Alterra Presentation May 29 - 2012


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Alterra Presentation May 29 - 2012

  2. 2. Forward-Looking InformationThis 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 estimatesthat, 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 hasmade assumptions based on or related to many of these factors. Such factors include, without limitation: fluctuations in currency markets (particularly withrespect to the Icelandic krona, the U.S. dollar and Canadian dollar); risks related to the technological and operational nature of Alterra’s business; changesin national or regional governments, legislation, regulation, permitting or taxation; political or economic developments in Canada, the United States, Icelandor other countries where Alterra may carry on business; risks and hazards associated with the business of renewable energy generation; risks relating to thecreditworthiness and financial condition of suppliers and other parties which Alterra will deal with; inadequate insurance or inability to obtain insurance tocover these risks and hazards; employee relations; relationships with and claims by local communities and First Nations; availability and costs of equipmentand 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 technicaldata and capital expenditure estimates; and availability of capital to fund development and expansion programs. Forward-looking information andstatements 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 causeresults not to be as anticipated, estimated, described or intended. There can be no assurance that the forward-looking information will prove to beaccurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors shouldnot place undue reliance on forward-looking information. Other than as required by applicable securities laws, Alterra does not assume any obligation toupdate or revise such forward-looking information to reflect new events or circumstances.2
  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.3
  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 2012e 4
  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…5
  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 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) (a) Upper Toba 124 MW 62 MW Hydro ABW Solar 50 MW 5 MW Solar Reykjanes 3 & 4 80 MW 54 MW Geothermal (a) 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 (a) Project design currently being optimized; final capacity amount may vary.6
  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 province7
  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 2013-14E8
  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 communities9
  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 Solar10
  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  $2.1 MM US treasury grant received at Soda Lake  Dokie 1 bump in PPA’s “firm energy”; 1.2% increase to annual revenue anticipated  All projects for ABW solar farm received their permits11
  12. 12. Alterra: Headwinds / Tailwinds Headwinds Tailwinds  Growth of natural gas reserves  BC growth: “move the gas  Disappearance / uncertainty cleanly” around programs that benefit  High supply of capital for renewable power energy projects  Gas acceptance by some as a  Attractiveness of Canada “cleaner” thermal source of  Technology prices driven down energy  Tough times create  Current investment cycle opportunities attributes no value to  Growth investors will return development pipeline12
  13. 13. 2012: Next Milestones Looking ahead in 2012:  Finalize partnership agreements  Upper Toba hydro  Chile geothermal  Peru geothermal  Finalize PPAs  Dokie 2  Reykjanes 3+4  Opportunistic acquisitions: wind, geothermal and hydro  Continue work in British Columbia and elsewhere for positive regulatory/political environment  Move projects into construction: Upper Toba, Dokie 2, Reykjanes 3+413
  14. 14. Analyst Coverage and Capital Structure CAPITAL STRUCTURE: ( NET INTEREST )MARKET CAPITALIZATION (30 APR 2012) C$ 219 MMCASH (30 MAR 2012) US$ 51 MMTOTAL ASSETS (30 MAR 2012) US$ 863 MMLONG TERM DEBT (30 MAR 2012) US$ 484 MMFIRM CONTACTCanaccord Genuity Jared AlexanderCormark Securities MacMurray WhaleJacob Securities John McIlveenMackie Research Capital Matthew GowingMirabaud Securities Gus HochschildNational Bank Financial Jeremy MersereauPritchard Capital Partners Veny AleksandrovRaymond James Securities Steven LiSalman Partners Mike PlasterINDEX COVERAGES&P/TSX Clean Technology IndexRENIXX Renewable Energy Industrial Index14
  15. 15. APPENDICES TSX : AXY15 MAY 2012
  16. 16. Senior Management Outstanding development, financial and operations expertise 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 Edinburghs 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.16
  17. 17. Board of DirectorsRoss 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 resourceExecutive Chairman companies 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 DukeExecutive Vice-Chairman of 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 theDirector 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 1989Director 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  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 successfulDirector 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  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 wasDirector 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 BCs Mining Person of the Year in 1996.17
