Pristine Power announces second quarter 2008 results and updates construction and development activities



    CALGARY, Aug. 12 /CNW/ - Pristine Power Inc. ("Pristine" or the
"Company") today announced its financial results for the quarter ending
June 30, 2008 and provided updates to its construction activities at the East
Windsor Cogeneration Centre and Enpower projects as well as its development
initiatives in British Columbia and Ontario. Pristine has filed with Canadian
securities regulatory authorities its unaudited financial statements and
related Management's Discussion and Analysis for the three and six months
ended June 30, 2008. 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.
    "In the second quarter of 2008 the Company made significant progress with
its three major projects under construction and in the development of new
projects," noted Mr. Jeffry M. Myers, President and Chief Executive Officer.
"Construction of Enpower's project at Savona was completed and is expected to
be operational in the third quarter. Completion and commercial operations of
Enpower's other project at 150 Mile House is also expected in the next
quarter. Progress on the East Windsor Cogeneration Centre project remains on
track and on budget with commercial operation expected in the third quarter of
2009. The Company also actively pursued additional growth submitting three
proposals totaling 40MW under BC Hydro's Bioenergy Call for Power. In addition
the Company continues to develop a project for submission into the Ontario
Power Authority's Request for Proposals for approximately 350 MW of Peaking
Generation in the Northern York Region, with the bid submission expected to be
in the fourth quarter of 2008."


    
    Financial and Operating Highlights

    -------------------------------------------------------------------------
                            For the three month        For the six month
                                period ended              period ended
    -------------------------------------------------------------------------
    ($000s)                   June 30,     June 30,     June 30,     June 30,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    Revenue                       516          206          695          463
    -------------------------------------------------------------------------
    Expenses                    2,517        1,126        4,247        1,884
    -------------------------------------------------------------------------
    Net income (loss)          (1,936)        (221)      (3,784)        (722)
    -------------------------------------------------------------------------
    Net income (loss) per
     share
    -------------------------------------------------------------------------
      Basic and diluted         (0.06)       (0.02)       (0.16)       (0.07)
    -------------------------------------------------------------------------
    Total assets              179,135       17,200      179,135       17,200
    -------------------------------------------------------------------------
    Long term debt             88,413            -       88,413            -
    -------------------------------------------------------------------------
    Shareholders' equity       60,932        5,537       60,932        5,537
    -------------------------------------------------------------------------
    Funds used in
     operations(1)             (1,553)        (899)      (2,949)      (1,374)
    -------------------------------------------------------------------------
    Funds used in
     operations per share
    -------------------------------------------------------------------------
      Basic and diluted(1)      (0.06)       (0.09)       (0.12)       (0.13)
    -------------------------------------------------------------------------
    (1) Non-GAAP measure
    


    In the three months ended June 30, 2008, Pristine incurred a net loss of
$1.9 million ($0.06 per share basic and fully diluted) compared to a loss of
$0.2 million ($0.02 per share basic and fully diluted) in the same period of
2007. Year-to-date, the Company reported a net loss of $3.8 million ($0.16 per
share basic and fully diluted) compared to a loss of $0.7 million ($0.07 per
share basic and fully diluted) in the first six months of 2007. Increased
development, stock based compensation and general administrative costs,
partially offset by realized foreign exchange gains, accounted for the
increased loss in both the second quarter and year-to-date 2008 results
compared to the same periods in 2007. Development activities increased in 2008
as the Company submitted three proposals totaling 40 MW in June 2008 under BC
Hydro's Bioenergy Call for Power and continues to develop a project for
submission into the Ontario Power Authority's Request for Proposals for
approximately 350 MW in the Northern York Region. Higher general and
administrative costs reflect increased salaries and wages due to an increased
staff complement to support the Company's development and construction
initiatives and upcoming operations. Funds used in operations during the
second quarter of 2008 were $1.6 million ($0.06 per share basic and fully
diluted) compared to $0.9 million ($0.09 per share basic and fully diluted) in
the second quarter of 2007. Year-to-date funds used in operations were
$2.9 million ($0.12 per share basic and fully diluted) compared to $1.4
million ($0.13 per share basic and fully diluted) during the first six months
of 2007. Increased use of funds during the quarter and year-to-date 2008
compared to 2007 reflect the aforementioned higher development and general and
administrative costs.
    On April 18, 2008, the Company's agents exercised their over-allotment
option and an additional 1,250,000 common shares were issued for net proceeds
of $4.6 million.

