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Press release from CNW Group

Sprott Power Corp. Announces 2013 First Quarter Results

Wednesday, May 15, 2013

Sprott Power Corp. Announces 2013 First Quarter Results

16:45 EDT Wednesday, May 15, 2013

  • Continued significant renewable energy production increases resulting in operating revenue growth of 71% for the quarter
  • EBITDA from assets under management increases 320% for the quarter

TORONTO, May 15, 2013 /CNW/ - Sprott Power Corp. (TSX: SPZ) ("Sprott Power" or "the Company"), an owner, operator and developer of renewable energy projects, today announced its results for the three months ended March 31, 2013.

"It has been an exciting quarter for Sprott Power.  Over the past two years, Sprott Power has focused its efforts on a number of value creation initiatives that, through their completion, are now contributing to the growth evident in Sprott Power revenues and EBITDA from assets under management," said Jeff Jenner, CEO of Sprott Power.  "These initiatives include the completion of the Amherst I Project in 2012 which helped grow revenue for the quarter ended March 31, 2013 to $6.0 million.  We also completed the acquisition of Glen Dhu and Fitzpatrick Mountain in late 2012.  The impact of Glen Dhu and Fitzpatrick Mountain and Amherst helped grow EBITDA from assets under management for the quarter ended March 31, 2013 to $8.4 million.  We look forward to announcing the results of our strategic review and continuing to execute on our growth plans in 2013."

Operational and Growth Highlights

  • As at March 31, 2013, the Company partially or wholly owned ten operating wind power facilities with an aggregate installed capacity of 143.2 MWs.  These consist of three facilities in Ontario with an aggregate installed capacity of 21.6 MWs and seven facilities in Nova Scotia with an aggregate installed capacity of 121.6 MWs.  Each of these facilities sells its electricity under long-term power purchase agreements ("PPAs") that expire between 2020 and 2037 with a weighted average life of 17 years remaining on the contracts.

  • The Company's operating assets performed as expected, producing approximately 118.1 gigawatt hours ("GWhs") of electricity during the quarter ended March 31, 2013, which represents approximately 126% of the 2012 comparable period.
        3 Months Ended March 31 -
Gross GWhs produced
        2013   2012 (2)
Ontario       18.5   19.0
Nova Scotia(1)       99.6   74.5
Total Generation (GWhs)       118.1   93.5

(1) GWhs shown includes certain Nova Scotia projects previously owned by Shear Wind Inc. prior to November 23, 2012.

(2)  GWhs shown represent quarterly production results for acquired assets prior to the acquisition by the Company.  The 2012 production numbers do not include production from Amherst and from Glace Bay II as both these assets were constructed later in the year.

  • During the quarter, the Company continued to advance contracted wind power development projects representing 77.5 MW of capacity that are subject to letters of intent and/or security agreements. The Company, along with a financial partner, continues to move forward to acquiring these projects, subject to customary terms and due diligence, including any required consent from the Ontario Power Authority ("OPA") and the approval of the board of directors of the Company (the "Board").

Corporate Highlights

  • During the quarter ended March 31, 2013, the Company announced that the Board had initiated a process to identify, examine and consider a range of strategic options available to the Company with a view to finding additional capital to fund its growth and enhancing shareholder value, including a possible sale of the Company (the "Strategic Review").

  • During the quarter ended March 31, 2013, the Company announced that it has decided to transition to internal management by way of a notice of termination, effective July 31, 2013, of its Management Services Agreement ("MSA") with Sprott Power Consulting LP ("SPCLP"), the outsourced management firm on which it has been relying for management services.  The Company developed and began implementing a detailed transition plan to ensure the smooth transition of operations upon the termination of the MSA.  In conjunction with the transition plan, the Company has retained additional resources to assist with and manage the overall transition.

