With the resignation of its founder and CEO, Hezy Ram, a share price that is barely a third of what it was in March, and cost overruns and delays at its San Jacinto-Tizate geothermal project in Nicaragua, it has been a tough go of late for shareholders of Ram Power (TSX:RPG)
But More recent activities have some investors believing the company is finally ready to right the ship.
Late in May, Ram Power completed a financing that should buy the company some real breathing room. Ram raised $70.62 million in a financing led by Cormark Securities that included Raymond James, Jacob Securities, National Bank Financial, and Wellington West Capital.
Shares of Ram Power plunged after February 7th, when the company warned the San Jacinto Project, which was scheduled to take eighteen months to complete would now take twenty-one. The company also faced $15 to 20 million in additional construction costs, mostly associated with material and labour. With a cash and short term investments position that had dwindled to under $30 million by January 31st of this year, a capital raise was inevitable. When the financing was completed, $10 million of the proceeds was immediately used to repay a bridge loan for critical path items associated with the construction of the phase I expansion at San Jacinto. The target commission date of the project is now slated for next month, instead of this past April.
With interim CEO and Ram board member Walter Higgins running the show while the company looks for someone to permanently fill that role, the company’s muddy future became just a little clearer today when it announced that another of its geothermal projects, at The Geysers geothermal field, located 75 miles north of San Francisco, was on more solid footing. The Northern California Power Agency amended and restated a power purchase agreement with RAM. The new agreement extends the term from 20 to 25 years and adjusts the expected capacity of the project to 26 megawatts. The Geysers is currently the largest source of geothermal electricity in the world.
According to the The International Geothermal Association 10,715 megawatts (MW) of geothermal power in 24 countries was online in 2010, a 20% increase over 2005. They expect the number to grow to 18,500 megawatts by 2015.
At press time, shares of Ram Power were up nearly 8%, to $.49 cents as more than 3.6 million shares traded hands.