Ram Power (RAMPF) Q1 2014 Results - Earnings Call Transcript

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Ram Power, Corp. (OTCPK:RAMPF) Q1 2014 Results Earnings Conference Call May 28, 2014 10:00 AM ET

Executives

Steven Scott -Director, Investor Relations

Antony Mitchell - Executive Chairman

Murray Sinclair - Chair, Mergers and Acquisitions Committee

Ashlee Carter - Acting Chief Financial Officer

Analysts

John McIlveen - Jacob Securities

Operator

All participants, please standby, your conference is now ready to begin. Good morning, ladies and gentlemen. Welcome to the Ram Power Corp.'s First Quarter 2014 Earnings Call. I would now like to turn the meeting over to Mr. Steven Scott, Director of Investor Relations for Ram Power Corp. Please go head, Mr. Scott.

Steven Scott

Thank you, Paul. Good morning, ladies and gentlemen. And welcome to the Ram Power’s conference call to discuss the financial and operating results for the quarter ended March 31, 2014. In addition to the press release issued over the Newswire on May 15, 2014 you can find our financial statements and management's discussion and analysis on both sedar.com and our website at ram-power.com.

I’d like to remind you that comments we make during the call, may include forward-looking statements within the meaning of applicable Canadian Securities Legislation, regarding the future performance of Ram Power Corp., and its subsidiaries.

These statements are current expectations and as such are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include the factors discussed in the company's annual information form for the year ended December 31, 2013.

Certain measures referenced in this call have no standardized meaning under IFRS and therefore are considered non-GAAP measures. For example, EBITDA is commonly defined as earnings before interest, taxes, depreciation and amortization.

For the company EBITDA is more just directly comparable to the GAAP measure, operating income or loss except depreciation and amortization expenses of planned assets are excluded in the calculation of EBITDA.

We believe many readers of the company's financial information find EBITDA to be useful in assessing the company's performance. In the company's earnings releases consolidated financial statements and MD&A unless otherwise noted all financial information is prepared in accordance with IFRS.

Joining me this morning is Antony Mitchell, Executive Chairman of Ram Power; Murray Sinclair, the Chair of our Mergers and Acquisitions Committee; and Ashlee Carter, our Acting Chief Financial Officer.

With that said, I’ll now turn the call over to Tony.

Antony Mitchell

Thank you, Steve. Good morning, everyone. And thank you for joining us to discuss Ram Power’s financial and operating results for the quarter ended March 31, 2014. During the first quarter we generated over 94,000 net megawatt hours of electricity and build approximately $10.7 million.

On today's call we will discuss the Geysers project sale, the recently concluded remediation efforts and testing, and Ashlee will discuss our financial results, after which we’ll fill questions.

Firstly, the company successfully sold the Geysers project to US Geothermal in April of 2014 with gross proceeds of $6.4 million. Proceeds from the sale will be used by the company to fulfill upcoming interest payment obligations to the holders of the company's outstanding debentures due on June 30th and December 31, 2014, and for general corporate and working capital purposes through April of 2015.

Moving to San Jacinto, I would like to touch on the conclusion of the remediation process. It goes without saying that the drilling campaign we began in July of 2013 was a critical task to the company, with the goal of regaining valuable megawatts and stabilizing the resource.

And as previously discussed, we have many challenges during the program and while we overcame these operational challenges, we are disappointed with the results of the seven-day performance test, but we have stabilized the resource, which gives much more clarity with respect to our strategic process.

The remediation drilling program consisted of the workover of Wells SJ 6-1 and 6-2 and the deepening and forking of Wells SJ 9-3 and 12-3. As a result, the four wells contributed to a total gross increase of approximately 8-megawatt. However, during the program a decline was absorbed in the steam field of approximately 5-megawatt, which was attributable mainly to the production of Well SJ 12-2.

Towards the end of 2013 and into early 2014, the degradation of the resource stabilized and current decline is estimated to be roughly 3% to 4% per year, which is in line with standard trends in geothermal steam field management.

In accordance with the amended -- with the amendment to the Phase 2 credit facility. The company concluded a 30-day stabilization period on May 18th followed immediately by a seven-day performance test, which concluded on May 25th.

