Polaris Renewable Energy Inc. (OTCPK:RAMPF) Q3 2022 Earnings Conference Call November 3, 2022 10:00 AM ET
Company Participants
Anton Jelic – Chief Financial Officer
Marc Murnaghan – Chief Executive Officer
Conference Call Participants
Nick Boychuk – Cormark Securities
David Quezada – Raymond James
Naji Baydoun – iA Capital Markets
Operator
Good morning, ladies and gentlemen, and welcome to Polaris Renewable Energy Inc Third Quarter 2022 Earnings Conference Call. [Operator Instructions]
It is now my pleasure to turn the floor over to your host Anton Jelic. Sir, the floor is yours.
Anton Jelic
Thanks, John. Good morning, everyone, and welcome once again to our Q3 2022 earnings call. In addition to the press release issued earlier today, you find our financial statements, MD&A, and quarterly information form on both SEDAR and on corporate website PolarisREI.com. Unless noted otherwise, all amounts referred to are denominated in U.S. dollars.
I’d like to remind you that comments made during this call may include forward-looking statements within the meaning of applicable Canadian securities legislation regarding the future performance of Polaris Renewable Energy and all 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 quarterly information form for the quarter ended September 30, 2022. I’m joined this morning, as always by Marc Murnaghan, CEO of Polaris Renewable Energy. At this time, I’ll walk through our financial highlights.
Power generation; during the three months ended September 30, 2022, quarterly consolidated power production was lower than the same period in 2021 due to lower hydrology in Peru and planned major maintenance performed in Nicaragua and Peru. Partly upset by the additional production from the solar project in the Dominican Republic acquired on June 28th and the hydroelectric project in Ecuador acquired on September 7th. During the nine months ended September 30th power production was 475,000, 536 megawatt hours net compared to 480,000, 981 megawatt hours net in the nine months ended September 30th. Due to the decrease in production at the San Jacinto facility expected from the natural decline of the reservoir. The decrease was partly offset by the increase in production as mentioned by the Peruvian facilities, coupled with production contributed by Canoa 1 and HSJM, both acquired during the nine months period ended September 30th.
Revenue; total revenue was $14.5 million during the three months ended September 30th compared to $14.8 million in the same period last year. Total revenue of $45.8 million for the nine months ended September 30th compared to $44.6 million in the same period last year. Net earnings loss; the net loss attributable to owners was $1.5 million for the three months ended September 30th compared to earnings of $2.2 million for the same period in 2021.
Further, the net loss attributable to owners for the nine months ended September 30th was $0.5 million compared to net earnings of $1.4 million for the same period last year. Adjusted EBITDA – adjusted EBITDA was $10 million for the three months end of September 30th compared to $10.9 million last year as well adjusted EBITDA was $33 million for the nine months end of September 30th compared to $32.7 million for the same period in 2021.
Cash generation; net cash from operating activities for the nine months end of September 30th of $20.7 million, lower than the $33.9 million for the same period last year, mainly because in the 2021 period, San Jacinto collected approximately $8 million overdue receivable balance after the sign-off of the new PPA agreement.
Net cash used in investing activities for the nine months ended September 30th was $57.3 million compared to $8.6 million in the same period in 2021. The large increase resulted from the $20.3 million cash paid for the acquisition of Emerald in the Dominican Republic and $15.2 million cash paid for the acquisition of HSJM in Ecuador net of a total cash received a $3 million from both acquisitions. In addition, the company has funded $19.9 million for the construction of the Binary project in San Jacinto and $3.4 million the Solar projects in Panama.
Net cash used in the financing activities for the nine months end of September 30th of $24.4 million compared to net cash provided by financing activities of $14.5 million reported in the same period in 2021. The decrease was driven by the net proceeds relating to common shares issued during the first quarter of 2021 compared to higher dividends paid in the first quarter of this year, and the net impact of the repayment of debt and refinancing completed in Nicaragua on February 2022 compared to the 2021 period.
And finally dividends, we would like to highlight that we do intend on paying our 27th consecutive quarterly dividend on November 25th, a $0.15 per share to shareholders of record on November 14th. This continues the board and management’s commitment to regular positive distributions to shareholders, coupled with an ongoing emphasis on attractive valued accretive acquisitions.
With that I’ll turn the call over to Marc who will elaborate on current business matters as well as on our quarter end results. Thank you.
Marc Murnaghan
Thanks Anton.
So first starting with the quarter, this third quarter was always anticipated in terms of the EBITDA and production to be a lower, should call it our seasonally lowest quarter given the maintenance in Nicaragua and it is the dry season in Peru. Although we did come in lower than anticipated for what I’d call onetime items. But in terms of actual dollar estimates that I’ve run, I would say the dry season in Peru cost us about $500,000. The further quarter we originally budgeted 47 megawatts net in Nicaragua and we came in at about 45, which I will – we did talk about that a little bit in the press release due to just two wells took a bit longer to recover, that was about 500,000.
