Alterra Presentation August 2012


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Alterra Presentation August 2012

  2. 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. Page | 2 TSX : AXY
  3. 3. 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: Managed Owned Alterra totals: Managed: 567 MW Wind 144 MW 51% Owned: 298 MW Managed Assets: $1.5 Billion Hydro 235 MW 40% Alterra Revenue: $110 MM Alterra EBITDA: $ 55 MM (a) Geothermal 187 MW 69% 2015E EBITDA: $105MM (a) Reflects 66.6% of HS Orka and 100% of Soda Lake assets.Page | 3 TSX : AXY
  4. 4. Alterra: Recent Growth and Performance Decrease reflects Alterra’s recent growth ... partial sell-down of 2H 2011 Performance: (net interest) HS Orka interest (net interest) CAPACITY (end of year) PRODUCTION 350 1,800 1,600  $54.9 million revenue 300 1,400 250 200 1,200  $23.3 million EBITDA GWh MW 1,000 150 800 100 600  778 GWh electricity produced 400 50 200 0 - 102% of forecast 0 2009 2010 2011 2012e 2009 2010 2011 2012e 1Q 2012 Highlights: (net interest) REVENUE EBITDA $120 $60 $100 $50Millions USD $40  Production to 99% of forecast Millions USD $80 $30 $60 $40 $20 $10  Increase in cash from $20 $- $32.0 million to $50.9 million $- $(10) 2009 2010 2011 2012e 2009 2010 2011 2012ePage | 4 TSX : AXY
  5. 5. Alterra: Planned Internal Growth Current plan would almost double EBITDA by 2015 Current Assets Operating by 2015 Growth Managed 567 MW 927 MW +64% Net Owned 298 MW 494 MW +66% Net 1,380 GWh 2,200 GWh +59% Production AXY Revenue $110 MM $180 MM +63% AXY EBITDA $55 MM $105 MM +91% Projects Dokie 1 144 MW Dokie 1 144 MW Toba Montrose 235 MW Toba Montrose 235 MW Reykjanes 1+2 100 MW Reykjanes 1+2 100 MW Svartsengi 72 MW Svartsengi 72 MW Soda Lake 15 MW Soda Lake 15 MW Dokie 2 156 MW Upper Toba 124 MW Reykjanes 3+4 80 MW ABW Solar 50 MW  20%+ implied annual growth rate  Mariposa, Eldvörp and other projects online post-2015… Page | 5 TSX : AXY
  6. 6. Assets and Pipeline 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 Power Plant Capacity Technology Operating (2012) Gross AXY Share Reykjanes 1 + 2 100 MW 67 MW Geothermal Svartsengi 72 MW 48 MW Geothermal Soda Lake 16 MW 16 MW Geothermal East Toba & 235 MW 94 MW Hydro Montrose Dokie 1 144 MW 73 MW Wind Total Capacity 567 MW 298 MW Annual Net Generation 1,425 GWh Planned (2016) ABW Solar 50 MW 5 MW Solar Upper Toba 124 MW 62 MW Hydro 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 McCoy 15 MW 15 MW Geothermal BC, Chile, Peru, Italy 200 MW 200 MW Geothermal Planned Total 725 MW 475 MW Total Capacity 1,292 MW 773 MW (a) Project design currently being optimized; final capacity amount may vary.Page | 6 TSX : AXY
  7. 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 provincePage | 7 TSX : AXY
  8. 8. 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 Wind Dokie 144 MW 2011 COD Hydro Toba Montrose 235 MW 2010 COD Geothermal Reykjanes 100 MW 2006 COD Near term organic growth - all near existing operations 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 Page | 8 TSX : AXY
  9. 9. Geothermal Development: The Right Approach 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 CHILE PERU ITALY  Negotiating definitive agreement  Negotiating agreement with  Early-stage discussions with prospective partner prospective partner  48,000+ ha of concessions in  320 MW resource and 158,000+  157,000+ ha of concessions, established geothermal field ha of concessions 1000+ MW potential  Strong clean power tariffs  Mid-stage development project  Rapid growth in economy and in  Easy year-round site access, power demand  Emerging clean power market close to transmission, with world-class potential  Established relationships with established contractor base government and communities Page | 9 TSX : AXY
  10. 10. Leading Growth Profile Alterra has one of Canada’s largest clean energy development pipelines 2,500 600 2,000 500 203 153 1,500 Net MW 400 GWh 153 156 300 1,000 73 73 156 94 500 200 94 94 243 185 165 131 131 100 0 2012e 2013e 2014e 2015e 2016e GEOTHERMAL HYDRO WIND SOLAR Existing Generation Capacity Additions Soda Lake Mariposa HS Orka Reykjanes 3 Reykjanes 4 Eldvörp Toba Montrose Upper Toba Dokie 1 Dokie 2 ABW SolarPage | 10 TSX : AXY
  11. 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  $2.1 MM US treasury grant received at Soda Lake  Dokie 1 bump in PPA’s “firm energy”; 1.2% increase to annual revenue anticipated  All projects for ABW solar farm received their permitsPage | 11 TSX : AXY
  12. 12. Alterra: Headwinds / Tailwinds Headwinds Tailwinds  Growth of natural gas reserves  BC growth: “move the gas  Disappearance / uncertainty cleanly” around programs that benefit  High supply of capital for renewable power energy projects  Gas acceptance by some as a  Attractiveness of Canada “cleaner” thermal source of  Technology prices driven down energy  Tough times create  Current investment cycle opportunities attributes no value to  Growth investors will return development pipelinePage | 12 TSX : AXY