During the 90-day stabilization period, the project produced an average of 56.7 megawatt gross or 51.63 megawatt net and during the seven-day performance test, the project produced an average of 57.79 megawatt gross or 52.68 megawatt net.

Therefore, at our current level of production the company is not eligible for distributions and as a result of the decreased production over the last four quarters from wells being off-line during the remediation program, we fell out of compliance with the financial ratio requirements in the Phase 1 and Phase 2 credit agreements, and while a technical default under the facilities, the company continues to engage in productive dialogue with the lending syndicate led by IFC for conditional waivers under the Phase 2 credit facility. Talks are ongoing and we do not expect any issue with receiving the waivers at this time.

Finally, as we have discussed, the company is entered into an engagement letter with Dundee Securities, as financial advisor to review options for the company, which may include without limitation ways of maximizing operational efficiencies, examining potential strategic transactions and opportunities to raise capital.

The Mergers and Acquisitions Committee for the Board remain active in its process, though the company has not set a timetable for completion of the review process and it does not intend to comment further regarding the review process unless a specific transaction or alternative is approved by the Board of Directors. The review process is concluded or it is determined that future disclosures will be appropriate when required.

I'd now like to turn the call over to Ashlee who will give us an overview of the financial figures. Ashlee?

Ashlee Carter

Thank you, Tony. Let me begin by referring our listeners to the company's recently filed financial statements and MD&A for the quarter ended March 31, 2014 for a more complete presentation and discussion of the company's financial position and results of operations.

San Jacinto operations generated energy revenue of $10.7 million during the quarter, a $1.2 million or 10% decrease over the first quarter of 2013. In terms of megawatt, we generated approximately 31,636 megawatt hours in January, 26,850 megawatt hours in February and 36,474 megawatt hours in March. This equates to 42.5 megawatt, 40 megawatt and 49 megawatt net, respectively.

EBITDA of $7.5 million decreased $0.4 million for the quarter versus EBITDA of $7.9 million for the same period in 2013. The decrease principally resulted from a decrease in revenue of $1.2 million and increases in direct costs of $0.5 million. This was offset by cost savings in general and administrative expenses of $1.3 million.

At March 31, 2014, the company had $17.7 million in cash, $15.2 million of which was held for use in the San Jacinto project and operations, with remaining $1.5 million available for general corporate purposes.

As of March 31, 2014, the company was not in compliance with the financial ratio requirements of the Phase 1 and Phase 2 credit agreements, allowing the Phase 1 and Phase 2 lenders to accelerate the loans at their discretion.

As a result, all amounts outstanding under this agreement are classified as short-term liabilities. This classification created a working capital deficit of $100 -- approximately $185 million.

The company anticipates obtaining a waiver from the lender, which would bring the company to compliance and eliminate the risk of acceleration of the loans. With a waiver, working capital would be $4.5 million.

From an outlook perspective with remediation activities complete and factoring and downtime related to the June Unit 3 overhaul. We expect annual revenues this year to be approximately $48 million to $52 million, assuming average production at 51 megawatt to 55 megawatt net and company EBITDA of $33 million to $37 million.

The company reduced corporate financing costs and corporate overhead in 2013 to refinancing the corporate credit facility and restructuring a corporate office. As a result, we expect interest on corporate debt to be approximately $4 million annually and corporate costs, including North America project costs to be just under $4 million annually starting in 2014.

The company expects the corporate cash on hand as of March 31, 2014 of $1.5 million, together with the net proceeds of the Geysers sale of approximately $5.8 million will allow the company to continue to satisfy obligations through April 2015 allowing the company time to complete the strategic process.

I would now like to turn the time over to Steve Scott for questions.

Steven Scott

Thanks, Ashlee. Paul, at this point we are now ready to receive questions.

Question-and-Answer Session

Operator

Thank you, Mr. Scott. (Operator Instructions) Our first question is from John McIlveen from Jacob Securities. Please go ahead. Your line is open.

