On May 1, 2017, MAXIM provided notice to the Alberta Electric System Operator ("AESO") to temporarily suspend the generation of electricity at M1 effective July 28, 2017. The decision to temporarily suspend the operations at M1 was due to continued record low Alberta power prices, which have undermined profitability for a prolonged period. Laying up M1 operations will result in a 75% reduction of plant staff through a combination of layoffs and severances for an undetermined period. Prior to suspension, M1 will remain available to the AESO as a long lead time asset and it is unlikely that the unit will be dispatched. MAXIM is currently maintaining a smaller operating team to undertake maintenance and repairs for possible resumption of generation as power market conditions improve. A significant improvement in Alberta power prices will be required to justify resuming operations.
STRATEGIC REVIEW
As previously announced on November 10, 2016, the Corporation commenced consideration of various strategic and financing alternatives potentially available to MAXIM. Since that date, MAXIM closed the sale of 100% of its ownership interest in COMAX and its parent MAXIM Power Europe B.V., and subsequently in 2017 closed the sale its of 100% of its ownership interest in its wholly-owned subsidiary MUSA. MAXIM continues to own 156 MW of generating capacity in Canada. MAXIM also has permitted power generation development projects totalling up to 996 MW (refer to Growth Initiatives section below) and a permitted metallurgical coal development project in Alberta. MAXIM will provide updates on initiatives pertaining to these investments as these considerations progress.
GROWTH INITIATIVES
MAXIM has four electrical generating development projects in Alberta totalling 996 MW of capacity. These projects are at various stages of the permitting phase, with 796 MW having AUC permits and the remainder in the early stage of permitting. The Corporation is currently evaluating the viability of each project in the context of recent regulatory announcements by the Government of Alberta. These regulatory announcements include provision for the transition of Alberta's "energy only" power market to a "capacity market" by 2021. The pace and success of the transition outlined above will determine decisions on advancing development of these projects. MAXIM has not made any definitive commitments to the timing or certainty of advancing development of these projects.
MAXIM also owns a metallurgical coal development initiative located north of Grande Cache, Alberta that in turn owns metallurgical coal leases for M14 and M16S ("SUMMIT"). Current estimates for M14 are 18.9 million tonnes of low-mid volatile metallurgical coal reserves with a mine life of 17 years based on the NI 43-101 Technical Report filed on SEDAR on March 21, 2013. M16S is located 30 kilometers northwest of M14 and represents 1,792 hectares or 29% of SUMMIT's total area of coal leases. A NI 43-101 Technical Report has not been prepared for M16S. M14 is permitted for a run-of-mine production rate of up to 1,300,000 tonnes per year. MAXIM has not made any definitive commitments to the timing or certainty of advancing development of this project.
About MAXIM
Based in Calgary, Alberta, MAXIM is an independent power producer, which acquires or develops, owns and operates innovative and environmentally responsible power and power related projects. MAXIM currently owns and operates 2 power plants in Alberta, having 156 MW of electric generating capacity. MAXIM trades on the TSX under the symbol "MXG". For more information about MAXIM, visit our website at www.maximpowercorp.com.
Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions and will update such forward-looking statements as required pursuant to applicable securities laws.
Contacts: Michael R. Mayder Senior Vice President, Finance and CFO (403) 750-9311
