20.5.2004: Meldung: WGP: Financial Results For The Three Month Ended March 2000
For the three months ended March 31, 2004, Western GeoPower Corp., ("the Company") incurred a loss of $1,127,809 ($0.06 per share), compared with a net loss of $115,379 ($0.00 per share) for the three months ended March 31, 2003. A significant portion of this loss, amounting to $685,182 (2003 -Nil), is related to the stock based compensation, where the fair value of stock options granted are expensed over the vesting period. There were no options granted during the first quarter of 2003. The losses are a reflection of the Company"s status as a non-revenue producing energy company. As the company has no source of income, losses are expected to continue.
Overhead expenditures, including administrative, management fees, professional fees, consulting fees and travel for the three months ended March 31, 2004, were $455,043, compared to $115,421 for the three months ended March 31, 2003. The increase in expenditures in 2004, reflects the increase in the level of activity during the period.
Interest and other income of $12,416 for the three months ended March 31, 2004, (2003 -$42) is comprised of interest earned on cash balances.
The Company has continued the development of its geothermal project and invested a total of $2,938,591 to date. The major work undertaken since 2001 has been the completion and evaluation of a magneto-telluric (MT) survey and slim-hole drilling program designed to determine the presence of high temperature geothermal fluids and indications of permeability within the rock formation. The field components of the technical program were concluded in 2002. During the three months ended March 31, 2004, the Company invested $63,954 in the technical program, primarily in project management and technical analysis.
Liquidity and Capital Resources
The Company does not have any cash flow from operations. The Company receives cash for use in operations principally from issuing common shares. The Company has been successful in accessing the equity markets during the last 6 months and while there is no guarantee that this will continue to be available, management has no reason to expect that this will diminish in the immediate term.
At March 31, 2004, the Company had cash of $4,577,773 (December 31, 2003 - $4,166,739) and working capital of $4,531,901 (December 31, 2003- $3,507,975).
An estimated $14.5 million of technical program expenditures are projected to complete the feasibility study. Upon completion, it is the Company"s intention to proceed to the project design and financing stage, with the objective of constructing the plant facilities during 2006 and 2007. The Company has sufficient funds on hand to complete the resource confirmation program and a feasibility study to determine the economic viability of the project. Should the feasibility study yield a positive result, the Company"s ability to bring the project into production will be dependent upon its ability to raise significant additional debt and equity financing to fund the development of the project. Alternatively, upon completion of the feasibility study, the Company may seek an industry partner to jointly fund, develop and operate the project.
South Meager Geothermal Project
The Company is dedicated to the development of its 100% owned, South Meager Geothermal Project, located 170km north of Vancouver, Canada. The project is held under the only geothermal lease issued in Canada for the commercial generation of electricity and has been extensively explored and evaluated. The Company is currently conducting a resource confirmation program on the project to determine its economic viability. Upon drilling and testing of the confirmation wells, the Company intends to complete a feasibility study, in anticipation of attaining project approvals from the appropriate regulatory bodies and securing project financing for construction of the plant.
The Company has initiated the planning, design and permitting processes to drill the wells. Drilling is expected to commence during Summer 2004 and be completed by the end of 2004. An application has been made for permits for road building and site preparation to commence in May 2004, to be followed through the second half of 2004, by drilling and testing of two deep production size wells to confirm the commercial viability of the project with the objective of completing the feasibility study by the end of 2004.
The technical development of the project is being conducted under the direction of California-based GeothermEx, Inc., regarded is an international authority in the evaluation of geothermal resources and has been involved in the development of all the producing geothermal fields in the USA and over 750 projects worldwide. GeothermEx has also conducted due diligence and resource verification for nearly all the geothermal projects worldwide financed by bank loans or bonds, enabling the financing of more than US $7 billion for the development of over 6,000 MW of geothermal power.
GeothermEx has concluded that the inferred geothermal reservoir has the potential to support between 100 and 250 MW of electricity generation, with the probable size estimated at 200 MW. A 200 MW facility is sufficient generation to supply a community of 160,000 households.
Principal Business Risk
Geothermal resource exploration and development involves a high degree of risk. Until the balance of the development program is completed, the viability of the South Meager Geothermal Project is undetermined. The long-term success of the Company relies on various factors, such as the technical characteristics of the geothermal resource, the cost to develop the facilities, the pricing of the electricity and financing the project. Other factors include the ability of the Company to obtain and maintain appropriate licenses and permits as well as addressing environmental and aboriginal issues.
Company"s Vision and Strategy
The Company is focused on the development of its South Meager Geothermal Project. The attention of the Company"s management is directed at planning the elements necessary to conduct a two-well
confirmation drilling program during 2004 and prepare a feasibility study to determine the commercial viability of the project.
Subject to the successful conclusion of the feasibility study, the procurement of all regulatory approvals to build the plant and the securing of project development funding, the Company"s objective is to achieve commercial generation of electricity in 2007.
On behalf of Western GeoPower Corp.
Kenneth MacLeod, President and CEO
411 - 837 West Hastings Street
Telephone: 604 662 3338
Vancouver, BC V6C 3N6
Facsimile: 604 646 6603
Toll Free: 1 866 662 3322