• Nickel Asia guarantees P3-B loan facility for EPI

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    THE country’s biggest nickel miner on Monday said it will guarantee the loan facilities of Emerging Power, Inc. (EPI), a domestic company engaged in the renewable energy business, for up to P3 billion over a maximum three-year period.

    In a disclosure to the Philippine Stock Exchange, Nickel Asia Corporation (NAC) said that its board of directors in a meeting on July 13 approved the move to guarantee the loan facility for EPI.

    NAC said the loan facility will be used by EPI to finance the purchase of up to 99.99 percent ownership in Jobin-SQM, Inc. (JSI) and a 60 percent ownership in Biliran Geothermal, Inc. (BGI), and for the development of the initial generating facilities for both projects.

    The company said JSI has 100-megawatt (MW) solar and 50-MW wind renewable energy service contracts, and a 50-year lease agreement with the Subic Bay Metropolitan Authority for 800 hectares within the Subic Bay Freeport Zone, where the project will be located.

    An amount of $60 million has been earmarked for the purchase of JSI and Phase I of the project, which is for an initial generation of 25 MW of solar power, to be available by the end of the first quarter of 2016, the statement said.

    It said that BGI has a geothermal renewable energy service contract covering 260 square kilometers in the province of Biliran, and that resource studies completed by Reykjavik Geothermal Ltd. indicate reserves of at least 100 MW in the southern portion of the concession.

    “Eight geothermal wells have been completed in this portion so far, as well as extensive infrastructure,” NAC said in its disclosure.

    In addition, separate studies performed on the northern portion of the concession indicate a potential for another 170 MW of geothermal power, it said.

    The balance of the loan facility will be used to fund the initial portion of the equity in BGI and the initial electrical turbines of up to 10 MW of capacity that could be operational by the third quarter of 2016.

    As disclosed in prior press releases, in 2014 NAC provided EPI with a P446 million loan to partially finance the drilling of two holes under the Montelago geothermal project in Mindoro Oriental. The results of the drilling confirmed an increase in the geothermal resource to a range of 28 to 30 MW of power over a 25-year period.

    “For this reason, the company’s board of directors approved the conversion of the loan to equity in EPI, corresponding to an initial ownership of 55 percent. The Board also approved an additional investment of P474 million for the Montelago project, which will increase NAC’s ultimate equity in EPI to 66 percent,” NAC said.

    The issuance of new EPI shares corresponding to the company’s initial 55 percent ownership is currently awaiting approval by the Securities and Exchange Commission (SEC) for the increase in EPI’s capital stock.

    Following the completion of the JSI and BGI purchases and in combination with the ongoing Montelago project, EPI will have three renewable energy projects with the potential to produce 300 MW of power within a three-year period, the statement said.

    In a separate disclosure, NAC said its four operating mines sold an aggregate 9.68 million wet metric tons (WMT) of nickel ore in the first half of the year, up by 25 percent compared to 7.73 million WMT in the same period last year.

    Due to lower ore prices, however, the estimated value of shipments during the first half of 2015 fell to P7.46 billion from the P8.93 billion reported in the comparable period last year.

    “While we continue to achieve higher sales volumes, the drop in commodity prices including nickel, due to factors affecting global financial markets and economic growth, has been a disappointment,” said Gerard Brimo, president and chief executive officer of NAC.

    “We believe the bottom has been reached and we should see a rebound in prices as these factors get resolved and as many analysts continue to believe that the nickel market will shift into a deficit,” Brimo added.

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