alterra presentation may 29 - 2012
DESCRIPTION
Alterra Presentation May 29-2012TRANSCRIPT
1 C O M P A N Y P R E S E N T A T I O N TSX : AXY MAY 2012
2
Forward-Looking Information
This Presentation contains certain “forward-looking information” within the meaning of Canadian securities laws, which may include, but is not limited to, statements with respect to future events or future performance, management’s expectations regarding Alterra’s production capacity, results of operations, cash flows, revenues and requirements for capital, future demand for and prices of electricity, and Alterra’s business prospects and opportunities. These statements reflect the current views of Alterra with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Alterra, are inherently subject to significant business, economic, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause Alterra’s actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained in this presentation, and Alterra has made assumptions based on or related to many of these factors. Such factors include, without limitation: fluctuations in currency markets (particularly with respect to the Icelandic krona, the U.S. dollar and Canadian dollar); risks related to the technological and operational nature of Alterra’s business; changes in national or regional governments, legislation, regulation, permitting or taxation; political or economic developments in Canada, the United States, Iceland or other countries where Alterra may carry on business; risks and hazards associated with the business of renewable energy generation; risks relating to the creditworthiness and financial condition of suppliers and other parties which Alterra will deal with; inadequate insurance or inability to obtain insurance to cover these risks and hazards; employee relations; relationships with and claims by local communities and First Nations; availability and costs of equipment and labour; litigation; the success and timely completion of planned expansion and development programs; the growth rate in net electricity consumption; support and demand for renewable energy; government initiatives to support the development of renewable energy generation; the reliability of technical data and capital expenditure estimates; and availability of capital to fund development and expansion programs. Forward-looking information and statements are also based upon the assumption that none of the identified risk factors that could cause actual results to differ materially from the forward-looking information and statements will occur. Although Alterra has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. There can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance on forward-looking information. Other than as required by applicable securities laws, Alterra does not assume any obligation to update or revise such forward-looking information to reflect new events or circumstances.
3
Managed Owned
Wind 144 MW 51%
Hydro 235 MW 40%
Geothermal 187 MW 69%
Alterra Power
Alterra’s mission: to be a leading global renewable energy company through…
Continued excellence in production and safety as premier asset operator / manager
Successful origination and development of new utility-scale projects
Opportunistic acquisitions of other renewable power projects and development assets
Our assets today:
Alterra totals:
Managed: 567 MW Owned: 298 MW Managed Assets: $1.5 Billion Alterra Revenue: $110 MM Alterra EBITDA: $ 55 MM 2015E EBITDA: $105MM
(a)
(a) Reflects 66.6% of HS Orka and 100% of Soda Lake assets.
4
Alterra: Recent Growth and Performance
Alterra’s recent growth ... (net interest)
2H 2011 Performance: (net interest)
$54.9 million revenue
$23.3 million EBITDA
778 GWh electricity produced
- 102% of forecast
1Q 2012 Highlights: (net interest)
Production to 99% of forecast
Increase in cash from $32.0 million to $50.9 million
REVENUE
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Decrease reflects partial sell-down of
HS Orka interest
5
Alterra: Planned Internal Growth
Current Assets Operating by 2015 Growth
Managed 567 MW 927 MW +64%
Net Owned 298 MW 494 MW +66%
Net Production
1,380 GWh 2,200 GWh +59%
AXY Revenue $110 MM $180 MM +63%
AXY EBITDA $55 MM $105 MM +91%
Projects Dokie 1 144 MW Toba Montrose 235 MW Reykjanes 1+2 100 MW Svartsengi 72 MW Soda Lake 15 MW
Dokie 1 144 MW Toba Montrose 235 MW Reykjanes 1+2 100 MW Svartsengi 72 MW Soda Lake 15 MW Dokie 2 156 MW Upper Toba 124 MW Reykjanes 3+4 80 MW ABW Solar 50 MW
Current plan would almost double EBITDA by 2015
20%+ implied annual growth rate Mariposa, Eldvörp and other projects online post-2015…
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Assets and Pipeline
Capacity Project Gross AXY Share Technology
Operating (2012)
Soda Lake 15 MW 16 MW Geothermal
Svartsengi 72 MW 48 MW Geothermal
Reykjanes 1 & 2 100 MW 67 MW Geothermal
Toba Montrose 235 MW 94 MW Hydro
Dokie 1 144 MW 73 MW Wind
Total Capacity 567 MW 298 MW
Annual Net Generation 1,380 GWh
Operating Additions (2016)
Upper Toba 124 MW 62 MW Hydro
ABW Solar 50 MW 5 MW Solar
Reykjanes 3 & 4 80 MW 54 MW Geothermal
Dokie 2 156 MW 80 MW Wind
Mariposa 50 MW 25 MW Geothermal
Eldvörp 50 MW 34 MW Geothermal
Other (e.g. Chile, Iceland) 200 MW 200 MW Geothermal
Pipeline Total 710 MW 460 MW
Total Capacity 1,292 MW 773 MW
Globally diversified across technology types and renewable power markets
Wind and hydro: primarily concentrated in North America
Geothermal: located in overlap of resource and strong markets / power demand
(a) Project design currently being optimized; final capacity amount may vary.