John McIlveen - Jacob Securities

Yes. Good morning. Just one question really, can you discuss the feasibility of maintaining the outflows at the field through additional wells and what that might cost?

Antony Mitchell

Yes, good morning, John. So, John, under the credit facility, when we’re under 55 megawatts net, all excess proceeds under principal and interest payments go into the major maintenance reserve account and that’s been out for future drillings. Drilling a new well in San Jacinto is $7 million and then you’ve got mobilization, demobilization charges on top of that. So in reality, it’s better to be drilling multiple wells. But right now, that’s how -- if we don’t have any activity with the M&A process which we don’t expect by the way, we expect to have activity there, then it’s forecast that the new wells will be drilled from the major maintenance reserve account.

John McIlveen - Jacob Securities

Okay, and the frequency of such drilling and perhaps the reasonable expectation of megawatts per well?

Antony Mitchell

So I think in San Jacinto, we’re sort of averaging 8 megawatts a well, John. And ideally you do it as needed. Obviously, with the capital structure of Ram, it would take, actually correct me if I am wrong, about three to four quarters to fill up the major maintenance reserve account to have enough capital to drill.

Ashlee Carter

That’s right, yes. We would expect that we could drill in the middle of 2015.

John McIlveen - Jacob Securities

Okay. And I know you don’t want to go into detail about the sale process or just interest if there is still lots of interest from international parties like people in the (indiscernible) market?

Antony Mitchell

Murray, would you like to take that?

Murray Sinclair

Certainly, the long and the short of it is, we’ve had a very robust process. We’ve had a lot of people in the data room. We’ve had a lot of people execute confidentially agreement and I appreciate your -- paraphrasing your comments by recognizing that we can’t go into a great deal of detail. The process is a little more advanced than I think that you might be alluding to. So we don’t have a lot of people trade simply through the data room, candidly they have been through the data room. They have done a great deal of their analysis. The fact that the stabilization tests have been published provides all of the requisite data for them to take and sharpen their pen for and we are optimistic that we will have something of a disclosable nature within the next say five weeks or say by June 30.

John McIlveen - Jacob Securities

Okay. Thanks very much. That’s all the questions.

Antony Mitchell

Thank you again.

Operator

(Operator Instructions) The next question is from [Mark Anthony] (ph). Please state the company you are representing and proceed with your questions.

Unidentified Analyst

Hi, there. I am not representing any company. I am just an independent shareholder. So yes, thanks for taking this call. As far as obtaining a waiver from the lenders, what exactly does that entail and what type of penalties will the company face? And if you can explain a little bit more what technical default means, I mean you can go into a little bit more detail about that?

Antony Mitchell

Yes. So good morning, Mark, and thank you for your questions. The waiver process is -- well within the financial documents you have covenants. One of the covenants is a debt coverage ratio covenant, meaning the banks like to have a cushion over what it actually cost to pay them back their principal and interest. That’s one covenant that we are going to breach.

Second covenant with the release of this performance results been under 55 megawatt is also a default under the credit facility and the waiver can be simply a one page document that wage these requirements for a period of time. And so it doesn’t have to be complicated process, I don’t expect a complicated process. And I also don’t expect penalties from the lenders because that’s -- the capital structure of the company is challenged and for them to be charging penalties on top of that which is that feel to that fire. So hopefully by next earnings call, we will have the waivers. We keep a very active dialogue with the lender group and we’re going to navigate through this right along side them.

Unidentified Analyst

So how much time is the waiver looking to buy I guess if that’s the question? I mean, they are going to obviously want to put a timeframe on that waiver, what -- how much time are you looking to buy from this waiver?

Antony Mitchell

Yes. So I think what we will expect to see it really is a quarter by quarter waiver. Obviously, we are in the middle of the strategic processing but the lender group are aware of that strategic process. And I think ultimately whatever we do in that regard will result in discussions with the banks and it will sort of clear up going forward the debt coverage ratios etcetera, etcetera. But until we are ready to sit down with them in that regard, I would expect to see a quarter by quarter waiver.

