Ram Power, Corp. Announces San Jacinto Project and Corporate Finance Updates
RENO, NV--(Marketwire - September 15, 2011) - Ram Power, Corp. (TSX: RPG) ("Ram Power" or the "Company"), a renewable energy company focused on the development, production and sale of electricity from geothermal energy, announced today the following San Jacinto Project and corporate finance updates.
SAN JACINTO PROJECT
Receipt of Funds under the Phase I and Phase II Credit Facilities
On August 10, 2011, the Company's subsidiaries, Polaris Energy Nicaragua, S.A. ("PENSA") and San Jacinto Power International Corporation, executed amendments to the Phase I and Phase II credit facilities, bringing the Company into compliance with the loan covenants in those facilities.
Given the successful production and injection drilling results as announced in August of 2011, the Company has satisfied the resource requirements and has full access to the $160 million available under the Phase II credit facility. The Company satisfied the conditions precedent to borrow under the Phase II credit facility, and received its initial draw on August 26, 2011 of $104 million with approximately $35 million (net of $3 million deposited into the Phase II major maintenance reserve account), being distributed to the Company and the remainder used to fund future project costs for the next four months and required contingency reserves.
Following the amendment to the Phase I credit facility, the Company now has access to the remaining $9 million available under the senior loan facility to fund a portion of the remaining budgeted costs of the Phase I expansion and an additional $8 million under the subordinated loan facility to fund contingencies for Phase I and Phase II. The amended facility now totals $85 million. In connection with the amendment, the Company funded an additional $9.3 million in equity for Phase I, which together with the remaining $9 million of the Phase I senior loan facility, is expected to be sufficient to complete Phase I. The remaining $17 million under the Phase I credit facility was disbursed to the Company on September 9, 2011.
Full Notice to Proceed to TIC International, Inc. for Phase II Expansion at San Jacinto-Tizate
Effective August 29, 2011, PENSA gave a full notice to proceed to TIC International, Inc. to begin work under the Procurement and Construction Contract for Phase II. The contract provides for the completion of the Phase II 36 MW expansion in December 2012, bringing the total output for the Phase I and Phase II expansions at the San Jacinto Project to 72 MW.
SJ 9-3 Acidization and Flow Test
A review of well drilling and testing results undertaken by Sinclair Knight Merz ("SKM") in February 2011 of well SJ 9-3 at the Company's San Jacinto Project indicated that the production potential of the well was likely restricted by reservoir formation damage during drilling. This finding led to the development of an acid stimulation program to improve the production of the well by removing some of the formation damage. Prior to commencing the acid stimulation program, GeothermEx Inc. ("GeothermEx"), the resource consultant for the lenders under the Phase II credit facility, certified that the well had an output potential of 41 t/h which equates to a power generation capacity of 5.3 MW (gross) at a design separation pressure of 5.11 barg. The acid injection program was successfully completed on July 31, 2011 by Schlumberger under the direction of SKM geothermal specialists. Subsequent re-testing of the well confirms that the acid stimulation has successfully improved steam production, with a steam flow rate of 57 t/h which represents a 39% improvement in well production and equates to a power generation capacity of about 7.4 MW (gross) at a design separation pressure of 5.11 barg. In addition to the estimated 2.1 MW increase in power potential, the acid treatment has significantly increased the well head pressure to more than 10 barg. The increased well head pressure provides a much greater operational margin when future reservoir pressure declines occur in response to field production. As of September 9, 2011, the well is undergoing a long-term flow test to enable re-certification of production capacity pursuant to GeothermEx's testing protocols.
Completion of Drilling of SJ 12-3
Well SJ 12-3 at the San Jacinto Project was completed on August 23, 2011 to a target depth of 7,841 ft. The Company conducted a short injectivity test which indicated deep permeability with an injectivity index of 16 tonnes/bar/hour. Currently, well SJ 12-3 is undergoing an extended heat up period, after which a long-term flow test will be performed in late September or early October 2011.
CORPORATE FINANCE
Restructuring of Bridge Facility
The Company has successfully negotiated amendments to the $50 million, term loan credit facility (the "Credit Facility") with Sprott Resource Lending Partnership, Exploration Capital Partners 2008 Limited Partnership and Newberry International Holdings Ltd. (collectively, the "Lenders"). The successful negotiations extend the maturity date of the Credit Facility, waive the non-compliance related to the delivery of post-closing collateral items by deadlines specified in the original agreement, and waive the non-compliance of Ram Power of its repayment obligation to the extent that equity distributions are made available to the Company from the proceeds of the San Jacinto phase II credit facility.
As a result of the negotiated amendments, the Lenders agreed to an extension of the maturity date from February 28, 2012 to September 30, 2013 for an upfront fee of 2.0 % of the outstanding loan amount of $50 million. The Lenders also agreed to waive immediate repayment of $35 million from the equity distributions made to the Company from the proceeds of the initial disbursement from the San Jacinto Phase II credit facility for an additional upfront fee of 2.25% of the outstanding loan amount and cancel 18,031,251 common share purchase warrants associated with the Credit Facility. The Company will pay the Lenders an additional fee of 1% of the amount outstanding under the Credit Facility every six months, (with the first payment due March 2012) if security over the Company's San Jacinto project near Leon, Nicaragua (the "San Jacinto Project") is not granted to the Lenders.
The Company is awaiting TSX approval of the proposed amendments and expects to execute the final documentation by September 30, 2011.
"The recently completed milestones are testament to the hard work and success the Company has had in the recent months," said Walter M. Higgins, Interim President and CEO. "The re-negotiated bridge loan facility will allow the Company flexibility to use available funds in the development of future projects, and the additional capital available under the Phase I facility as well as the initial draw under the Phase II facility re-affirms the desire of our lending partners to complete both phases of the expansion at San Jacinto. In addition, the continued success of our drilling program means added savings in future drilling costs to the Company resulting in increased shareholder value."
Antony Mitchell, Executive Chairman for Ram Power stated, "We would like to thank our bridge facility lenders Sprott Resource Lending Partnership, Exploration Capital Partners 2008 Limited Partnership and Newberry International Holdings Ltd. for their continued support of the Company during this time. The significant changes instituted by the Company over the last two quarters have had positive, tangible results which will ensure the long term success at San Jacinto and the continued development of our pipeline of projects."
About Ram Power
Ram Power is a renewable energy company based in Reno, Nevada, engaged in the business of acquiring, exploring, developing, and operating geothermal properties. Ram Power has an interest in geothermal projects, primarily in the United States, Canada, and Latin America.
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