4th Apr 2014 14:49
LONDON (Alliance News) - Rame Energy PLC Friday is trading confidently above its offer price, after it became the latest energy company to list on London's AIM.
Rame shares were quoted at 19.2 pence per share Thursday, 6.7% above its IPO price of 18 pence.
The energy consultant, engineer and power generator said dealings follow the completion of a placing of 7.2 million shares at 18 pence per share and the issuance of GBP800,000 of convertible loan notes to raise GBP2.1 million, giving it an initial market capitalisation of GBP17 million.
The company, which is making revenues by selling wind, solar and diesel power generation consultancy services to blue-chip clients like Anglo American PLC, Barrick Gold Corporation and BHP Billiton PLC, said it is in transition towards power production, targeting an operational portfolio in Latin America of 100 megawatts by the first quarter 2016 and 300 megawatts within three years.
"We are now becoming a power producer in Chile," Chief Executive Tim Adams told Alliance News. "Our plan of development is totally commercially driven, its about using our experience to sell power privately to large industrial consumers in a country where there isn't enough energy to meet demand."
The company said that the cash made from its IPO will be used to finance the company's equity participation in a near term wind project with a capacity of nine megawatts, complete final technical work on a further two sites with a combined capacity of 84 megawatts and for potential investment in other energy projects including diesel, biomass and solar.
"Chile is natural for us to start due to the background of our operational team and the structure of the Chilean market for energy, but there are other opportunities in the region," Adams said. "Particularly those linked to our current clients, for instance we see possible opportunities in Peru and even up into Central America, in Nicaragua for instance."
Rame Energy is involved in the development of roughly 23% of Chile's installed wind power capacity with a pipeline in place for 28 Chilean wind assets with a potential installed capacity of over 1.4 gigawatts.
The company also recently completed its first joint venture agreement with Santander Ltd to co-finance its first two wind projects totalling 15 megawatts, in which Rame will have a 20% equity participation with an option to increase to 100%.
"We'll be shortly starting construction of the 15 megawatt sites," Adams said. "While we are looking to shortly announce our development plan for another 9 megawatt near-term wind project."
The independent power producer believes its production revenues are complemented by the provision of technical consultancy and downstream operating and maintenance services, while its near-term cashflows will provide asset backing and revenues for reinvestment into additional projects.
"We plan to reinvest revenues generated from the first 24 megawatts to develop further projects in line with our target to install an asset base of approximately 300 megawatts of wind and diesel projects over the next three years," Adams said. "We are confident that this strategy will allow us to rapidly develop and monetise our land bank and, in the process, generate considerable value for shareholders.?
The company also told Alliance News it expects its first results to be released around June 30 but, as it moves through its transition to focus on energy development, it doesn't expect to provide a normalised revenue model until at least its full-year 2014 results.
By Tom McIvor; [email protected]; @TomMcIvor1
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