And then actually the bigger one was on the G&A line some deal costs from the acquisitions et cetera in terms of advisory fees and legal fees of about 600,000. So you’re looking at about $1.6 million in costs, I would say either cost incurred or lower revenue in the quarter in terms of the net impact on EBITDA that I wouldn’t consider go forward, definitely not what we’re running in our numbers going forward. Give you an example San Jacinto in October was 51.5 net, which is right on budget.
The Peru plants in terms of hydrology and production are right back on budget. 8 de Agosto in October did as much production as the whole Q3. So it would, the – call it the rainy season has started in the normal fashion and that’s actually more important than, than call it having a dry, dry season in terms of numbers to us. So we’re happy with that. A few other things about the quarter we call it Dominican was I would say as expected and that did have a full quarter contribution EBITDA around 1.4 to 1.5.
San Jose de Minas was only about a month, so that didn’t really contributed anything there, but it is running as expected. And then we did have a small carbon credit sale brought in about $427,000 in revenue, and that was actually for 2015 vintages. And I’ll talk a little bit about that later, but that we saw the price of those at a price of $2.30, so that did come in the quarter. But I think in terms of once San Jose de Minas current quarter, it’s going to be a full quarter. Obviously the DR [ph] is a full quarter, so before the Binary and Panama Solar though, I think the current quarter where we’re running is more indicative of, call it a go-forward number. And I would have that in; call it a $12.5 million range ballpark for current quarter EBITDA.
And then – but that does not include the Binary unit nor Panasolar in Panama. So in terms of those projects though the Binary unit we are still looking at a COD in December, the commissioning date in December and we had spent up to above $23 million at September 30th. There’s another $2 million, so we’re expected to come in on budget for that and starting in December. So Q1 should be a full quarter with the Binary unit. The Panasolar and that’s the big one of the development projects. The Solar in Panama is moving as expected and as budgeted as well.
And we’re looking at end of December, potentially early January, but for commissioning. So maybe a little bit of slippage but not much there and on budget, which is great? So, so those should come in. So Q1 next year would be, again, more on the – what I’d call the go forward run rate as I just mentioned, plus a quarter of the Binary plus a quarter Panasolar and likely some carbon credits as well, which are not in those numbers that I quoted there.
In terms of the other development projects that we have on the go, we were – Canoa 2 would be the most important one. That’s the expansion at the site, so we did two, three weeks ago, we did receive what is called the definitive concession for the ability to double the capacity there. That was or is necessary in order for the offtaker to, and us to formally do the actual power purchase agreement. So we couldn’t get into the pricing and term with the offtaker until this was granted by the authority, which hasn’t been granted. So we’re now actually exchanging documentation in terms of the contract and so we hope that to move pretty quickly. And we would – we will, given that we’re going to be starting what I call the very sort of early stage small dollar site prep designs, et cetera.
So that’s going to start moving very quickly now, which is great. That would be, call it our first expansion project on the backs of the acquisitions that we announced earlier. The other one that that we’re going to be starting construction on either this month or first thing in December is the – it’s a small expansion in brownfield expansion project at the San Jose de Minas site in Ecuador, which is about a $3 million project, but we think it should increase production by about 20% to 30% annually. Very good payback project, and that should be started and we’re looking at about a nine-month construction there. And then the other that that we have yet to I would say fully define, but we’ll have it by end of December in terms of what the plan is, is some certain acid jobs on wells in San Jacinto.
We’ve been assessing this with the technical consultant for the greater part of the year. And we think that we have some real interesting opportunities here. Principle one being one of the wells 4-2 where we had to use a lot of mud during drilling because it was we got a lot of steam kicks during the drilling. We’re getting estimates of anywhere from, well 3 to 10 megawatt potential there and this is something that should cost us about $750,000 to do. So that is something that we will hope to have. The only thing that’s left is really the – what’s the – what is the exact way of doing it, and there’s a few options, but we should have that nailed down and can communicate it to it.
I think this is important because as we don’t see any large program drilling at the field for years now, but we do see what I’d call more typical maintenance/optimization. And this will probably be the first one that we will execute to kind of validate the thought that with, call it a maintenance CapEx of one to two a year. We can sort of change the either sustained the zero percent decline or potentially even improve the production from where we’re at today, which would be very economic for us.
Last thing I’ll mention is the carbon credits. We did get 8 de Agosto a month ago was finally fully verified. So that’s great. So we now have what I call relatively recent credits that we can sell there, and we are in the process on three other ones which would include the Panama Solar, actually El Carmen in Peru, and the Binary unit is actually being done separately, so that those should all be done. We spent a lot of time on that. Those should be done this year.
