Great Plains Metals Corp. press release

Pristine Power announces results for the first quarter ended March 31, 2009 and updates operations, construction and development activities

2009-05-05

TSXV - TSX Venture Exchange · Gold · Copper · Molybdenum · Rare Earth Elements · Uranium · Canada

CALGARY, May 4 /CNW/ - Pristine Power Inc. ("Pristine" or the "Company") today announced its financial results for the first quarter ending March 31, 2009 and provided updates to its operations, construction activities and development initiatives. Pristine has filed with Canadian securities regulatory authorities its unaudited financial statements and related Management's Discussion and Analysis for the first quarter ended March 31, 2009. These filings are available for review on the Corporation's SEDAR profile at www.sedar.com and on Pristine's website at www.pristinepower.ca.

"During the quarter, the Company remained focused on executing our plans to achieve the major milestones for 2009," commented Mr. Jeffry M. Myers, President and Chief Executive Officer. "Since year end, at our East Windsor site, we have started commissioning and expect to fire the first turbine next month. Progress to date has been on track and we remain confident that the plant will become commercially operational on time and on budget. On our newest project, York Energy Centre, we continue to make tangible progress in our negotiations with an EPC contractor, equipment suppliers and environmental permitting."

"While we remain focused on maximizing the value of our existing assets, we also continue to seek new areas for growth. During the quarter we submitted four bids to build four 200 MW plants in Colorado and New Mexico."

HIGHLIGHTS

Three months ended March 31 2009 2008

Net production (MWh)(1) 6,487 -

Revenue 883 179 Expenses 3,513 1,730 Net loss and comprehensive loss (2,541) (1,848) Net loss per share - basic (0.08) (0.10) Net loss per share - diluted (0.08) (0.10)

Cash used in operations (1,651) (1,258) Cash used in operations per share - basic (0.05) (0.07) Cash used in operations per share - diluted (0.05) (0.07)

Funds used in operations (2,153) (1,267) Funds used in operations per share - basic (0.07) (0.07) Funds used in operations per share - diluted (0.07) (0.07)

Notes: (1) Before non-controlling interest share.

March 31, December 31, As at 2009 2008

Total assets 176,917 181,587 Long term debt 100,210 100,311 Shareholders' equity 53,401 55,828

OVERVIEW

Pristine is in the business of developing, owning and operating independent power plants that will produce and sell electricity, and in some cases, sell process steam to industrial users. The Company currently operates two 5 MW Energy Recovery Generation ("ERG(R)") plants, Savona and 150 Mile House, along the Spectra Energy natural gas transmission system in British Columbia. Pristine is also managing the construction of the East Windsor Cogeneration Centre ("EWCC"), an 84 MW natural gas-fired cogeneration facility that will generate electricity and steam from the combustion of natural gas. This project is expected to commence commercial operations in the third quarter of 2009. Pristine has a 25% effective interest in all three of these projects.

The Company is also managing the development of the York Energy Centre ("YEC"), a 393 MW natural gas fired peaking generation facility. Construction is expected to start in 2010 with commercial operations to commence in late 2011. The Company is expected to have a 50% interest in this project.

HIGHLIGHTS

During the first quarter ended March 31, 2009, the Company incurred a net loss of $2,541,000 ($0.08 per share, basic and fully diluted) compared to a loss of $1,848,000 ($0.10 per share, basic and fully diluted) in the first quarter of 2008. Higher expenditures on development activities and salaries, reflecting increased staffing levels, primarily attributed to the increased loss in the first quarter of 2009 over the comparable period in 2008. Increased costs were partially offset by revenues of $549,000 from power generated at the Company's two operating plants. Cash used in operations during the first quarter of 2009 was $1,651,000 ($0.05 per share, basic and fully diluted) compared to $1,258,000 ($0.07 per share, basic and fully diluted) in 2008. During the quarter, the Company spent $7,712,000 on property, plant and equipment compared to $16,743,000 in the comparable period in 2008. Cash used in investing activity was offset by the receipt of funds totaling $2,320,000 previously held in trust and release of funds from restricted cash. Proceeds from restricted cash were $638,000 in the first quarter of 2009 compared to $10,417,000 in the first quarter of 2008. Proceeds from restricted cash consist of funds released for construction of East Windsor Cogeneration Centre. In the first quarter of 2009 this was offset by cash collateral posted as security for $6,980,000 letters of credit. The majority of such letters of credit were issued in support of the York Energy Centre project. As a consequence, at the end of the quarter, the Company's cash position totaled $30,936,000 compared to $37,700,000 at year end.

