Conifex Sets Aside $79 Million for Mackenzie Cogen
Wednesday, May 23, 2012 @ 3:59 AM
Prince George, B.C. – Confiex has announced it has approved a capital expenditures budget estimated to be $79 million, including a $7 million general contingency, to develop its bioenergy cogeneration project at Mackenzie.
The $72 million amount, is more than previously estimated amounts with the increase largely due to the acceleration of certain project enhancements originally scheduled to be undertaken in the first three years of commercial operations and funded out of segment cash flows. Conifex has now decided to include the additional components within the initial construction phase in order to avoid further construction related disruptions to ensuing future bioenergy activities at the site.
The existing project site and infrastructure carries a book value of approximately $10 million and as at March 31, 2012, Conifex has invested an additional $9.1 million in project development and equipment costs. The company expects to invest an additional $7 million in the project and expects to secure debt facilities to finance the balance of the expenditures. Conifex expects project financing to be in place and construction to start in or about the third quarter of 2012.
The news of the capital plan came on the heels of Conifex announcing it was reporting a net loss of $6.5 million dollars for the first quarter of 2012, that is an improvement over the net loss of $7.5 million recorded in the 4th quarter of 2011, but still well above the net loss of $3.6 million in the first quarter of 2011.
Conifex says although there was a 12% improvement in average benchmark lumber prices, that was partially offset by a 2% strengthening of the Canadian dollar.
Production efficiencies during the current quarter were challenged by the recent conversion of the Fort St. James mill from a three-line to two-line configuration and weather related disruptions in January.
The completion of the installation of an automated grading system at the Mackenzie Site II planer mill in April 2012 is expected to result in improved grade outturns, productivity gains from increased throughput and lower labour costs. The Company also expects an increase in production and shipments of premium grade products to Japan during subsequent quarters.
Comments
How much seed money from the govt for this project?
Ah, the things that can be done when a company has a continued access to credit in spite of booking continuous losses.
One would suspect that either the principals of Conifex must have some very special financial connections with their bankers, and that there is something very favourable to them going on behind the scenes that we are not privy to, or they’re rather big risk takers. I doubt it is that last.
What is the price hydro is forced to pay by the fiberals for that pwoer. Contracts to the friends of fiberals, the IPP’s, is the main reason our rates are going up.
Well it is a bad thing Irri, as it is all backed by the taxpayers of BC. The whole IPP program is financed through taxpayers. You can argue that it is not tax dollars but, a crown corporation monopoly raising rates to finance these IPPs is tax dollars. I am not sure the difference of the government building a community center that doles out three meals a day and provides a cheque for all the people in a small town. As compared to handing out guaranteed contracts to big business in return of HOPEFULLY some jobs are provided. Both offer to build infrastructure and both provide economic stability. It all depends where the people of BC want to put their welfare dollars, either to the people of BC or to the BC Liberals corporate welfare friends. Either or it is money that has to be paid by the taxpayers of BC as these IPPs gererate their income on the backs of BCers.
Here are some points I picked up
“The last BC Hydro call for tenders for IPP electricity was priced at $134 per megawatt hour, compared to between $4 to $52 per megawatt hour for power purchased on the open market, and an average $5.81 per megawatt from BC Hydro’s publicly owned dams.
Despite that huge extra cost, BC Hydro is on the hook for obligations of $30 billion in IPP energy purchases over the next 25 years.
Someone — you the consumer — has to pay the difference.”
More points
There’s one big question about the B.C. government’s new plan to build three liquid natural gas plants near Kitimat — how much will this cost BC Hydro customers on their monthly electricity bills?
That’s because LNG plants are energy pigs, consuming enormous amounts of power to convert natural gas into a liquefied, transportable form to ship by tankers to Asia.
The electricity needed for just one LNG plant alone is equivalent to that needed by three Catalyst Paper mills — B.C.’s largest electricity user.
So what BC Hydro consumer should wonder whether LNG will become the Smart Meters of the north — with expensive BC Hydro costs once again being loaded onto the backs of ratepayers to subsidize private corporate profits.
BC Hydro’s deferred debt set to jump to $4.5B
http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20120523/bc_hydro_accounting_debt_climbs_120523/20120523/?hub=BritishColumbiaHome
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