditure program and other expenditures; (iv)supply and demand for power; (v) expectations regarding the Company’s ability to raise capital and to increase its powergeneration capacity through acquisitions and development of energy projects; (vi) schedules and timing of certain projectsand the Company’s strategy for growth; (vii) the Company’s future operating and financial results; and (viii) the impact onthe Company of governmental regulatory regimes and tax, environmental and other laws.
Forward-looking statements are based on current expectations, estimates and projections that involve a number of risksand uncertainties, which could cause actual results to differ materially from those anticipated and described in the forwardlooking statements. Such statements involve known and unknown risks, uncertainties and other factors that may causeactual results or events to differ materially from those anticipated in such forward-looking statements including, withoutlimitation: (i) volatility in market prices for power; (ii) volatility in exchange rates for the Canadian dollar relative to otherworld currencies; (iii) liabilities and risks inherent in the power generation industry, including technical problems; (iv) failureto close or realize the anticipated benefits of acquisitions; (v) competition for, among other things, capital and skilledpersonnel; (vi) changes in general economic, market and business conditions in Alberta, United States, and worldwide; (vii)actions by governmental or regulatory authorities including changes in tax laws; (viii) the ability of the Company to raisecapital and continue with its energy projects; (ix) the impact of adverse weather, wind and water flow conditions on theCompany’s operations; and (x) increases and overruns in power generation costs.
The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. Additionalinformation on these and other factors which could affect operations or financial results can be found in the Company’sAnnual Information Form available on SEDAR at www.sedar.com. The Company does not undertake any obligation topublicly update or revise any forward-looking statements except as expressly required by applicable securities law.
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Highlights
Independent Power Producer
� Alberta based wholesale seller of electricity and generating capacity
Strategy
� Establish sustainable ventures in organized power markets
� Acquire or develop assets
� Optimize and enhance existing assets
� Re-deploy capital when appropriate to realize shareholder value
Shareholder/Management Alignment
� Insider shareholdings are 52.5% of outstanding shares
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Market Profile
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MXG Closing Price
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3TSX Listing MXG
52 Week Range $1.79 - $2.62
Share Price $1.94
Shares Outstanding 52.5 million
Market Capitalization $101.9 million
Insider Shareholdings 52.5%
May 10, 2019
Normal Course Issuer Bids
� 2018 bid expired on May 10, 2018; repurchased 2.2 million shares at average price of $2.27/share
� 2019 bid commences May 23, 2019; authorized to purchase 2.6 mm shares
Leadership Team
M. Bruce Chernoff
Chairman & CEO
Over 30 years of senior corporate experience in oil & gas and power sectors.
Mike Mayder
President & CFO
Over 30 years of experience in the power sector. Background in finance, business development, and information systems.
Bob Emmott
Executive VP and COO
Over 30 years experience in the power sector. Has been a part of the design, build, and
commissioning of several large coal and gas-fired power plants.
.Rob Watson
VP Canadian Facilities
Over 20 years of experience in the power sector. Background in operations, market analysis, energy marketing and portfolio
management.
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Kyle Mitton
VP Corporate Development
Over 14 years experience in thepower sector. Senior positions include
operations, corporate development and energy marketing.
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Kim Karran
Corporate Secretary
Over 25 years experience in the power sector. Held leadership roles in business
development, corporate strategy and human resources.
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Experienced senior management team
2005 2010 2015 CurrentM2 phase I
(SCGT)M2 phase II
(CCGT Option)
Geographies 4 3 3 1 1 1
Facilities 25 44 39 1 1 1
Generating Capacity (MW)
• Total 334 809 778 144 204 234
• Average Per Facility 7.4 18.4 19.9 144 204 234
History
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� Track record of acquiring and developing generation projects during early stages of developing power markets and redeploying capital as markets mature
� Over the past 15 years MAXIM built up and successfully sold operating power plants in United States, France and Canada
� Maxim also organized and sold a 48.5 MW wind powered development project in 2018
� Currently focussed on opportunities in Alberta, where the power market is completing a twenty year transition from a regulated power market.