  18. 18. Overview - Toba Montrose Hydro Alterra owns a 40% economic interest in two run-of-river hydroelectric generation facilities in southwestern British ColumbiaFacilities  East Toba River and Montrose CreekCapacity & Production  235 MW generating 727 GWh / year  60% - GE EFSOwnership  40% - AlterraStart of Operation  2010Power Purchase  EPA to 2045 with BC HydroAgreement  $470 MM total project debt with 35 year amortization and 6.4%Project Debt effective interest rate  Average annual project revenue of $78 MMRevenue  Includes $10/MWh ecoEnergy Program incentive  Average annual project EBITDA of $60 MMEBITDA  $24 MM net EBITDA to Alterra18
  19. 19. Overview - Dokie 1 Wind Farm Alterra owns a 51% economic interest in the Dokie 1 wind farm, located in northern British ColumbiaFacilities  Dokie Wind FarmCapacity & Production  144 MW generating 330 GWh annually  51% - AlterraOwnership  49% - GE EFSStart of Operation  March 2, 2011Power Purchase  EPA to 2036 with BC HydroAgreement  $175 MM total project debt with 20 year amortization and 7.2%Project Debt effective interest rate  Average annual project revenue of $39 MMRevenue  Includes $10/MWh ecoEnergy Program incentive  Average annual project EBITDA of $27 MMEBITDA  $14 MM net EBITDA to Alterra19
  20. 20. Overview - Svartsengi and Reykjanes Geothermal Alterra’s 67% - owned subsidiary HS Orka owns two geothermal power plants in southwestern IcelandFacilities  Svartsengi and Reykjanes  172 MW generating 1,258 GWh /yearCapacity & Production  Thermal (hot water) production 150 MWth  67% - AlterraOwnership  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 contractsAgreements  36% of power sales paid in USD and linked to aluminum price  $170 MM total company debt with average 9 years to maturity andProject Debt average 2.65% effective current interest rateRevenue  2011 revenue of $64 MMEBITDA  2011 EBITDA of $20 MM20
  21. 21. Overview - Soda Lake Geothermal Alterra owns a 23 MW geothermal power plant near Fallon in northern NevadaFacilities  Soda Lake 1+2  23 MW, currently operating at 15 MW gross and generatingCapacity / Production 84 GWh /yearOwnership  100% AlterraStart of Operation  1987 / 1991Power Purchase  Two PPAs to 2020 with NV EnergyAgreementProject Debt  NoneRevenue  Average annual revenue of $5 MMEBITDA  Average annual EBITDA of $1 MM21
  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 OntarioFacility  3 solar facilities in southwestern Ontario  Amherstburg – 10 MWCapacity  Belmont – 20 MW  Walpole – 20 MWProposed  90% - GE EFSOwnership  10% - Alterra  4Q 2012Start of Operation  Construction began in May 2012Power Purchase  20 year EPA with Ontario Power AuthorityAgreementProject Debt  TBDEBITDA  $3 MM net annual EBITDA to Alterra22
  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 RiverLocations  In close vicinity to existing Toba Montrose facilityCapacity / Production  89 to 124 MW, generating 300-320 GWh annually  51% - AlterraOwnership  49% - GE EFS  Environmental Assessment Certificate granted and water licencePermitting pendingPower PurchaseAgreement  40-year contract with BC HydroBegin Construction  1Q 2013EOn Line  2Q 2015E  Completion of preliminary engineering and cost estimation targeted for mid-2012Notes  Utilizes existing transmission line and other infrastructure at Toba Montrose23
  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 productionLocation  Existing Reykjanes facility and steam fieldCapacity / Production  80 MW generating 630 GWh annually  67% - AlterraOwnership  33% - Jarðvarmi (Icelandic pension funds)Permitting  CompletedPower PurchaseAgreement  Resolution expected 2H 2012Begin Construction  2H 2012  Reykjanes 3 - 50 MW in 2H 2014On Line  Reykjanes 4 - 30 MW in 1H 2015  High pressure 50 MW turbine for Reykjanes 3 already on siteNotes  Reykjanes 4 will run on existing well field output in a 30 MW low pressure turbine24
  25. 25. Overview - Dokie 2 Wind Farm Expansion The Dokie Wind Farm in northern B.C. is permitted for a 156 MW expansionLocation  Undeveloped ridgelines within Dokie 1 wind farm areaCapacity / Production  107 to 156 MW, generating 330-460 GWh annually  51% - AlterraOwnership  49% - GE EFSPermitting  156 MWPower PurchaseAgreement  Seeking opportunities with BC Hydro or other off-takersBegin Construction  1Q 2013EOn Line  3Q 2014E  Wind assessment, turbine layout, infrastructure and financialNotes studies in progress25
  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 300Location km south of Santiago  320 MW inferred resource with promising characteristicsCapacity / Production  Exploitation concession granted for first phase of 50 MW  Permanent production concession at Laguna del MauleConcessions  Resource area continues on adjacent Pellado concession  Alterra has a third adjacent concession at Los Cristales  Letter authorizing first round of exploratory holesPermitting  Baseline prepared for subsequent permittingExploration &  Access road and infrastructure advanceDevelopment  Three slim holes completed by core drillingNext Phase  Deep rotary and wide diameter drilling planned in 2013On Line  50 MW in 2016E  Recent volcanism and hot springs near concessionNotes  Seeking investment partner for next phase26
  27. 27. Overview - Mensano and Roccastrada Geothermal (Italy) Alterra’s exploration concessions in Italy are in the historic and promising Larderello region of Tuscany  100% AlterraOwnership  Interest from multiple prospective partners  32 geothermal plants already operating in regionOpportunity  Attractive power prices as high as €180 /MWh  Strong public and government support for clean powerCHARACTERISTICS Roccastrada MensanoLocation South of Larderello in Tuscany Southeast of Larderello in TuscanySize 27,190 hectares 21,256 hectares oKnown 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 areasPotential • 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  at 2800-3000m, 200 C oWork Program Prospecting to build a Detailed exploration program to geothermal system and define confirm high enthalpy resources targets for exploration wells27
  28. 28. TSX : AXY28 MAY 2012