  • Upon the termination of the MSA, the Company is to pay to SPCLP $8.5 million (the "Termination Fee") for amounts owing by the Company under the MSA.  The Termination Fee will be paid by cash or the issuance of Shares.  In the event of a sale of the Company, the Company is to satisfy the Termination Fee concurrently with the completion of the sale in cash or Shares depending upon the purchase consideration. Approximately 40% of the Termination Fee will be paid to the Company's management team.

Financial Summary

  • Revenue from energy sales for the three months ended March 31, 2013 was $6.0 million, as compared to $3.5 million, an increase of $2.5 million or 71% from the same period of 2012.  Gross Revenue1 from assets under management for the quarter ended March 31, 2013 was $11.8 million, including $5.8 million as a result amounts generated from Glen Dhu and Fitzpatrick Mountain, which are accounted for using equity accounting.

  • Earnings before interest, income taxes, depreciation and amortization ("EBITDA"1) from assets under management for the three months ended March 31, 2013 was $8.4 million as compared to $2.0 million, a net increase of $6.4 million or 320% as compared to in the same period of 2012.  EBITDA from assets under management includes $4.8 million generated from Glen Dhu and Fitzpatrick Mountain, which are accounted for using equity accounting.

  • The net loss attributable to the shareholders for the three months ended March 31, 2013 was $10.8 million or $0.159 per share, as compared to a loss of $0.04 million or $0.001 per share in the same period of 2012.  The net loss in 2013 was primarily the result of expenses totaling $10.8 million related to the termination of the MSA and the ongoing Strategic Review.

  • The net increase in cash from operations before changes in working capital for the three months ended March 31, 2013 was $0.3 million as compared to $1.3 million in the same period of 2012.

  • At March 31, 2013, the Company had working capital of $4.3 million including $13.8 million in cash and $8.7 million in restricted cash as compared to working capital of $17.7 million, including $17.5 million in cash and $9.8 in restricted cash, as at December 31, 2012.

  • At March 31, 2013 the Company had total assets of $232.4 million as compared to $236.8 million as at December 31, 2012.  At March 31, 2013 the Company had long-term debt of $129.2 million as compared to $129.9 million as at December 31, 2012.

The Company's unaudited consolidated financial statements and Management's Discussion and Analysis for the quarter ended March 31, 2013, can be found at www.sedar.com or the Company's website at www.sprottpower.com.

About Sprott Power Corp.

Sprott Power is a publicly-traded (TSX: SPZ) Canadian-based company dedicated to the development, ownership and operation of renewable energy projects. Through project development efforts, acquisitions, partnerships and joint ventures, Sprott Power provides its shareholders with income and growth from the renewable power generation sector of the energy industry.

Forward-Looking Statements

Certain information contained in this press release may constitute "forward-looking information" which reflects the current expectations of Sprott Power. This information reflects Sprott Power's current beliefs with respect to future events and is based on information currently available to management.  Forward-looking information involves significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking information including, without limitation, the risks listed under the heading "Risk Factors" in the Company's Revised Annual Information Form dated April 2, 2013. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information contained in this release. Although forward-looking information contained in this release is based upon what Sprott Power believes to be reasonable assumptions, management cannot assure investors that actual results, performance or achievements will be consistent with this forward-looking information. The forward-looking information is made as of the date of this release and Sprott Power does not assume any obligation to update or revise it to reflect new events or circumstances, except as required by law.

__________________________________

1 Gross Revenue and EBITDA from assets under management are terms that the Company utilizes to assess the financial performance of its business that are not measures recognized under International Financial Reporting Standards ("IFRS"). These non-IFRS measures should not be considered alternatives to performance measures determined in accordance with IFRS and may not be comparable to similar measures presented by other issuers.  See the calculations included in the March 31, 2013 Management's Discussion and Analysis of Financial Results for a discussion of these calculations.

SOURCE: Sprott Power Corp.

For further information:

Jeff Jenner, CA, CBV
President and Chief Executive Officer
Sprott Power Corp.
416-943-6387
jjenner@sprottpower.com 

Ross Marshall
Investor Relations
(416) 815 0700 ext. 238
rmarshall@tmxequicom.com

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