Unidentified Analyst

Okay. Now actually just touched upon the EBITDA for 2014, $33 million, $37 million. Murray or anybody, can you talk about the EBITDA going forward and can you also talk about the company’s value today? Now that we have more clarity, can we touch upon the company’s value and the current level of debt?

Antony Mitchell

So actually if you can -- if you could give us the current debt figure at the project level and the corporate level and then the 2015 projected EBITDA, given these figures, I am -- I will defer to Murray, I am not sure it’s appropriate that we put a value on, but to give you the metrics that may help you.

Ashlee Carter

Yes, so the debt values as of the end of March for the project we had $220 million outstanding with $15 million in reserves, cash reserves. And then at the corporate level, we have approximately $45 million or so. When you convert the debentures in US dollars it’s about $45 million of outstanding principal and corporate debt

Unidentified Analyst

Okay. That’s about 265 or so?

Ashlee Carter

It’s right. Yeah, 265.

Unidentified Analyst

The reason why I’m asking is because we did touch upon this in the conference call in November. Murray spent some quality time talking about the company’s value using different multiples. And yeah, I was hoping that we can do the same thing today and since we have -- the remediation is complete. And we have a pretty much set EBITDA for this year and going forward. So can you talk more about that Murray?

Murray Sinclair

Well, I think -- first of all Tony mentioned the fact that the remediation efforts weren’t 100% successful.

Unidentified Analyst

Right.

Murray Sinclair

And so we were hoping to take and end up here at about 60 megawatts. We’re not at 60 megawatts.

Unidentified Analyst

No.

Murray Sinclair

And so the question really comes down to if you are looking at 60 megawatts, you are looking at a company that isn’t necessarily in technical default as of the debt. It doesn’t necessarily get a lot of distributions from the subsidiary level but you can start applying multiples, 6, 6.5, 7.5x EBITDA and you can look at what it is.

In Canada, I think everybody has touched around the fact that we’re in technical default as of the debt. And so the -- that has to come -- we have to resolve that. After resolving that in some manner, we’re not going to get the maximum multiple. We can say it’s worth 7 or 7.5x EBITDA when you are in technical default of your debt. And so you have to resolve that.

And I think that’s what the strategic process is aiming to take a look at. At the end of the day, Ashlee can tell you but we’re into the project in Nicaragua for considerably what more than $400 million, Ashlee?

Ashlee Carter

Yeah, it’s about $400 million, exactly.

Murray Sinclair

And replacement value on this, if you were to pay, you can do that now would be considerably higher. So there are no guarantees. The prior person you asked the question recognized that there is confidentiality aspects. And there is also securities provisions whereby we can get into a great deal of details on this until we have a disclosable event.

But in the event that somebody that’s bigger than us or somebody with more capital than us, takes and sees the value in what we put here than the value of the company will be whatever they would might hypothetically bid for the company. And so you can look at your value in one or two ways as a going concern based on the multiples that we can apply to the earnings, the EBITDA or in a strategic process. And those are different.

One is multiple based on earnings and the other is really based on assets and what somebody else thinks they can take into the project. And it’s really comparing an asset value analysis versus an earnings value analysis. And until we take and complete this process which I said isn’t very long, we would hope to have a disclosable event at some point in the next couple of weeks. For me to take and sit here and try to talk about earnings base analysis when we have the technical default with the debt that will be disingenuous. And I think we’re better to take and proceed with the process.

Unidentified Analyst

Well, okay. Thank you. The reason why I’m asking is because it didn’t sound like the technical default was much of a problem. Tony, just explain that it anticipated not getting the waiver. So I just thought that maybe talking about the value wouldn’t be much of an issue since it seems like you are going to get that waiver. But if you can go into it, that’s all right?

Antony Mitchell

Even if you get the waiver, the simple situation is that you have to take and find the method of getting out of technical default. And the only manner that I’m aware of getting out of technical default might be hypothetically reducing your debt or increasing your steam production.

Both of those require capital. And so yes you can continue to take and get waivers for your default going forward quarter-to-quarter. But to take and maximize shareholder value, at some point in time the company needs additional capital or it needs a partner or it needs a strategic process that would take and allow the -- again more seem to be generated. And the -- we raised money previously in December. We’ve deployed bulk of that money. We sold Geysers. We have enough capital to take and move forward. But I think it's reasonably apparent from the financials that, for example, if we want to drill two or three wells, we don't have the capital for it.