We should be entering, call it next year with around 350,000 tons annually in terms of annual production. And where we see the market today is that that is, call it what I would call recent vintages seem to be going for $4 to $5 a ton, which I think is quite a strong signal given despite the war, despite inflation, I do – I would’ve expected maybe more of a pressure on those prices, but we’re not seeing that, we are seeing transactions getting done. So I would expect – I don’t, at this point, I don’t see us doing anything in Q4. But given that [indiscernible] was done and we have actually at San Jacinto alone from 2017 and 2018, about 300,000 just sitting there on inventory.
So I think a policy for us will be just to keep working off things that are four or five years dated. As I said, we sold 2015s things closer to that – closer to today; I think we can get four to five. So I think we would start in Q1 and Q2 to look at starting to sell some of that older inventory and even some of the more recent, even if we do small bits of it. So I would think that next year in terms of, as I said, the numbers that I quote, I don’t put the carbon credits in, but I would expect it to be represent a larger number in terms of our total revenue next year than it did this year.
So that’s it for my comments, so we can open it up for questions now.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] And the first question is coming from Nick Boychuk with Cormark Securities. Your line is live.
Marc Murnaghan
Hi Nick.
Nick Boychuk
Hey, thanks. Good morning, Marc. Just on Nicaragua first; can you please clarify the 3 to 10 megawatts that you’re looking at getting out that additional well, that’s totally new capacity that we’d be adding, right?
Marc Murnaghan
Yes. So that is a well that when you drill, we had a steam kick, which means steam comes and the only way before you’ve cased your well, and so you have to basically kill it, which the only way to do that is you dump a lot of mud. If you dump a lot of mud in it and it took us two weeks to kill it, then you keep drilling. We had another one, and so basically there’s a lot of mud in the formation, right? And so this well 4-2 only produces about one to two megawatts despite how strong these kicks were. So all the data suggests that there’s for sure production there, the question is how effective can your acid clean it out? And good news is, is because it’s a very shallow production zone and we don’t need a big rig to get there.
So our estimates, as I said are anywhere from one to even higher than 10 megawatts. So that was part of the 2017/2018 drilling campaign. And right now, as I said it’s a tiny producer, but our average well in the field is about five, six megawatts now. So if you assume the average then we get like an extra four, that’s it, and that’s probably a good thing to ballpark. We just need to finalize the actual process – the actual asset, and then we can communicate it and put it in the budget probably by the end of the year.
Nick Boychuk
Okay. So budget by the end of the year, and then roughly in terms of construction timeline, how long you think that would take?
Marc Murnaghan
It’s – we would do it likely mid-year, but it’s a one-month process.
Nick Boychuk
Okay, sweet. Looking into Panama, can we get a little bit of extra color on Panasolar 3? What do you see in terms of the development process, cost to develop it, and then also power price market where merchant rates in Panasolar 3 currently and how you’re thinking about PPAs versus going full spot on those two assets?
Marc Murnaghan
So in terms of the current build, we’re still – we’re on, are you talking the current one that we’re building or even further?
Nick Boychuk
I’m thinking more Panasolar 3?
Marc Murnaghan
Yes. Just so phenomenally I just though [ph], my bad, but it’s technically two projects what we’re building, just because they have two different generation licenses, but we’re doing two and three now and we’re looking at doing a few more later next year. But what I – just let me comment first on the spot market, the trailing 12 months is around $100 a megawatt hour there. We definitely have interest in contracting, although given that, so the first projects that we’re building right now that are going to come on, call it Jan. 1 would only represent 2% to 3% of our total production. Every, everything else is 100% contracted, so I don’t think, and we’ve equity funded, so we’re not rushing out to get contracts we have started conversations with people that are interested in buying. But I think we’ll just start the year and call it merchant there. And I run my numbers at about $85 a megawatt hour and yes, it’s at about 100 right now or the LTM is at about 100.
Nick Boychuk
Okay.
Marc Murnaghan
In terms of the cost to get there, I think our all in will be about $9 million for, it’s 12.5 megawatts DC, 10 megawatts AC, which is I think very good. And we executed this project with our own sort of project management team and I think that is something we would look at do going forward. It was the same with the Binary and it will likely be the same with Canoa 2. So as opposed to hiring EPC contractor, because we see about $0.10 to $0.15 per watt difference in doing that and so for the smaller or expansion projects, we think we can handle that and it does make a big difference in terms of the net return to you.
Nick Boychuk
Okay. That’s helpful. Thanks. And then in Ecuador were you guys able to submit the bids for the 720 – 27 megawatt projects in the October 31st auction?