Results of Operations

During the first quarter of 2009, the Company's net interest in electricity generated from the two plants at Savona and 150 Mile House totaled 6,487 MWh with a combined capacity factor of 62% compared to an expected capacity factor of 82%. Power generated from these two plants is sold to BC Hydro at fixed prices under the terms of a twenty-year contract. Production at the beginning of 2009 was negatively affected by post-commissioning issues related to quality control that is primarily the responsibility of the major equipment supplier. While lost revenues are not recoverable, the cost to rectify a significant portion of these issues is recoverable under warranty and both plants returned to full capacity in the third week of January. Production was also negatively impacted by lower gas flows on the Spectra Energy natural gas transmission system due to warmer than normal weather. These plants were under construction in the first quarter of 2008.

Project under Construction

Construction of the $207 million 84 MW East Windsor Cogeneration Centre continued in the first quarter of 2009, remaining on schedule and on budget. All major equipment is now on site and installed. During the quarter, work on piping and the plant's electrical systems was undertaken along with the start of initial commissioning. Commencement of commercial operations is anticipated in the third quarter of 2009.

Projects under Contract

York Energy Centre

In December 2008, the Company was awarded a 20 year contract by the Ontario Power Authority to construct and operate the York Energy Centre, a 393 MW natural gas fired peaking generation facility, located in the Township of King, Region of York, Ontario. Pristine expects to hold a 50% interest in the project with total project costs expected to be up to $365 million. The Company has received confirmation from municipal and regional authorities that the facility complies with Official Plan and zoning by-law requirements. During the quarter, the Ontario Ministry of the Environment denied all requests for elevation of the project to a full environmental assessment. Subsequent to the quarter end, and during the normal appeal period, appeals of this decision were received by the Ministry of the Environment which are currently under review by the Minister. The Company is currently completing the necessary provincial environmental assessment, permitting and site plan process to obtain the necessary approvals required for construction, with completion of the permitting process expected in the last half of 2009. The Company is also in the process of finalizing agreements with the preferred Engineer Procure and Construct ("EPC") contractor and gas turbine supplier. Preliminary discussions have commenced with potential lenders for long-term non-recourse financing, with such financing expected to be in place following receipt of all necessary environmental permits. Construction is expected to commence in mid 2010 with completion anticipated late in 2011.

Mackenzie Green Energy Centre

The Mackenzie Green Energy Centre is a proposed 65 MW (thermal equivalent) biomass fired project to be located in Mackenzie, British Columbia. Recently, the British Columbia Ministry of Forests and Range advised Pristine that Mackenzie Green Energy Inc.'s current energy supply contract with BC Hydro, dated August 31, 2006, was designated as a bioenergy supply contract under the Forest Act and accordingly could apply for a non-replaceable forest license, supplying a portion of the necessary fuel requirements. This is an important step in securing adequate fuel supplies for the project. However, before this project can proceed, certainty of the project site and mitigation of fuel price risk requires resolution.

Submission of Bids

Pristine submitted four bids in the first quarter of 2009. On January 16, 2009, in response to Southwestern Public Services ("SPS") requests for proposals for up to 600 MW of dispatchable resources, the Company submitted two bids in New Mexico for the development of two 200 MW natural gas peaking power plants. The total cost of these projects is estimated to be approximately US$275 million each. If awarded, Pristine expects to hold a 50% interest in each of the projects. Should these projects be selected by SPS in its short list of potential suppliers, a contract negotiation process would follow.