  13. 13. 2012: Next Milestones Looking ahead in 2012:  Finalize partnership agreements Upper Toba hydro Chile geothermal Peru geothermal  Finalize PPAs Dokie 2 Reykjanes 3+4  Opportunistic acquisitions: wind, geothermal and hydro  Continue work in British Columbia and elsewhere for positive regulatory/political environment  Move projects into construction: Upper Toba, Dokie 2, Reykjanes 3+4Page | 13 TSX : AXY
  14. 14. Analyst Coverage and Capital Structure CAPITAL STRUCTURE: ( NET INTEREST ) MARKET CAPITALIZATION (31 JULY 2012) C$ 212 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 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 IndexPage | 14 TSX : AXY
  15. 15. APPENDICESPage | 15 2012AUGUST TSX : AXY
  16. 16. Senior Management Outstanding development, financial and operations expertise Ross Beaty: Executive Chairman Mr. Beaty is a geologist and resource company entrepreneur with over 40 years of experience in the international minerals industry. He is the founder of Magma Energy Corp., Pan American Silver Corp., and several other resource companies, many of which have been successfully divested. Mr. Beaty is a Director of The Nature Trust of BC and patron of the Beaty Biodiversity Center at the University of BC. Donald McInnes: Executive Vice-Chairman Mr. McInnes, founder of Plutonic Power, currently serves as Chairman of the Clean Energy Association of BC, the Duke of Edinburgh’s Award- British Columbia and Yukon Division and is a Governor of the British Columbia Business Council. Mr. McInnes is a frequent public speaker and contributor to the debate on public policy and the integration and value of clean power. 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 sector, 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.Page | 16 TSX : AXY
  17. 17. Board of Directors Ross Beaty 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 Executive Chairman that were successfully built and divested. Donald A. McInnes 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 Executive Vice-Chairman Edinburghs Award-British Columbia and Yukon Division and is a governor of the British Columbia Business Council. David Cornhill Mr. Cornhill is the founder, Chairman and Chief Executive Officer of AltaGas Income Trust, one of Canadas 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 Director energy industry, Mr. Cornhill also sits on several private and public boards including AltaGas Utility Group and Ivey Business School. Donald Shumka 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 Director 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. Jamie Bruce Mr. Bruce is a senior partner of Capital West Partners, a private Vancouver-based investment banking firm specializing in investment advisory services. He is well-known as both a financial and business leader and has served widely in public and private companies, crown Director corporations and not-for-profit organizations, most recently as Vice-Chairman of southern BC’s transportation authority and Chair of the 2010 Games Operating Trust. Mr. Bruce is a mechanical engineer and certified management accountant with over 20 years‘ experience in the corporate finance and investment banking industry. Paul Sweeney 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 Director 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 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 Director 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 BCs Mining Person of the Year in 1996.Page | 17 TSX : AXY
  18. 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  60% - GE EFS Ownership  40% - Alterra Start of Operation  2010 Power Purchase  EPA to 2045 with BC Hydro Agreement  $470 MM total project debt with 35 year amortization and 6.4% Project Debt effective interest rate  Average annual project revenue of $78 MM Revenue Includes $10/MWh ecoEnergy Program incentive  Average annual project EBITDA of $60 MM EBITDA $24 MM net EBITDA to Alterra Page | 18 TSX : AXY
  19. 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  51% - Alterra Ownership  49% - GE EFS Start of Operation  March 2, 2011 Power Purchase  EPA to 2036 with BC Hydro Agreement  $175 MM total project debt with 20 year amortization and 7.2% Project Debt effective interest rate  Average annual project revenue of $39 MM Revenue Includes $10/MWh ecoEnergy Program incentive  Average annual project EBITDA of $27 MM EBITDA $14 MM net EBITDA to Alterra Page | 19 TSX : AXY
  20. 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  172 MW generating 1,258 GWh /year Capacity & Production  Thermal (hot water) production 150 MWth  67% - Alterra Ownership  33% - Jarðvarmi (Icelandic pension funds) Start of Operation  1978 (Svartsengi) and 2006 (Reykjanes)  Two PPAs with varying terms through to 2026; Power Purchase additional power sold on one-year contracts Agreements  36% of power sales paid in USD and linked to aluminum price  $170 MM total company debt with average 9 years to maturity and Project Debt average 2.65% effective current interest rate Revenue  2011 revenue of $64 MM EBITDA  2011 EBITDA of $20 MMPage | 20 TSX : AXY