Unidentified Analyst

Okay. And the amount of money that we have now is, do you expect that to take us until the fall?

Antony Mitchell

I think the prior comment as I understand is that the money is good to about April or May, so call it spring to be general, ‘15.

Unidentified Analyst

Okay.

Antony Mitchell

Is that fair Ashlee?

Ashlee Carter

That’s right.

Unidentified Analyst

And in keeping with the project cost of $400 million, I’m not sure, if you could speak about this. But if anybody or is there value in the project itself, I mean to say that the project was off. It wasn't producing anything, just the fact that it costs $428 million to build. Is there value in that?

Murray Sinclair

Well, it’s difficult to take and separate the value again from production. So to say that it’s not producing is tough. I think we’ve spent a lot of the money on the fixed cost associated with this. And those fixed costs in my opinion at least had a great deal of value. And somebody who is capable of coming in and growing additional wealth and adding to our steam production and moving the steam production up to the high 60s and the low 70s, then there is tremendous value, tremendous value on many, many, many funds.

So we’ve built the bricks and the mortar. And what we need is we need a partner, we need a sponsor, additional capital in some form to drill a couple of more wells in order to take and maximize the value. And the -- so in my opinion, there is a great deal of value there. And then the -- again it would be the same. You can’t really look turning off the steam because why would somebody turn off steam while producing a great deal of power right now. And that will continue to go on for long period of time.

I think Tony mentioned decline rates of approximately 2%. So you are looking at a resource that's going to produce for the generation and with a little bit of additional effort and a little bit of additional TLC. You’re talking about something that that would have tremendous style and not just tremendous value from the creditors’ point of view, tremendous value from shareholders’ point of view or from a partners’ point of view but also for the people in Nicaragua and producing the power down there.

So this is something that will last the generation. We built the bricks and mortars. And now at some point in time, we need partners, sponsorship to take and drill one or two more wells.

Unidentified Analyst

Okay. And as far as maximizing value and this is hypothetical I guess but is the preference a joint venture or a buy out and in what -- has there been any reaction thus far, negative reaction being under 55 megawatts from the potential, sort of potential partners?

Antony Mitchell

I will deal with your question in reverse order. First of all, has there been any negative perception of being under 55 megawatt? I don't think so. I think that people who have come into the data room have looked at it on a facts-based analysis. And if there's any negative repercussion it's really from us. We prefer that our numbers were higher. Again, think of it as an oil and gas company. If you're producing 5,000 barrels a day, you are going to get higher value than if you are producing 4,000 barrels a day. So when we are producing, call it, mid-50s megawatts, we are going to get a lesser value than we would, if we were producing mid-60s. But nobody, that’s come in and said that they have a problem with it.

So the long and short of the answer to that part is nobody's expressed any reservations or reluctance with respect to our production levels. I think, if anything they see an opportunity there and as do we. On the flip side of that with respect to your question, our objective from a Board point of view is to discharge our producer responsibility, maximize shareholder value. It's a complex process. People can bid for the company at the parent level. People could bid for the asset at the subsidiary level. People could take and offer to take and do joint ventures. People could take and offer to take and do drilling funds.

And what we are left with is comparing these bids to take and try to take and determine what might exactly be best for the shareholders. Ultimately, however, we have a financial advisor who is going to have to opine on this. We have legal advisors who are going to assist us and the beauty of the democratic process here is that it’s ultimately going to go in front of the shareholders and the shareholders. Now that’s not to say, we are going to give the shareholders two alternatives, tick box a, and box b. That's impossible because no bidders would allow themselves to get into that type of process. But we are going do our best to maximize shareholder value and ultimately, it will go in front of the shareholders and the shareholders can opine on that.

Unidentified Analyst

Is there a cut-off date for the bids for lack of better word for potential buyers, partners?