    Projects under Construction

    Construction of the Company's projects remained on track and on budget in
the second quarter of 2008.

    East Windsor Cogeneration Centre
    --------------------------------

    Construction of the 84 MW East Windsor Cogeneration Centre continued in
the second quarter of 2008 on schedule and on budget. During the second
quarter, the once-through steam generators were received at site and
installation is now substantially complete. As at August 12, 2008, the GE
LM6000 gas turbine generator sets have been delivered to site and installation
has commenced. Foundation work and construction of the switchyard and
interconnect is ongoing. The project remains on track for commencement of
commercial operations in the third quarter of 2009. At June 30, 2008,
$133.4 million of the total expected project costs of $207 million had been
incurred with $37.0 million incurred in the second quarter of 2008. Pristine
holds a 25% effective working interest in the project.

    EnPower Projects
    ----------------

    At the 5 MW Savona and 5 MW 150 Mile House Enpower ERG(R) waste heat
recovery generation projects, construction also continued in the second
quarter of 2008. Construction of the Savona project was completed in July 2008
and commissioning commenced in August with the first MW generated on August 2,
2008. On August 11, 2008, the Savona project successfully completed its 72
hour performance test and commencement of commercial operations is expected by
August 31, 2008. At the 150 Mile House site, assembly of all major components
is nearly complete and commissioning is expected to begin in September, 2008.
The total construction cost of the Enpower projects is on budget and expected
to be approximately $31.5 million. At June 30, 2008, $24.9 million of the
total expected costs had been incurred with $10.2 million incurred in the
second quarter of 2008. Pristine holds a 50% working interest in the projects,
which will be reduced to 25% upon completion of the related project financing,
expected to be finalized in the third quarter of 2008.

    Projects under Contract

    Mackenzie Green Energy Centre
    -----------------------------

    Development of the proposed 65 MW (thermal equivalent) biomass fired
Mackenzie Green Energy Centre, in which the Company holds a 35% working
interest, continued in the second quarter of 2008. In May 2008, the Mackenzie
pulp mill, the proposed steam host and fibre supplier for the project,
suspended operations and the sale of the mill is currently subject to a court
approved auction. Accordingly, negotiations with BC Hydro continued during the
second quarter to amend the existing Electricity Purchase Agreement to address
the impact of changes in the region's overall fibre supply environment on the
project. The Company is also continuing to examine other potential sites
available in the immediate vicinity of the Mackenzie pulp mill and is seeking
to secure other cost effective sources of fibre.

    Development Activities

    On June 10, 2008, Pristine submitted three proposals totaling 40 MW under
the BC Bioenergy Call for Power by BC Hydro. The Ditni Yoh Green Energy
project is a 20 MW proposed project to be located in Burns Lake, British
Columbia, developed in association with the Burns Lake Band. The Anahim Green
Energy project is a 10MW proposed project developed in association with the
Ulkatcho First Nation to be located near Anahim Lake, British Columbia, while
the Cheslatta Green Energy project is 10 MW proposed project developed in
association with the Cheslatta Carrier First Nation to be located near
Cheslatta, British Columbia. If awarded by BC Hydro, the projects will employ
gasification or traditional boiler technology, utilizing a combination of
sawmill wood residue, road side slash residue and standing pine beetle kill.
Total cost of the projects as bid, including related significant transmission
upgrades, is approximately $240 million with projected in service dates of
between 2010 and 2011. Awards are expected to be announced by BC Hydro in
October 2008.
    On June 11, 2008, the Ontario Power Authority released its draft Request
for Proposals for approximately 350 MW of Peaking Generation in Northern York
Region ("Northern York RFP"). Under the Northern York RFP, proposals must be
submitted by October 30, 2008 with awards expected to be announced in December
2008. An affiliate of Pristine is one of 5 pre-qualified proponents and is
actively developing a project to submit under the Northern York RFP.
    On June 11, 2008, BC Hydro issued the Clean Call Request for Proposals
("Clean Call RFP") with an acquisition target of 5,000 GWh per year. Under the
terms of the Clean Call RFP, projects with an extended in-service date of up
to 2016 will be considered. Pristine is actively developing projects to submit
into the Clean Call RFP.
    On July 10, 2008, Pristine, through a 50% owned affiliate, acquired a
site in the town of Milton, Ontario for approximately $9 million ($4.5 million
net to Pristine) in support of development of a future power project. The site
is strategically located adjacent to transmission lines and the related
environmental assessment has been completed for a large scale gas-fired power
generation facility.