  21. 21. Overview - Soda Lake Geothermal Alterra owns a 23 MW geothermal power plant near Fallon in northern Nevada Facilities  Soda Lake 1+2  23 MW, currently operating at 15 MW gross and generating Capacity / Production 84 GWh /year Ownership  100% Alterra Start of Operation  1987 / 1991 Power Purchase  Two PPAs to 2020 with NV Energy Agreement Project Debt  None Revenue  Average annual revenue of $5 MM EBITDA  Average annual EBITDA of $1 MMPage | 21 TSX : AXY
  22. 22. Overview - ABW Solar Alterra has an option to acquire a 10% interest in a portfolio of solar facilities from First Solar, to be built in southern Ontario Facility  3 solar facilities in southwestern Ontario  Amherstburg – 10 MW Capacity  Belmont – 20 MW  Walpole – 20 MW Proposed  90% - GE EFS Ownership  10% - Alterra  4Q 2012 Start of Operation  Construction began in May 2012 Power Purchase  20 year EPA with Ontario Power Authority Agreement Project Debt  TBD EBITDA  $3 MM net annual EBITDA to Alterra Page | 22 TSX : AXY
  23. 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.  Jimmie Creek and Upper Toba River Locations  In close vicinity to existing Toba Montrose facility Capacity / Production  89 to 124 MW, generating 300-320 GWh annually  51% - Alterra Ownership  49% - GE EFS  Environmental Assessment Certificate granted and water licence Permitting pending Power Purchase Agreement  40-year contract with BC Hydro Begin Construction  1Q 2013E On Line  2Q 2015E  Completion of preliminary engineering and cost estimation targeted for mid-2012 Notes  Utilizes existing transmission line and other infrastructure at Toba Montrose Page | 23 TSX : AXY
  24. 24. 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  67% - Alterra Ownership  33% - Jarðvarmi (Icelandic pension funds) Permitting  Completed Power Purchase Agreement  Resolution expected 2H 2012 Begin Construction  2H 2012  Reykjanes 3 - 50 MW in 2H 2014 On Line  Reykjanes 4 - 30 MW in 1H 2015  High pressure 50 MW turbine for Reykjanes 3 already on site Notes  Reykjanes 4 will run on existing well field output in a 30 MW low pressure turbine Page | 24 TSX : AXY
  25. 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  51% - Alterra Ownership  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  Wind assessment, turbine layout, infrastructure and financial Notes studies in progress Page | 25 TSX : AXY
  26. 26. Overview - Mariposa Geothermal (Chile) The Mariposa geothermal field in Chile has an inferred capacity of 320 MW  In the Andes Mountains in south-central Chile, approximately 300 Location km south of Santiago  320 MW inferred resource with promising characteristics Capacity / Production  Exploitation concession granted for first phase of 50 MW  Permanent production concession at Laguna del Maule Concessions  Resource area continues on adjacent Pellado concession  Alterra has a third adjacent concession at Los Cristales  Letter authorizing first round of exploratory holes Permitting  Baseline prepared for subsequent permitting Exploration &  Access road and infrastructure advance Development  Three slim holes completed by core drilling Next Phase  Deep rotary and wide diameter drilling planned in 2013 On Line  50 MW in 2016E  Recent volcanism and hot springs near concession Notes  Seeking investment partner for next phase Page | 26 TSX : AXY
  27. 27. Overview - Geothermal Assets in Peru Alterra’s new concessions in Peru are at an early stage of exploration and development  100% Alterra Ownership  Interest from multiple prospective partners  Region of hot springs and silica sinters Opportunity  Alterra plan: advance to inferred status  Strong public and government support for clean power Crucero, Loriscota, Tutupaca Norte, CHARACTERISTICS Sara Sara Pasto, Panejo Suche, Atarani In the NE trend of the Location southern volcanic In the SW trend of the southern volcanic belt belt Size 77,400 hectares 59,900 hectares 20,000 hectares • Temperatures significant fumaroles over 150oC at and steaming ground Known Geology 2,000 m depth • Hot springs Surface studies begun and Beginning geophysics Detailed exploration Work Program and surface studies detailed planned exploration planned Page | 27 TSX : AXY
  28. 28. Overview - Mensano and Roccastrada Geothermal (Italy) Alterra’s exploration concessions in Italy are in the historic and promising Larderello region of Tuscany  100% Alterra Ownership  Interest from multiple prospective partners  32 geothermal plants already operating in region Opportunity  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 o Known Geology • Nearby 1000m exploratory • Temperatures over 150 C at wellhead temperatures up to 2000m depth o 100 C • Thermal springs and • Hot spring and high heat flow hydrothermal alteration areas Potential • Potential reservoir within • Large geothermal system 3000m depth inferred with two potential • Estimated temperature 200 C o reservoir targets: o - 250 C at 1000-2000m, 150oC o at 2800-3000m, 200 C Work Program Prospecting to build a Detailed exploration program to geothermal system and define confirm high enthalpy resources targets for exploration wells Page | 28 TSX : AXY
  29. 29. Page | 29 2012AUGUST TSX : AXY