Antony Mitchell

When somebody -- the prior gentlemen asked the question, he talked about people going to the data room, our first deadline in terms of people lobbing inbound calls and signing up new people that has come and gone. We have had a number of people and I won’t get into the specifics as to how many people that have entertained the possibility of moving forward with this. We’ve had a number of people get into discussions with respect to confidentiality agreements and people taking in and doing site visits. So we've been going through the standard process, but the first deadline has come and gone. We have had a number of people. We were happy with the number of people that came in and now we will have to take and see how that process plays out.

Unidentified Analyst

Yeah. Okay. During the 7-day performance test, were any of the wells turned off intermittently during that test, because we saw some, we still see a lot of fluctuations from the low 50s to the high 50s? So is there still some sort of an attempt to bring in more steam by turning off the wells by 9-3?

Antony Mitchell

Yeah. Good question, Mark. So the wells are actually still going through various forms of thermal recovery. So we certainly didn't turn any wells off during the 7-day performance test. But we have to manage the -- we have to manage the wells and we have to manage the well openings and the lid pressure, et cetera and obviously that's part of the day-to-day blocking and tackling of the wells. This is not prediction by the way, but it's highly possible that there could be as many as two more megawatts, when these wells finally stabilized and I’m glad you refer to the live distribution side that they have in Nicaragua.

And you can see that when these wells flow and flow well on a gross basis, we are above the 60 megawatt levels. I mean, there is a -- there was a time on a given day, on a given hour that we were actually above the 55-megawatt net. But the wells are still cycling. When you do remediation, you put a tremendous amount of cold water into the wells, that’s the drilling fluid and we still haven’t seen the maximum production. So what you're seeing on the live site is sort of the day-to-day normal fluctuations is actually 9-3 and 12-3, still show signs of being able to increase their output.

Just for everyone on the call, we do have a scheduled Fuji maintenance on unit 3 which is the -- that's coming up in June. And so you'll see that volume go offline for two weeks, 19 days, so almost three weeks. So for the people listening in, don’t pass out. When you see that and if you see anomalies there, we are always happy to feel cold at the office. We can let everybody know, when we are doing maintenance work along those lines.

Unidentified Analyst

Okay. Does that 20 -- so that 19-day wash, does that helped increase steam as well, or is that just something that has to be picked on four times a year?

Antony Mitchell

Yeah. So we sort of mix in terms. This is a Fuji schedule maintenance where they are really -- we've said almost 3 weeks of activity. A turbine wash is something a little different. You do tend to see increased output after turbine wash and that only takes a few days.

Unidentified Analyst

Okay. Okay. And the office in Nevada, when is that closing down?

Antony Mitchell

It’s actually -- well, May 31st. But functionally, we don't really have people in the office anymore. It will be closed down completely at May 31st.

Unidentified Analyst

Okay. And just a couple more questions if I may. Sorry for all these questions. So, yeah, I’m looking at the release yesterday and it did said, we generated an additional 8 megawatt. And I'm not really sure how we got additional 8 megawatts because on the conference call in April, without 9-3 tied into the gathering system, we were operating between 54 and 57 megawatts gross. And it seems pretty much that’s what we are operating now. I think 61 and 62 -- 61 only came up with one additional megawatts and 62 came up with one and half additional megawatts. So how did we get the additional eight?

Antony Mitchell

So, I don't have the individual breakdowns. What you’ve got going on Mark is you’ve got an increase through remediation. And then you’ve got field degradation and unfortunately you end up with a net three increase. And obviously, we also have the fluctuations that you’ve observed where we do go over the 60 megawatts gross.

Unidentified Analyst

Okay. All right. Yeah. I’m looking back and obviously the hindsight is 2020. And I just think that there could have been a better job done in communicating the challenges that we were facing and we’re still facing with 9-3 and 12-3 and some of the other wells. I’m not sure why more information wasn’t given, especially in the last conference call because it kind of seems clear to me that the target of 59 to 63 probably wasn't going to be met even during the last conference call, because nobody mentioned 59 to 63 megawatts and I thought that was pretty deliberate in the sense that we were kind of setting up for the news of what we have today. So, yeah, I didn’t see it anywhere on the conference call, in the press release, in the MD&A reports and I’m just kind of little bit, I guess, disappointed on how that was sort of communicated through this process because maybe some of us would have taken some other steps through that course.