� Targeting to:
� Simplify business by employing modern, competitive technology
� Focus on economies of scale
MAXIM's Alberta Assets
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Operating Asset – HR Milner (M1)
• 150 MW dual fuel-fired (coal and natural gas-fired) power station
• Nearing end of its life under federal regulations
• To be phased out as M2 development project advances
Loss Factor Claim
• ~$40 million plus interest
• Approved by the AUC
• Financial settlement expected late-2019
• Appeals are pending
Non-Core Assets
Summit Coal
• Alberta metallurgical coal mine project
• 18.9 million tonnes of reserves
Land
• 32 acres of undeveloped land in New Jersey
Project in Construction (M2)
• 204 MW gas-fired generation facility operating in simple cycle mode
• Commercial operation late in 2019
• More efficient than coal and coal-to-gas conversions
• Option to expand to 234 MW combined cycle
Development Projects
Milner Site
• Permitted to develop an additional 402 MW of natural-gas fired generation
Deerland
• Permitted to develop 190 MW natural-gas fired peaking station
Buffalo Atlee
• Organized and sold a 48.5 MW wind power development project in 2018
• Potential to develop a further 200 MW of wind powered generation
Alberta Power Market -Transition
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Government Objective
• Transition from regulated generation to competitive market
Market Design
Compensation
• Compensation for regulated generation grandfathered for 20 years through transitional Power Purchase Arrangements (PPAs) to Dec. 2020
• Other participants compensated for electricity generated
Carbon Dioxide Emissions
• Carbon tax levied on carbon emitted in excess of power-plant specific baselines
Supply
• Baseload generation dominated by legacy coal-fired power plants
Historical
Government Objective
• Ensure Alberta has a market-based electricity system that provides affordable electricity
Market Design
Compensation
• Transitional PPAs expire Dec. 31, 2020
• All participants compensated for electricity generated
• Potential compensation for availability of generating capacity
Carbon Dioxide Emissions
• Carbon tax levied on carbon emitted in excess of “best installed” thermal capacity
Supply
• Coal-fired generation phased out by 2030
• Base load generation becomes dominated by natural gas-fired power plants
Current Focus
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Energy Capacity
Alberta Power Market - Prices
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Source: EDC Q2-2019 Report, Historical Data
� 2015 – 2017 prices were suppressed due to uneconomical bidding by the Balancing Pool
� Capacity price in $/kW-year adjusted to equivalent $/MWh
� Capacity price in 2021 is for 2 months
Actual EDC Forecast
2001-2014$65/MWh
2015-2017$25/MWh
M2 Development Project
Investment
� SCGT estimated installed cost $138 million
Competitiveness
� High efficiency unit with low onsite fixed costs
� Procured General Electric Frame 7 F-Class combustion turbine generator and certain related equipment for $20.3 million in 2018.
� Previously delivered new to the seller in 2012 and never installed
� “Brownfield" development site (utility interconnections, water license, existing permits)
� Engineer, Procure, Construct ("EPC") model being employed to de-risk project
� Receives loss factor credits (location based credits)
SCGT Financing
� Funded with cash on hand, anticipated Line Loss settlement, and third party debt facilities
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M2 Investment & Unit Costs
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M2’s investment cost and its ongoing operating costs are competitive
$28.29
$19.34
$37.44
$43.51
($10.00)
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M2 SCGT M2 CCGT
(Option)
AVG - CTG AVG - Coal
M2 Unit Costs
Fuel Carbon Loss Factor Charge/(Credit)
Other variable costs Fixed Cost @ Baseload
Installed cost based on Maxim's estimates for M2 and EDC Associates Ltd. estimates for comparison (EDC Q1-2019 Report)
Coal and coal to gas (CTG) units represent 47% of forecast 2019 system peak
Unit costs are Maxim’s estimates assuming natural gas price of $1.50/GJ and current carbon emission legislation which is under review by the Alberta government
M2 SCGT Investment
M2 SCGT New SCGT
Capacity (MW) 204 200
Installed Cost ($MM) $138 $280
Installed Cost ($/kW) $675 ~$1,400
Commercial Operation Late 2019 2 to 3 years
M2 DEVELOPMENT PROJECT
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SCGT Development Schedule
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Purchase equipment
- Major generation equipment
- Site specific equipment
Relocate US equipment to Canada
Engineering
Construction
- Site preparation and foundation
- Construction
Update permits and approvals
Upsize Gas Supply
Commissioning
2018 Q1 Q2 Q3 Q4 Q1
Major generation equipment
� Maxim purchase a GE combustion turbine generator and certain related equipment in 2018.
� This GE equipment was previously delivered new to the seller in 2012 and never installed
Construction
� Foundation work began in Q1 2019
� Currently negotiating an Engineering, Procurement and Construction Agreement for balance of work
M2 Development Phases
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Condenser(heat
exchanger)
CoolingTower
Exhaust Flow
Heating Loop
Cooling Loop
Cold
Hot
Steam Steam
Water
GT Gas turbine generatorStack Bypass exhaust stackHRSG Heat recovery steam generatorST Steam turbine generator
Phase I - Simple Cycle Phase II - Combined Cycle Upgrade Option
Stack
New 2012 Equipment Existing Milner InstallationNew 2012 Equipment
~ ~
ElectricityElectricity
GT
HRSG(boiler)
ST
M2 benefits from existing M1 equipment and new in 2012, never installed equipment
M2 - Combined Cycle Mode
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M2 Generator
M2 Gas Turbine
M1 Steam turbine and generator
steam
Transport From Salt Lake City Storage
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260 Ton Gas Turbine
250 Ton Generator
Site Construction Progression
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Sprung Structure Assembly First Piling
Site Construction Progression
Foundation Preparation – Pilings and Hoarding
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Site Construction Progression
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Main Foundation Poured – 800 Cubic Metres of Concrete
Site Construction Progression
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Construction Time Lapse Images
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