Pacific Energy rides mining sector up, and down

Power generator Pacific Energy has reported record earnings for FY2013 but revised down its earnings guidance for the current financial year after being hit by project closures and the general slowdown in the resources sector.

Pacific Energy managed a record year of revenue and profit on the back of commissioning 95 megawatts of capacity across nine power stations, and a number of contract renewals.

The company reported an adjusted profit of $17.3 million for the year, up 56 per cent from last year, and a statutory profit of $13 million after the amortisation of electricity supply contracts associated with the acquisition of its subsidiary Kalgoorlie Power Systems in 2009.

Revenue from operations was up 37 per cent to $43.5 million and EBITDA was up 30 per cent to $27.8 million.

It has provided guidance for next financial year's EBITDA to be within a range of $31 and $33 million, down from its original guidance of between $34 and $36 million.

In the past year, Pacific Energy has secured new contracts to install 13MW of power station capacity and extended contracts for eight of its Goldfields-based resources clients.

It has also started construction on a new $6.5 million workshop and office in Perth due to be completed in June next year, which will support its operations in Perth and regions outside the Goldfields.

The slowdown of the resources sector resulted in some losses for Pacific Energy, however.

On March 28, gold producer Navigator Resources was placed into administration, with the power contract for the Bronzewing gold project reduced from 11MW to 1MW.

On August 16, Reed Resources subsidiary GMK Exploration was placed into administration. However discussions are ongoing with the administrators regarding the continuation of the power contract, as GMK’s Meekatharra gold project may be kept running.

On June 30, Norilsk Nickel subsidiary Lake Johnston paid a fee of $1.5 million after the early termination of its contract for 12MW (and signing a care and maintenance contract to receive only 3MW).

In addition, Xstrata reduced its power requirement from 19MW to 12MW from September of last year at two of its nickel mines.

Managing director Adam Boyd said that, as Pacific Energy’s resource sector clients adjusted their focus from expansion to cost reduction, his company had focused on providing energy efficient power generation technologies that allowed it to reduce costs.

“The ability of our Kalgoorlie power station dual fuel and waste heat recovery technologies to deliver reduced electricity costs for our existing mine clients is also being well received in this new cost focused environment, which gives us confidence we will see further contract renewals,” Mr Boyd said in a statement.

Shares were up 5 per cent at 4.2 cents following the record profit announcement, which included Pacific Energy’s intention to pay a fully franked dividend of 1 cent per share to shareholders.