(a)
(a)
7
BC Opportunity
British Columbia’s demand for power is expected to grow significantly in the next 3-5 years
LNG plants in Kitimat
Mining growth
General population growth
Clean renewable power sourced from IPPs is expected to be a critical source of new supply
Alterra is uniquely positioned to benefit from this new demand
Built and operate largest wind farm and run-of-river plants in British Columbia
History of delivering on-time and on-budget
Established reputation with First Nations
Large portfolio of expansion and development projects
Currently growing this portfolio
Largest IPP in the province
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Outstanding Developer Track Record
Successful developer track record across renewable technologies
Proven ability to develop and deliver large assets at greenfield locations
Development teams from all these projects remain substantially intact
Recent project successes
Near term organic growth - all near existing operations
Wind Dokie 144 MW 2011 COD
Hydro Toba Montrose 235 MW 2010 COD
Geothermal Reykjanes 100 MW 2006 COD
Wind Dokie 2 up to 156 MW COD 2014E
Hydro Upper Toba up to 124 MW COD 2015E
Geothermal Reykjanes 3/4 80 MW COD 2013-14E
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Geothermal Development: The Right Approach
CHILE
Negotiating definitive agreement with prospective partner
320 MW resource and 158,000+ ha of concessions
Mid-stage development project
Emerging clean power market with world-class potential
PERU
Negotiating agreement with prospective partner
157,000+ ha of concessions, 1000+ MW potential
Rapid growth in economy and in power demand
Established relationships with government and communities
ITALY
Early-stage discussions
48,000+ ha of concessions in established geothermal field
Strong clean power tariffs
Easy year-round site access, close to transmission, established contractor base
Early mover: moving into promising power markets with strong geothermal potential
Strong development skills: resource assessment, community relations and project de-risking
Utilize value-add partners: sharing capital outlays and further de-risking projects
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Soda Lake HS Orka
Toba Montrose Dokie 1
ABW Solar
Reykjanes 3
Dokie 2
Reykjanes 4 Upper Toba
Mariposa Eldvörp
131 131 165
185
243 94 94
94
156
156
73 73
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GEOTHERMAL HYDRO WIND SOLAR
Leading Growth Profile
Alterra has one of Canada’s largest clean energy development pipelines
Existing Generation Capacity Additions
11
Recent News
Recent positive events:
$37.5 MM infusion into HS Orka business per exercise of partner option, increasing partner stake to 33.4%
Cash earmarked for Reykjanes expansion
Toba Montrose back online after planned 1Q 2012 penstock warranty repairs
Generation at 132% of plan for stub period in April
$2.1 MM US treasury grant received at Soda Lake
Dokie 1 bump in PPA’s “firm energy”; 1.2% increase to annual revenue anticipated
All projects for ABW solar farm received their permits
12
Alterra: Headwinds / Tailwinds
Headwinds
Growth of natural gas reserves
Disappearance / uncertainty around programs that benefit renewable power
Gas acceptance by some as a “cleaner” thermal source of energy
Current investment cycle attributes no value to development pipeline
Tailwinds
BC growth: “move the gas cleanly”
High supply of capital for energy projects
Attractiveness of Canada
Technology prices driven down
Tough times create opportunities
Growth investors will return
13
2012: Next Milestones
Looking ahead in 2012:
Finalize partnership agreements
Upper Toba hydro Chile geothermal Peru geothermal
Finalize PPAs
Dokie 2 Reykjanes 3+4
Opportunistic acquisitions: wind, geothermal and hydro
Continue work in British Columbia and elsewhere for positive regulatory/political environment
Move projects into construction: Upper Toba, Dokie 2, Reykjanes 3+4
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Analyst Coverage and Capital Structure
FIRM CONTACT
Canaccord Genuity Jared Alexander
Cormark Securities MacMurray Whale
Jacob Securities John McIlveen
Mackie Research Capital Matthew Gowing