Antony Mitchell

Mark, look, I have to go back through prior disclosures but I think we've been as forthcoming as we’re able to be. This is the dynamic process. We don't restrict calls. Actually, the last conference call, there is no question, the conference call before that was probably our longest call. We’re dealing literally with the living, breathing resource that’s frankly jumped around quite a bit.

And even in the last few months, we've been -- I turn on the live site myself everyday. Obviously, we have more accurate information at the site but we’ve been out with 62 megawatts gross. So we’ll go back, take a look but I think that we've been as forthcoming about the dynamic process of the wells as a management team could.

Unidentified Analyst

Okay. And last question, Murray, do you still hold your shares? We saw some activity on your as far your shares, change in ownership and all that. Can you speak of that as you still hold the Ram Power 21 million shares?

Murray Sinclair

I can't get into the specifics, what I can say is that my father passed away a little while ago. And his funeral was two weeks ago today, actually in Toronto. And I have made a donation of some of my equity position and I’m not restricting these comments to ramp. I’m restricting it to a number of others. My father suffered from oral cancer being tongue, throat, esophageal and stomach. And so what I did was I took and donated a number of my personal holdings to couple of charities that my father helped there. So I’ve not sold the share. But at the same time, in sort of, in memory to him, I made a donation to couple of charities on a number of my various positions.

Unidentified Analyst

I see. Okay. Well, thank you for answering that and I’m sorry for your loss. Okay. Well, thank you everybody for being patient with my questions and that’s it. Thank you.

Antony Mitchell

Thank you, Mark.

Operator

Thank you. There are no further -- yes we do have a new question that just queued up. It is from [Bob Lee] (ph) and he is a private investor. Please go ahead.

Unidentified Analyst

Can you talk about the Casita project and how you are going to proceed that in lieu of our current situation?

Antony Mitchell

Bob, great question. As you compositely and probably imagine, Bob, we don't have any resources to direct to Casitas right now. There are concession deadlines with the government that we’re heading up against some of those. We would make appropriate disclosures if anything material changes there. And we’re hoping that as part of the strategic process having a concession at the Casitas, where I think we’ve invested something like $12 million in total.

We got a flowing slim hole and a 13 km road. We’re hoping that we’ll derive some value from that through the strategic process. But from the company itself as you can imagine we’re directing all available resources to San Jacinto and making sure that they operates to the maximum of its capacity that we can do.

Unidentified Analyst

And by same expansion that goes with also the bottom unit?

Antony Mitchell

The one that we -- sorry, the binary unit, yes, so again on the binary unit, that’s very exciting, but frankly it’s driven off the waste heat from your existing megawatt. So again, I think that's all upside potential that can be realized through the strategic process, because you would want to get your megawatts higher. You would want your GFM field to stabilize and then you would want to add your binary unit. And I think it's very important that it’s done in that order, because you wouldn’t want to bolt on a $40 million piece of equipment and then find you don't have the required steam to make it work.

Unidentified Analyst

So talk us through on the data room. Regarding to the exploration potential of what we have nearby and for any person or any party that have capital coming in, how do you sell them the potential of additional resources in our immediate vicinity?

Antony Mitchell

Yeah. I think, I don't know how launch the concession is, but it’s big. I mean, it maybe several hundred kilometers squared. I think we’re operating in 8 square kilometers. There is a field called the western sector, which runs alongside the San Jacinto concession area that there is initial feasibility studies done, surface and some subsurface worked on.

And we obviously have our own geothermal engineering consultant of people who being through the data room. They’ve had their own engineering consultants. And I think the -- I've heard no voices concerns that there are unavailable steam resources in the area, it’s just Ram doesn't have the capital structure to exploit them.

Unidentified Analyst

Thank you answering all my questions. Good luck to all.

Antony Mitchell

Thank you, Bob. Appreciate the question.

Operator

Thank you. There are no further questions registered at this time. The conference is now ended. Please disconnect your lines at this time and we thank you for your participation.

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