ADDS BROKER COMMENT AND SHARE PRICE
Rame Energy (LON:RAME) has farmed out 75% of its wind power development at the Cerro Bayo mine in Chile in return for US4.7mln in funding.Investment group Anden Re put up the money for a 75% stake, with Rame retaining a 25% equity interest.
Rame and Anden Re are also in talks over a broader relationship to finance the rest of the off-grid and smaller on-grid project portfolio.
The cash will pay for construction of the project, which is expected to be finished by the end of 2015.
Originally, the schedule was for building to be finished in the coming quarter but optimising and implementing the wind farm took longer than expected and Cerro Bayo's owner, Mandalay Resources, has decided to wait until the winter is over before commissioning.
The start of Rame's five year power purchase agreement with Mandalay has also been put back until the end of the year.
Anden Re is a partnership set up by three German financiers, Rolf Christof Dienst, Carsten Eckert and August von Joest specifically to invest in renewable energy projects in Chile.
It will lend Rame US1.2mln to fund its 25% share of the costs of the project and invest US3.5mln for its equity stake.
Already, US600,000 has been drawn to buy wind turbines and start civil engineering works.
Tim Adams, Rame's chief executive, said: "On this occasion, we have retained an equity interest at a commercially reasonable cost in this asset through the financing with Anden Re.
"Going forward, we would hope to maintain or recover a larger proportion of the equity in our projects.
"By the end of 2015, we will have completed as a minimum, both on-grid and off-grid wind projects and a rooftop solar project, all as an IPP."
He added that Cerro Bayo is of special technical and commercial interest and cements Rame as a market leader in short term, off-grid power purchase agreements.
Broker Northland noted Rame had agreed to supply Mandalay's Cerro Bayo mining project with power at an agreed price per MWh for a minimum five years and thereafter on a rolling one year contract at Cerro Bayo's option.
"The project will work in parallel with Cerro Bayo's existing diesel generating system," said analyst David Johnson, who added that Chile faced considerable challenges generating power.
"As a result, there is a concerted effort to invest in non-conventional renewable energy (NCRE). Rame has considerable in-country experience and expertise and is well positioned to capitalise on a significant opportunity," said the broker.