Mirabaud Securities Gus Hochschild
National Bank Financial Jeremy Mersereau
Pritchard Capital Partners Veny Aleksandrov
Raymond James Securities Steven Li
Salman Partners Mike Plaster
INDEX COVERAGE
S&P/TSX Clean Technology Index
RENIXX Renewable Energy Industrial Index
CAPITAL STRUCTURE: (NET INTEREST)
MARKET CAPITALIZATION (30 APR 2012) C$ 219 MM
CASH (30 MAR 2012) US$ 51 MM
TOTAL ASSETS (30 MAR 2012) US$ 863 MM
LONG TERM DEBT (30 MAR 2012) US$ 484 MM
15 www.alterrapower.ca TSX : AXY MAY 2012
APPENDICES
16
Senior Management
Ross Beaty: Executive Chairman
Geologist and resource company entrepreneur with 40 years experience in the international minerals industry. In early 2008, Mr. Beaty
founded Magma Energy Corp to focus on international geothermal energy development. In 2011 Magma and Plutonic Power merged
to create Alterra Power. Mr. Beaty is the Director of the Nature Trust B.C. and patron of the Beaty Biodiversity Center at the University
of B.C. Recipient of numerous awards, including the prestigious Viola Macmillan Award.
Donald McInnes: Executive Vice-Chairman
Mr. McInnes was the founder, Vice-Chair and CEO of Plutonic Power Corp. He currently serves as Vice-Chair of the Clean Energy
Association of British Columbia and is a director of Prostate Cancer Canada, the Powell River Economic Development Society, the Duke
of Edinburgh's Award-British Columbia and Yukon Division and is a governor of the British Columbia Business Council.
John Carson: Chief Executive Officer
Mr. Carson is a highly experienced renewable energy business leader with a core expertise in structuring and leading financial
transactions. His financing experience includes senior positions held with GE Energy Financial Services, Terra-Gen Power and Noble
Environmental Power. He has closed over US$2 billion of transactions, primarily in the renewable energy space, including geothermal,
wind and hydro transactions.
Bruce Ripley: Chief Operating Officer
Mr. Ripley has 30 years of engineering experience in the hydroelectric and heavy civil industries, including 16 years with BC Hydro
where he was Vice President of Engineering. He oversees all technical and commercial work at Alterra’s assets including operations and
exploration. He has worked on development, design, construction, operations and maintenance projects in Canada, USA, China,
Philippines and Australia.
Peter Wong: Chief Financial Officer
Mr. Wong joined the Company in 2005; over the last 18 years he has held a number of progressive senior financial management
positions with publicly listed mining and technology companies at the venture, development and operational stages. Mr. Wong articled
with the accounting firm of Deloitte and Touche and obtained his CA designation in 1992. He is a current member of the Institute of
Chartered Accountants of BC and holds a B.Comm. from the University of B.C.
Outstanding development, financial and operations expertise
17
Board of Directors
Ross Beaty
Executive Chairman
Mr. Beaty is a geologist and resource company entrepreneur with more than 40 years of experience in the international minerals
industry, the founder and chair of Magma Energy Corp and Pan American Silver (TSX: PAA, NASDAQ: PAAS) and several other resource
companies that were successfully built and divested.
Donald A. McInnes
Executive Vice-Chairman
Mr. McInnes was the Founder, Vice-Chair and CEO of Plutonic Power Corporation. He currently serves as Vice-Chair of the Clean Energy
Association of British Columbia and is a director of Prostate Cancer Canada, the Powell River Economic Development Society, the Duke
of Edinburgh's Award-British Columbia and Yukon Division and is a governor of the British Columbia Business Council.
David Cornhill
Director
Mr. Cornhill is the founder, Chairman and Chief Executive Officer of AltaGas Income Trust, one of Canada's largest energy infrastructure
groups, focused on gas and power infrastructure and renewable energy (wind and hydro). With more than 25 years of experience in the
energy industry, Mr. Cornhill also sits on several private and public boards including AltaGas Utility Group and Ivey Business School.
