Conifex Timber Inc. recently announced that it has finalized an Electricity Purchase Agreement (the "EPA") and a Load Displacement Agreement (the "LDA"), through a subsidiary company, with BC Hydro in connection with the Company's planned Mackenzie, British Columbia bioenergy facility (the "Bioenergy Facility"). The bioenergy generation project is currently estimated to cost approximately $50 million (Cdn.) to complete. The planned capital expenditures are to be utilized for the upgrade of the existing power island infrastructure and the purchase of a 36 megawatt steam turbine generator set. The Bioenergy Facility is currently expected to generate approximately 230 gigawatt hours ("GWh") of net energy per year, enough to power 24,000 B.C. homes annually.
Under the EPA, the Company will supply a minimum of approximately 200 GWh of electrical energy annually to BC Hydro over a 20-year term with deliveries currently estimated to commence in approximately Q3 2012. The EPA provides for a fixed price for energy delivered to BC Hydro. Revenues from the project to Conifex Timber Inc.’s bioenergy segment are expected to exceed $20 million annually when the bioenergy facility is operating at design capacity.
Under the LDA, the Company is required to deliver 30 GWh of electrical energy annually to BC Hydro over a 20-year term paralleling that of the EPA. The energy delivered to BC Hydro under the LDA shall offset and supply the energy requirements of the Company's sawmills located in Mackenzie over the term of the LDA. In exchange for the Company agreeing to supply such energy for the sawmills, BC Hydro shall provide incentive funding to be utilized towards the completion of the Bioenergy Facility.
The transactions contemplated by the EPA and the LDA are subject to the EPA being accepted by the British Columbia Utilities Commission as an energy supply contract.
Mr. Ken Shields, President and Chairman, commented: "I am pleased that we were able to successfully conclude our negotiations with BC Hydro. The effect of the agreement is to augment and stabilize Conifex revenues, and concurrently expand and stabilize the employment base in Mackenzie B. C., the Province’s most forest dependent community. We expect employment opportunities to be expanded not only from the creation of jobs directly related to the project but also because this removes one of the impediments to the 2012 restart of our Site I Mackenzie mill."
The Bioenergy Facility will create approximately 80 jobs during the 18-month construction period, and over 20 new jobs upon completion. The feedstock from the Bioenergy Facility will be sourced from a portion of the residuals and former waste products produced at Conifex’s lumber manufacturing and log harvesting operations.