    Conference Call

    Pristine will hold a conference call on Wednesday, August 13, 2008 at
10:00 am MT (12:00 pm ET) to discuss its second quarter 2008 results and
provide an update on operations, construction and development activities. The
call can be accessed at 1-800-796-7558 or 1-416-644-3428. A replay of the call
will be available until August 27, 2008 at 1-877-289-8525 or 1-416-640-1917.
The access code for the replay is 21280174 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 and
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 was founded in 2002, and 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.
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
electricity generation and hydroelectric projects and small replicable waste
heat recovery ERG(R) and bioenergy gasification electricity generation
projects. Pristine currently has three projects under construction, and is
actively developing projects in Ontario, British Columbia and Alberta.


    
    PRISTINE POWER INC.
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)

                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------

    ASSETS

    Current assets

      Cash and cash equivalents                   $ 37,386,258  $  1,567,275
      Accounts receivable                            2,079,297     2,030,638
      Prepaid expenses and deposits                    931,379       624,593
      Due from related parties                               -       392,116
      Derivative financial instruments asset           269,660        49,111
      -----------------------------------------------------------------------
                                                    40,666,594     4,663,733

    Restricted cash                                 53,849,786    75,235,475
    Investments                                      2,317,352     2,282,452
    Property, plant and equipment                   82,301,030    41,415,392
    -------------------------------------------------------------------------
                                                  $179,134,762  $123,597,052
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued liabilities    $ 11,470,788  $  8,344,109
      Due to related parties                         4,471,416             -
      -----------------------------------------------------------------------
                                                    15,942,204     8,344,109
      -----------------------------------------------------------------------

    Asset retirement obligation                        310,786       211,049
    Long-term debt                                  88,412,593    88,443,876
    -------------------------------------------------------------------------
                                                    88,723,379    88,654,925
    -------------------------------------------------------------------------

    Non-controlling interest                        13,536,722    13,309,051
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                   67,323,967    16,947,656
    Contributed surplus                              1,510,653       463,551
    Deficit                                         (7,902,163)   (4,122,240)
    -------------------------------------------------------------------------
                                                    60,932,457    13,288,967
    -------------------------------------------------------------------------
                                                  $179,134,762  $123,597,052
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments and guarantees



    PRISTINE POWER INC.
    CONSOLIDATED STATEMENTS OF LOSS, COMPREHENSIVE LOSS AND DEFICIT
    (Unaudited)

                             Three Months Ended        Six Months Ended
                              June 30,     June 30,     June 30,     June 30,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------

    REVENUES
      Consulting fees     $   210,363  $   163,223  $   314,951  $   391,159
      Interest and other
       income                 305,673       43,102      379,872       72,290
      -----------------------------------------------------------------------
                              516,036      206,325      694,823      463,449
      -----------------------------------------------------------------------
    EXPENSES

      General and
       administrative       1,202,713      889,247    2,092,992    1,529,971
      Project development
       costs                  948,017      125,122    1,477,184      213,578
      Stock based
       compensation           194,213       10,931    1,047,102       27,886
      Interest and
       finance charges          1,637       87,882       13,115       87,882
      Unrealized (gain)
       loss on derivative
       financial
       instruments            148,775            -     (220,549)           -
      Unrealized foreign
       exchange (gain)
       loss                    59,918            -     (274,776)           -
      Realized foreign
       exchange (gain)
       loss                   (83,061)           -       53,390            -
      Depreciation,
       amortization and
       accretion               45,136       12,553       58,616       24,513
      -----------------------------------------------------------------------
                            2,517,348    1,125,735    4,247,074    1,883,830
      -----------------------------------------------------------------------

    NET LOSS BEFORE THE
     UNDERNOTED            (2,001,312)    (919,410)  (3,552,251)  (1,420,381)

    OTHER ITEMS

      Partnership loss              -            -            -       (1,030)
      Loss from equity
       accounted for
       investments                  -       (1,508)           -         (480)
      Gain on disposal of
       investments                  -      700,000            -      700,000
      -----------------------------------------------------------------------
                                    -      698,492            -      698,490
      -----------------------------------------------------------------------

    NET LOSS BEFORE
     NON-CONTROLLING
     INTEREST              (2,001,312)    (220,918)  (3,552,251)    (721,891)