Donald Shumka
Director
Mr. Shumka is Managing Director of Walden Management Ltd., a financial consulting firm. Mr. Shumka received a Master of Business
Administration from Harvard University. From 1966 to 1979 he worked in a variety of positions in the forest industry, from 1979 to 1989
he was Vice President and Chief Financial Officer of West Fraser Timber Co. Ltd. and from 1989 to 2004 he headed the Forest Products
Group for two Canadian investment banks. Other public company boards include Eldorado Gold Corp and Paladin Energy Ltd.
Paul Sweeney
Director
Mr. Sweeney has over 30 years experience in financial management of mining and renewable energy companies. From 2007-2010, he
was Executive Vice President, Corporate Development, of Plutonic Power Corporation. He has served as CFO of a number of successful
mineral resource companies including Canico Resources, Sutton Resources and Gibraltar Mines and is a director of several resource
companies including Pan American Silver Corp. where he chairs the audit committee.
Walter Segsworth
Director
Mr. Segsworth recently served as Chairman of Plutonic Power Corporation. He is past President and Director of Westmin Resources.
Upon the takeover of Westmin by Boliden in 1998, Mr. Segsworth joined Homestake Mining Company of California where he was
subsequently appointed President, Director and Chief Operating Officer and served until the merger with Barrick in early 2002. He is
past Chairman of both the Mining Associations of BC and Canada and was named BC's Mining Person of the Year in 1996.
18
Overview - Toba Montrose Hydro
Alterra owns a 40% economic interest in two run-of-river hydroelectric generation facilities in southwestern British Columbia
Facilities East Toba River and Montrose Creek
Capacity & Production 235 MW generating 727 GWh / year
Ownership 60% - GE EFS
40% - Alterra
Start of Operation 2010
Power Purchase Agreement
EPA to 2045 with BC Hydro
Project Debt $470 MM total project debt with 35 year amortization and 6.4%
effective interest rate
Revenue Average annual project revenue of $78 MM
Includes $10/MWh ecoEnergy Program incentive
EBITDA Average annual project EBITDA of $60 MM
$24 MM net EBITDA to Alterra
19
Overview - Dokie 1 Wind Farm
Alterra owns a 51% economic interest in the Dokie 1 wind farm, located in northern British Columbia
Facilities Dokie Wind Farm
Capacity & Production 144 MW generating 330 GWh annually
Ownership 51% - Alterra
49% - GE EFS
Start of Operation March 2, 2011
Power Purchase Agreement
EPA to 2036 with BC Hydro
Project Debt $175 MM total project debt with 20 year amortization and 7.2%
effective interest rate
Revenue Average annual project revenue of $39 MM
Includes $10/MWh ecoEnergy Program incentive
EBITDA Average annual project EBITDA of $27 MM
$14 MM net EBITDA to Alterra
20
Overview - Svartsengi and Reykjanes Geothermal
Alterra’s 67% - owned subsidiary HS Orka owns two geothermal power plants in southwestern Iceland
Facilities Svartsengi and Reykjanes
Capacity & Production 172 MW generating 1,258 GWh /year
Thermal (hot water) production 150 MWth
Ownership 67% - Alterra
33% - Jarðvarmi (Icelandic pension funds)
Start of Operation 1978 (Svartsengi) and 2006 (Reykjanes)
Power Purchase Agreements
Two PPAs with varying terms through to 2026; additional power sold on one-year contracts
36% of power sales paid in USD and linked to aluminum price
Project Debt $170 MM total company debt with average 9 years to maturity and
average 2.65% effective current interest rate
Revenue 2011 revenue of $64 MM
EBITDA 2011 EBITDA of $20 MM
21
Overview - Soda Lake Geothermal
Alterra owns a 23 MW geothermal power plant near Fallon in northern Nevada
Facilities Soda Lake 1+2
Capacity / Production 23 MW, currently operating at 15 MW gross and generating
84 GWh /year
Ownership 100% Alterra
Start of Operation 1987 / 1991
Power Purchase Agreement
Two PPAs to 2020 with NV Energy
Project Debt None
Revenue Average annual revenue of $5 MM
EBITDA Average annual EBITDA of $1 MM
22
Overview - ABW Solar
Facility 3 solar facilities in southwestern Ontario
Capacity
Amherstburg – 10 MW
Belmont – 20 MW
Walpole – 20 MW
Proposed Ownership
90% - GE EFS
10% - Alterra
Start of Operation 4Q 2012
Construction began in May 2012
Power Purchase Agreement
20 year EPA with Ontario Power Authority
Project Debt TBD
EBITDA $3 MM net annual EBITDA to Alterra
Alterra has an option to acquire a 10% interest in a portfolio of solar facilities from First Solar, to be built in southern Ontario
23
Overview - Upper Toba Valley Hydro
A power purchase agreement and permitting are in place for additional run of river hydro plants near the Toba Montrose facilities in southwestern B.C.
