Vancouver, British Columbia--(Newsfile Corp. - February 14, 2023) - Synex Renewable Energy Corporation (TSX: SXI) (Formerly, Synex International Inc.) (the "Company" or "Synex") announced its financial and operational results for the three months ended December 31, 2022 ("Q2 2023").
Revenue for Q2 2023 decreased to $458,445 from $1,210,505 for the three months ended December 31, 2021 ("Q2 2022"). The reduction in revenue for Q2 2023 as compared to Q2 2022 was due to lower electricity generation. Electricity sales in Q2 2023 were $455,759 compared with $1,216,042 in Q2 2022, a decrease of $760,283 as a result of lower power generation from the Mears, Cypress, and Barr Plants caused by record dry conditions resulting in much lower precipitation. Management expects significant improvement in electricity generation for the three months ended March 31, 2023 as weather conditions have improved near the Mears, Cypress, and Barr Plants.
The net loss attributable to shareholders of the Company in Q2 2023 was $586,274 as compared to net income attributable to shareholders of the Company of $137,519 in Q2 2022. Synex has continued to streamline and reduce costs and this Q2 2023 loss included Sea Breeze development costs, the cost of the previously announced Normal Course Issuer Bid program, and total retirement costs of the former CFO of $75,000 that was expensed in Q2 2023. The net loss per share in Q2 2023 was $0.15 as compared to a net earnings per share of $0.03 in Q2 2022.
Expenditures in respect of the development of run-of-river hydro projects in British Columbia for Q2 2023 were $nil as compared to $12,391 for Q2 2022. For Sea Breeze Power Corp, the Company spent a total of $130,519 on the development of investigative licenses. This includes expenses for 3rd party consultants for reviewing technical aspects of the sites and labor costs. The Company intends to continue invest resources in developing these investigative licenses.
As of December 31, 2022, the Company had a unrestricted cash balance of $159,371 as compared to $625,888 on June 30, 2022. The decrease in cash is mainly due to fixed asset upgrade and/or replacement for the Kyuquot site and the Barr Creek site as well as maintenance work at Cypress and Mears Creek sites during Q2 2023. Also, as of December 31, 2022, the Company had a restricted cash balance of $1,060,840 and a term deposit of $230,000. The total loan principal outstanding to The Equitable Life Insurance Company of Canada and The Empire Life Insurance Company was $14,347,552 on December 31, 2022, as compared to the $14,612,407 on June 30, 2022. Loans payable on December 31, 2022, included a current portion of $918,816 and a non‐current portion of $13,428,737.
During Q2 2023, the Company commenced discussions with BC Hydro for the renewal of the Electricity Power Agreement (the "EPA") for the Mears Creek power plant for another 20 years. The current EPA expires in January 2024. The Company expects to finalize the EPA in the coming months once it receives all necessary approvals from BC Hydro.
Additionally, Sea Breeze, a subsidiary of the Company, applied to expand the boundary of its wind energy investigative license to include more lands in the immediate vicinity of Kitimat. The application is currently subject to regulatory review. Management estimates that a wind farm in this area could deliver over 150 MW of clean electricity.
Private Placement Update
The Company is also pleased to announce that it has closed a non-brokered private placement financing (the "Offering") of common shares ("Common Shares") in the capital of the Company at a price of $2.55 per Common Share. An aggregate of 196,078 Common Shares were issued for aggregate gross proceeds of $500,000.00.
Synex expects to use the proceeds of the Offering for the development of the Company's wind projects, working capital and general corporate purposes. The Common Shares issued pursuant to the Offering will be subject to a four month hold period from the closing of the Offering pursuant to applicable securities laws.
Russell Industries Corp., a corporation controlled by Daniel J. Russell, a director and the President of the Company, purchased all of the Common Shares issued pursuant to the Offering. Prior to completion of the Offering, Daniel J. Russell owned, or had control or direction over, 2,269,579 Common Shares, representing approximately 57.04% of the issued and outstanding Common Shares. After the Offering, Daniel J. Russell owns, or has control of direction over, 2,465,657 Common Shares, representing approximately 59.05% of the issued and outstanding Common Shares.
The issuance of Common Shares to Russell Industries Corp. is considered to be a "related party transaction" for purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company did not file a material change report more than 21 days before the expected closing date of the Offering as the details of the Offering were not settled until shortly prior to the closing of the Offering, and the Company wished to close the Offering on an expedited basis for sound business reasons.
The Company is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Offering is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Offering, insofar as it involves related parties, exceeded 25% of the Company's market capitalization. The Offering was unanimously approved by the directors of the Company that did not participate in the Offering.
About Synex Renewable Energy Corporation (formerly, Synex International Inc.)
Synex is a Vancouver, British Columbia based company engaged in the development, acquisition, ownership, and operation of renewable energy projects in Canada. It has ownership interests in 12 MW of operating hydro projects in British Columbia and owns a Vancouver Island grid connection and utility carrying on business as Kyuquot Power Ltd. The Company also has 9.4 MW of construction ready run-of-river projects, applications, and land tenures on another 24 potential hydroelectric sites totaling over 150 MW of capacity, and approximately 17 wind development sites that could provide up to 4,850 MW of clean power in British Columbia. For further information, visit www.synex.com.
For media inquiries, please contact:
Daniel J. Russell President & CEO, Synex Renewable Energy Corporation. (Formerly, Synex International Inc.) 524 Locust St., Burlington, ON, L7S 1V2 Phone (905) 329-5000 E-mail: daniel.russell@synex.com
Cautionary Note Regarding Forward-Looking Information and Statements
This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Synex's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Synex's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved", including the use of proceeds for the Offering and the potential electricity output for the Company's projects.
By identifying such information and statements in this manner, Synex is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, Synex has made certain assumptions. Although Synex believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. Among others, the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: changes in general economic, business and political conditions, including changes in the financial markets; and the other risks disclosed in the Company's annual information form dated September 28, 2022 and available on the Company's profile at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected.
The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Synex does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to Synex or persons acting on its behalf is expressly qualified in its entirety by this notice.