In January 2009, the Public Service Company of Colorado issued an All Source Solicitation consisting of four separate requests for proposals, seeking to acquire approximately 2,200 MW of electricity. On April 10, 2009, in response to the request for proposals for dispatchable resources, the Company submitted two bids for the development of two 200 MW natural gas peaking power plants. These projects are also expected to cost approximately US$275 million each. Pristine currently holds a 100% interest in each of these projects.

The Company is also awaiting announcements in regards to submissions made to BC Hydro's Clean Power Call. In November, 2008, Kleana Power Corporation, a company in which Pristine holds a 10% equity interest, submitted a proposal to build a 600 MW Run of River hydroelectric project. If selected, the total projected cost of the project is anticipated to be approximately $2.5 to $3.0 billion. An announcement of awards by BC Hydro is expected to occur in mid- 2009.

New Developments

On March 5, 2009, BC Hydro announced the launch of the second phase of the Bioenergy Call for Power ("Phase II"). Phase II is expected to be officially issued in May 2009, with submission of bids due in the Fall of 2009 and project selection expected in early 2010. Phase II will be conducted in two streams, the first stream targeting 1,000 GWh per year from larger-scale biomass projects and the second stream targeting at least two smaller-scale, community-driven biomass projects.

The province of Ontario has recently introduced the Green Energy Act, and the Ontario Power Authority has responded to this initiative through the proposed establishment of a Feed-in Tariff Program ("FIT"), or fixed and known prices to promote the development of onshore and offshore wind, bioenergy and solar resources. The objectives of the proposed FIT program are to increase capacity of renewable energy supply to ensure adequate generation and reduce emissions while simplifying the method to procure and develop generation. Pristine is participating in processes to consult on establishment of the rules of engagement for FIT, and the Company will evaluate resources and projects to offer under the FIT program for bioenergy and other technologies.

In the United States, the Obama administration has introduced The American Clean Energy & Security Act of 2009 (March 31, 2009). The proposed legislation calls for the federalization of a legally binding Renewable Portfolio Standard and enabling the Federal Energy Regulatory Commission (FERC) to support, coordinate and integrate regional transmission planning efforts. In addition, the bill tasks the US Environmental Protection Agency (EPA) with regulating greenhouse gas emissions, and administering a market based CO(2) cap and trade program. The immediate impact on Pristine is to continue capitalizing on opportunities for gas fired peaking generation, as state utilities aim to meet Renewable Portfolio Standards.

Conference Call

Pristine (TSX:PPX) will hold a conference call on Tuesday, May 5, 2009 at 9:00 am MST (11:00 am EST) to discuss its first quarter results and provide an update on operations. The call can be accessed at 1-800-732-6179 or 1-416-644-3416. A replay of the call will be available until May 19, 2009 at 1-877-289-8525 or 1-416-640-1917. The access code for the replay is 21304738 followed by the pound sign.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this news release may constitute "forward-looking information" or "forward-looking statements" which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this news release, such information uses such words as "estimates", "expects", "plans", "anticipates" and other similar terminology. This information reflects the Company's current expectations regarding future events, including development and financing of the Mackenzie and York projects, development of new projects and construction and financing of the East Windsor Project as well as future operating performance and speaks only as of the date of this news release. Forward-looking information involves significant uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information. Although the forward-looking information in this news release is based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is provided as of the date of this news release, and, subject to applicable securities laws, the Company assumes no obligation to update or revise such information to reflect new events or circumstances.