Locations Jimmie Creek and Upper Toba River
In close vicinity to existing Toba Montrose facility
Capacity / Production 89 to 124 MW, generating 300-320 GWh annually
Ownership 51% - Alterra
49% - GE EFS
Permitting Environmental Assessment Certificate granted and water licence
pending
Power Purchase Agreement 40-year contract with BC Hydro
Begin Construction 1Q 2013E
On Line 2Q 2015E
Notes
Completion of preliminary engineering and cost estimation targeted for mid-2012
Utilizes existing transmission line and other infrastructure at Toba Montrose
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Overview - Reykjanes 3 & 4 Geothermal Expansion
The Reykjanes geothermal power plant in southwestern Iceland has substantial existing well capacity and is permitted for an expansion of production
Location Existing Reykjanes facility and steam field
Capacity / Production 80 MW generating 630 GWh annually
Ownership 67% - Alterra
33% - Jarðvarmi (Icelandic pension funds)
Permitting Completed
Power Purchase Agreement Resolution expected 2H 2012
Begin Construction 2H 2012
On Line Reykjanes 3 - 50 MW in 2H 2014
Reykjanes 4 - 30 MW in 1H 2015
Notes
High pressure 50 MW turbine for Reykjanes 3 already on site
Reykjanes 4 will run on existing well field output in a 30 MW low pressure turbine
25
Overview - Dokie 2 Wind Farm Expansion
The Dokie Wind Farm in northern B.C. is permitted for a 156 MW expansion
Location Undeveloped ridgelines within Dokie 1 wind farm area
Capacity / Production 107 to 156 MW, generating 330-460 GWh annually
Ownership 51% - Alterra
49% - GE EFS
Permitting 156 MW
Power Purchase Agreement Seeking opportunities with BC Hydro or other off-takers
Begin Construction 1Q 2013E
On Line 3Q 2014E
Notes Wind assessment, turbine layout, infrastructure and financial
studies in progress
26
Overview - Mariposa Geothermal (Chile)
The Mariposa geothermal field in Chile has an inferred capacity of 320 MW
Location In the Andes Mountains in south-central Chile, approximately 300
km south of Santiago
Capacity / Production 320 MW inferred resource with promising characteristics
Exploitation concession granted for first phase of 50 MW
Concessions
Permanent production concession at Laguna del Maule
Resource area continues on adjacent Pellado concession
Alterra has a third adjacent concession at Los Cristales
Permitting Letter authorizing first round of exploratory holes
Baseline prepared for subsequent permitting
Exploration & Development
Access road and infrastructure advance
Three slim holes completed by core drilling
Next Phase Deep rotary and wide diameter drilling planned in 2013
On Line 50 MW in 2016E
Notes Recent volcanism and hot springs near concession
Seeking investment partner for next phase
27
Overview - Mensano and Roccastrada Geothermal (Italy)
Alterra’s exploration concessions in Italy are in the historic and promising Larderello region of Tuscany
Ownership 100% Alterra
Interest from multiple prospective partners
Opportunity
32 geothermal plants already operating in region
Attractive power prices as high as €180 /MWh
Strong public and government support for clean power
CHARACTERISTICS Roccastrada Mensano
Location South of Larderello in Tuscany Southeast of Larderello in Tuscany
Size 27,190 hectares 21,256 hectares
Known Geology • Nearby 1000m exploratory wellhead temperatures up to 100
oC
• Hot spring and high heat flow
• Temperatures over 150oC at 2000m depth
• Thermal springs and hydrothermal alteration areas
Potential • Potential reservoir within 3000m depth
• Estimated temperature 200oC - 250oC
• Large geothermal system inferred with two potential reservoir targets:
at 1000-2000m, 150oC
at 2800-3000m, 200oC
Work Program Prospecting to build a geothermal system and define targets for exploration wells
Detailed exploration program to confirm high enthalpy resources
28 www.alterrapower.ca TSX : AXY MAY 2012