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Meldungen 01.12.2005

1.12.2005: Meldung: Polaris Reports Completion of First 10 MW and Third Quarter Results

Polaris Geothermal Inc. ("Polaris"),a developer of geothermal power projects, announces completion of Stage 1 and its third quarter financial results.

 

Completion of Stage 1

 

Polaris is currently developing a 66 MW project on its San Jacinto-Tizate (SJT) concession in Nicaragua. Construction of the first 10 MW of production was completed in July 2005. As announced previously on June 30, 2005, the Company"s geoscientific consultants, Sinclair Knight Merz Ltd., of Auckland, New Zealand ("SKM") issued a final report as to the results of a recent geophysical exploration program completed in the field at San Jacinto-Tizate. SKM advised that new estimates now indicate a significant increase in the resource size. The San Jacinto-Tizate resource is now estimated at 90% probability to have the capacity for providing 203 MW and at 50% probability of providing 274 MW. Previously, based on data provided from earlier exploration work completed by predecessors, the resource was estimated at a 90% probability of providing 75 MW and a 50% probability of 115 MW with an additional possible capacity for 60 MW.

 

This increase in resource opens up possibilities for expanding the size of the planned 66MW San Jacinto-Tizate power plant. Spot prices for power in Nicaragua are currently in excess of US$0.10 per kwh which is attractive when compared to the US$ 0.0595 per kwh currently agreed to for the first 66MW. There can be no assurance that the company will be able to sell additional power at these rates, however, management is currently evaluating all possibilities including entering into of additional power purchase agreements with qualified buyers.

 

Third Quarter Results

 

Polaris" financial results for the three and nine-month period ended September 30, 2005 are highlighted below. Polaris reports its results in U.S. dollars.

 

Comparative summary results for three and nine-month periods ended September 30, 2004 are shown in US Dollars in the following tables. Additional information is contained in the Company"s financial statements, which are available for review in the SEDAR database (www.sedar.com).

 

Condensed Summary Unaudited Consolidated Balance Sheet as at --------------------------------------------------------------------- September 30, December 31, In US dollars 2005 2004 --------------------------------------------------------------------- Current assets 2,516,842 3,935,537 --------------------------------------------------------------------- Total assets 42,087,432 37,214,806 --------------------------------------------------------------------- Current liabilities 8,709,415 4,613,968 --------------------------------------------------------------------- Long term debt 8,280,346 7,673,522 --------------------------------------------------------------------- Non-controlling interest(i) 2,770,093 3,816,700 --------------------------------------------------------------------- Total Liabilities 19,759,854 16,104,190 --------------------------------------------------------------------- Shareholders" Equity 22,327,578 21,110,616 --------------------------------------------------------------------- (i) Non-controlling interest represents the 10% holding by debis Industriehandel GmgH as at September 30, 2005 and the 2.4% holding by a South American investor in the San Jacinto concession.

 

Condensed Summary Unaudited Consolidated Statements of Operations --------------------------------------------------------------------- For the nine month For the three month In US dollars except period ending period ending per share data September 30 September 30 --------------------------------------------------------------------- 2005 2004 2005 2004 --------------------------------------------------------------------- Revenue $448,778 - $448,778 - --------------------------------------------------------------------- Operating Costs 735,390 - 464,238 - --------------------------------------------------------------------- Operating Loss (286,612) - (15,460) - --------------------------------------------------------------------- Expenses 2,831,971 1,768,234 1,421,783 $605,066 --------------------------------------------------------------------- Loss before controlling interest 3,082,603 1,718,298 1,406,284 531,692 --------------------------------------------------------------------- Net Loss 2,726,153 1,469,571 1,237,293 374,704 --------------------------------------------------------------------- Shares outstanding 35,274,342 20,234,488 36,668,771 22,368,760 --------------------------------------------------------------------- Loss per share $0.08 $0.073 $0.03 $0.017 ---------------------------------------------------------------------

 

Business Highlights

 

During this quarter the company commenced commercial production of power. The production levels achieved for the quarter were as follows:

 

--------------------------------------------------------------------- Month July August September --------------------------------------------------------------------- Power Production (kwh) 2,485,700 2,104,763 2,952,015 ---------------------------------------------------------------------

 

During the quarter the company experienced some restriction of re-injection capacity which limited production to a maximum level of 5MW. This limitation is being resolved and the Company expects that it will soon be able to commence increasing production to the full 10MW level. As the Company optimised its operations, plant availability (operating with one 5MW unit) increased from 63% in July, to 93% in October, slightly over the 92% forecast.

 

The current operating loss is a result of the gradual commencement of production. The Company"s operating costs are both fixed and variable in nature and during the second quarter the company incurred start up costs which will not be repeated on an ongoing basis. The operating results are expected to improve significantly once the full 10MW production capability achieved.

 

At September 30, 2005, Polaris had US$480,450 in cash and short-term investments and a working capital deficiency of $6,192,573 the principal components of which are a $2,000,000 bridge loan provided by a syndicate which includes one of the Company"s shareholders and $4,846,271 representing the current portion of the bank loan and the equipment financing. $1,786,155 of this amount is due on January 9, 2006. The Company needs to raise additional equity or debt financing in order to meet this obligation as current cash flows from operations will not be sufficient to retire this debt on its due date.

 

To this end, the Company is currently in discussions with its bankers and is investigating ways that this situation can be resolved. In addition the Company has received expressions of interest from European and North American financial institutions to supply funding and is confident that the matter will be resolved early in 2006.

 

Polaris is a renewable energy resource company focused on the development of geothermal projects. Polaris has 36,668,771 Class A common shares issued and outstanding.

 

FORWARD-LOOKING STATEMENTS

 

This press release includes certain forward-looking statements. All statements regarding potential estimated capacity, reserves, the ability of Polaris Geothermal to successfully expand the size of the San Jacinto-Tizate project, to sell additional power at increased rates, to resolve the re-injection capacity issues, to obtain new equity or debt financing on favourable terms, to successfully negotiate favourable terms of repayment of debt, and future plans and objectives of Polaris Geothermal, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

 

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

 

 

Contact:

 

John Clark

Polaris Geothermal Inc.

(416) 367-0150

johnitm@aol.com

www.polarisgeothermal.com

 

Source: Polaris Geothermal Inc.

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