    NON-CONTROLLING
     INTEREST                 (65,424)           -      231,255            -
    -------------------------------------------------------------------------

    NET LOSS AND
     COMPREHENSIVE LOSS    (1,935,888)    (220,918)  (3,783,506)    (721,891)

    DEFICIT, BEGINNING
     OF PERIOD             (5,966,275)  (5,896,873)  (4,122,240)  (5,395,900)

    ADOPTION OF FINANCIAL
     INSTRUMENTS                    -            -        3,583            -
    -------------------------------------------------------------------------
    DEFICIT, END OF
     PERIOD               $(7,902,163) $(6,117,791) $(7,902,163) $(6,117,791)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    BASIC AND DILUTED NET
     LOSS PER SHARE       $     (0.06) $     (0.02) $     (0.16) $     (0.07)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                             Three Months Ended        Six Months Ended
                              June 30,     June 30,     June 30,     June 30,
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    OPERATING
    Net loss              $(1,935,888) $  (220,918) $(3,783,506) $  (721,891)
    Add (deduct) non-cash
     items:
      Unrealized loss (gain)
       of derivative
       financial instrument   148,775            -     (220,549)           -
      Unrealized foreign
       exchange Loss (gain)    59,918            -     (274,776)           -
      Amortization of
       deferred leasehold
       Inducements                  -       (2,775)      (3,293)      (5,550)
      Stock based
       compensation           194,213       10,931    1,047,102       27,886
      Non-controlling
       interest               (65,424)           -      227,671            -
      Gain on disposition
       of investment                -     (700,000)           -     (700,000)
      Loss in equity
       accounted investments        -        1,508            -          480
      Partnership loss              -            -            -        1,030
      Depreciation,
       amortization and
       accretion               45,136       12,553       58,616       24,513
      -----------------------------------------------------------------------
                           (1,553,270)    (898,701)  (2,948,735)  (1,373,532)

      Change in non-cash
       operating working
       capital               (302,343)   1,274,902     (293,578)    (530,452)
      -----------------------------------------------------------------------
    Cash (used in) provided
     by operating
     activities            (1,855,613)     376,201   (3,242,313)  (1,903,984)
    -------------------------------------------------------------------------

    FINANCING
      Net proceeds from
       issuance of
       shares (net of share
       issue costs)         4,552,300            -   50,376,311            -
      Advance from
       partners             5,810,206            -    4,863,532            -
      Repayment of
       shareholder loans            -         (536)           -         (536)
      Issuance of
       promissory note              -    7,000,000            -    7,000,000
      Net proceeds from
       issuance of
       special warrants             -      296,014            -      296,014
      Change in non-cash
       working capital       (464,818)      (7,500)     (14,760)      13,986
      -----------------------------------------------------------------------
    Cash provided by
     financing activities   9,897,688    7,287,978   55,225,083    7,309,464
    -------------------------------------------------------------------------

    INVESTING
      Acquisition of
       property, plant,
       and equipment      (24,128,423)  (7,734,431) (40,872,217)  (9,125,299)
      Release of
       restricted cash     11,101,550            -   21,518,799            -
      Proceeds from
       disposal of
       investments                  -      700,000            -      700,000
      Investments             (34,900)     (30,483)     (34,900)     (30,483)
      Advance from
       related parties              -     (426,808)           -     (434,564)
      Change in non-cash
       working capital     (1,207,294)   2,561,340    3,097,850    4,156,867
      -----------------------------------------------------------------------
    Cash used in
     investing
     activities           (14,269,067)  (4,930,382) (16,290,468)  (4,733,479)
    -------------------------------------------------------------------------
    Unrealized foreign
     exchange (gain) loss      (1,614)           -      126,681            -
    -------------------------------------------------------------------------
    Increase (decrease)
     in cash and cash
     equivalents           (6,228,606)   2,733,797   35,818,983      672,001

    Cash and cash
     equivalents,
     beginning of period   43,614,864    1,916,631    1,567,275    3,978,427
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period        $37,386,258  $ 4,650,428  $37,386,258  $ 4,650,428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Jeffry M. Myers, President & Chief Executive
Officer, Telephone: (403) 444-5571, Fax: (403) 444-6784; Geoffrey D. Krause,
Chief Financial Officer, Telephone: (403) 444-6405, Fax: (403) 444-6784

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PRISTINE POWER INC.

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