About Pristine

Pristine (TSX: PPX) is in the business of developing, owning and operating independent power plants that produce and sell electricity and in some cases, sell process steam to industrial users. Pristine capitalizes on opportunities in the independent power market by actively pursuing the development of dependable, cost-effective and environmentally responsible power generation facilities utilizing technology with proven past performance. Pristine pursues a mix of large gas-fired, bioenergy and hydroelectric projects, and smaller replicable waste heat recovery ERG(R) and bioenergy projects. Pristine currently has two projects in operation, one under construction, and two under contract and in advanced development. Pristine is developing projects in Ontario, British Columbia and the Western United States. Visit www.pristinepower.ca for more information.

PRISTINE POWER INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands)

As at: March 31, December 31, 2009 2008

ASSETS Current assets Cash and cash equivalents $ 30,936 $ 37,700 Cash held in trust - 2,320 Accounts receivable 1,576 2,581 Prepaid expenses and deposits 812 1,922 Due from related parties 288 490 Derivative financial instruments 155 250 Restricted cash 7,754 770 41,521 46,033

Restricted cash 12,462 20,062 Investments 2,250 2,250 Property, plant and equipment 120,684 113,242 $ 176,917 $ 181,587

LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 5,865 $ 7,884 Due to related parties 125 164 Current portion of long-term debt 1,461 877 7,451 8,925

Asset retirement obligation 326 321 Long-term debt 98,749 99,434 99,075 99,755 Non-controlling interest 16,990 17,079

SHAREHOLDERS' EQUITY Share capital 67,441 67,441 Contributed surplus 2,042 1,928 Deficit (16,082) (13,541) 53,401 55,828 $ 176,917 $ 181,587

PRISTINE POWER INC. CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS AND DEFICIT (Unaudited) (in thousands)

Three Months Ended March 31, 2009 2008

REVENUES Power generation sales $ 549 $ - Project management fees 186 105 Interest and other income 148 74 883 179

EXPENSES General and administrative 1,780 890 Project development costs 816 529 Interest, bank, and finance charges 220 12 Plant operating costs 219 - Stock based compensation 114 853 Unrealized loss (gain) on derivative financial instruments 95 (369) Foreign exchange gain (5) (198) Depreciation, amortization and accretion 274 13 3,513 1,730

NET LOSS BEFORE NON-CONTROLLING INTEREST (2,630) (1,551)

NON-CONTROLLING INTEREST (89) 297

NET LOSS AND COMPREHENSIVE LOSS (2,541) (1,848)

DEFICIT, BEGINNING OF PERIOD (13,541) (4,118) DEFICIT, END OF PERIOD (16,082) (5,966)

NET LOSS PER SHARE Basic $ (0.08) $ (0.10) Diluted $ (0.08) $ (0.10)

PRISTINE POWER INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)

Three Months Ended March 31, 2009 2008

OPERATING Net loss $ (2,541) $ (1,848) Add (deduct) non-cash items: Depreciation, amortization and accretion 274 13 Stock based compensation 114 853 Non-controlling interest (89) 293 Other (6) (3) Unrealized foreign exchange gain - (206) Unrealized loss (gain) on derivative financial instrument 95 (369) (2,153) (1,267) Change in non-cash working capital 502 9 Cash used in operating activities (1,651) (1,258) FINANCING Repayment of long-term debt (75) - Financing costs (21) - Advances from (to) partners 163 (947) Proceeds from issuance of shares (net of share issue costs) - 45,824 Change in non-cash working capital (23) 450 Cash provided by financing activities 44 45,327 INVESTING Restricted cash 638 10,417 Property, plant and equipment (7,712) (16,743) Cash held in trust 2,320 - Change in non-cash working capital (390) 4,305

Cash provided by (used in) investing activities (5,144) (2,021) Unrealized foreign exchange gain on foreign denominated cash (13) - Increase (decrease) in cash and cash equivalents (6,764) 42,048 Cash and cash equivalents, beginning of period 37,700 1,567 Cash and cash equivalents, end of period $ 30,936 $ 43,615