Ram Power, Corp. announced today that the Company’s Nicaragua subsidiary, Polaris Energy Nicaragua, S.A., has completed the 30-day stabilization period and the 7-day performance test of the resource field for the San Jacinto-Tizate project (the “Project”).
As previously disclosed, the Remediation Drilling Program (the “Program”) consisted of the workover of wells SJ 6-1 and SJ 6-2, and a deepening, and forking, of wells SJ 9-3 and SJ 12-3. As a result, the four wells contributed to a total gross increase in of 8 MW. During the Program, a decline was observed in the steam field of approximately 40 t/h, or 5 MW, which was attributable mainly to production well SJ 12-2. Towards the end of 2013, and into early 2014, the degradation of the resource stabilized, and current decline is estimated to be roughly 3-4% per year which is in line with standard trends in geothermal steam field management.
In accordance with the amendment to the Project’s Credit Facilities, the Company concluded a 30-day stabilization period on May 18th, followed immediately by a 7 day performance test which concluded on May 25th. During the 7-day performance test, the Project produced an average of 57.8 MW (gross) / 52.7 MW (net).
As a result of the performance test, the Company is now in technical default of the Phase I and Phase II loan agreements for failure to achieve a minimum MW output with the Program and meet certain debt service coverage ratios and is not eligible for distributions under the loan agreements. The Company is in active discussions with its lending syndicate, led by the International Finance Corporation, to obtain conditional waivers for the Project under the agreements.
“While the results of the remediation program did not meet our expectations, we have further stabilized the resource allowing for increased clarity with respect to our Strategic Process,” stated Antony Mitchell, Executive Chairman of Ram Power, Corp. “We continue to engage in active dialogue with SKM as to improvements we can make to the steamfield to increase production, and continue to press forward with the Strategic Process with a goal to finish the process sometime later this year.”