Marc Murnaghan
It’s not until November 18th is the bid date. But we are evaluating – we are reevaluating because they did publish some prices for – max prices and hydro is $52, which is – it would be maybe possible to get a returns. I think very few people are going to bid. Then immediately after that there was a change in the Minister of Energy for the Ministry. So I think they’re going to have to redo the whole thing quite frankly, and we’re going to come back in Q1 and they’d already talked about two, so I think it’d be very shocked if people show up at that price and or they basically redo the whole thing and in Q1 we – it’s back on track. So yes, but I don’t – our plan is really going to be to do the expansion that – we can go ahead with everything at San Jose de Minas, but in terms of the bidding process it’s likely going to be more of a Q1 thing now.
Nick Boychuk
Okay. That’s helpful. Thanks. I’ll hope back in the queue.
Operator
Up next we have David Quezada with Raymond James. David, your live is live.
David Quezada
Thanks. Good morning Marc. Leaving my first one here, just maybe a long-term question. Just thinking about growth opportunities across your footprint; obviously you’ve got a lot of stuff on the go right now, but just curious about what kind of potential you see for storage across your footprint and what kind of timeline would you look at there? I suspect its a few years out and what would you need to see in terms of contractual underpinning for something like that?
Marc Murnaghan
So, yes, and in terms of a few years out, what I would hope that actually contractually is sooner than that in terms of having something nailed down for storage. We are actually are moving ahead with a very small storage project in Peru next year, but it’s pure frequency regulation, so it’s not really energy storage, but it’s going to be like a one-megawatt hour lithium project. And again, that’ll, I think will be very good call it knowledge for us, its’ a little baby step to do it, which actually is the second one. We have a solar plus battery project in Nicaragua right now at a very small scale, and we’re going to do this one in Peru. And then I think the next one will be the Dominican. We’ve already had conversations with them. What they told us was we really wanted to get this definitive concession for Canoa done.
And then which we have, and now we’re going to go move ahead with that project. On the backs of that though, what we need to do is just change our concession, which right now it is technology specific, which is solar. So technically we need an amendment and it’s not actually hard, it’s just taking, instead of saying solar, it says solar batteries, and we can now start that process because – and we are going to start it. The nice thing with the Dominican is that they’ve already published reference prices for solar projects that add storage and it’s an increase, and it’s a material increase and they’re not definitive. They use the term referential for a reason because they’re trying to guide people. I would say that the guiding that they’re doing is close to making a lot of economic sense, not quite there, but they’ve already had a task force that’s working on it.
So I would hope we can have that kind of amendment in the first half of next year to say that we can do it, and then it would get into negotiating that price and the size. So how big do you need to start? Can you go sort of small medium or did they want you to go big? That’ll be a bit of a negotiation, but it will – I think it’ll literally be hopefully mid- next year we’re going into them saying, okay, here’s the price we’re willing to do like 50 megawatt hours or 100 megawatt hours of storage on the backs of Canoa 1 and 2 and we have the land for it. So, so that’s where I would hope that we would start and maybe it’s two to three years in terms of actual production but in terms of project definition contracting, I would hope that it is much sooner than that. And then with that, I think the messaging will be, that is going to be a really big focus for the company going forward and that our, call it a key growth engine for the company is going to be storage, absolutely.
David Quezada
Okay. Awesome. That’s great caller. Thanks Marc. Maybe just one more for me; as you look to move forward on some of your expansion projects here, like Canoa 2 and in Ecuador, I’m just curious what you’re seeing in terms of supply chain, like are you out looking to procure panels? I think in the past you suggested that the size of projects you’re looking at, it’s not too much of an issue. Just curious what you’re seeing there and if you see that as a hurdle in any way?
Marc Murnaghan
Yes. We just interestingly recently got indicative quotes on panels and inverters and they both were lower than what our project in Panama was done at. So that’s – obviously that’s good. I think what we’re seeing more is, it tends to be more certain parts of a project do have issues whether it’s with transportation or there is some supply chain issue, obviously a massive percentage of the world’s goods do parts flow through China and they are still having issues. So I would see it more timing? No, necessarily than budget at this point that’s what we’re seeing. So it’s causing – it can cause delays, which you got, that’s where you need to focus more so than it’s causing call it cost increase and I would reiterate that we don’t. A lot of the countries we’re operating in, they aren’t seeing the same type of inflation levels that we did, that you’re seeing in the United States, in the western world.
David Quezada
Yes. Okay. Excellent. I appreciate those comments. Marc. I’ll turn it over.
Marc Murnaghan
Thanks.
Operator
[Operator Instructions] Up next we have Naji Baydoun with iA Capital Markets. Your line is live.
Naji Baydoun
Hi. Good morning. Just wanted to go back to the Panama Solar projects, so if I understood correctly you’re comfortable operating the projects that are going to be completed soon on a merchant basis for now. And then maybe you think about contracting for the next ones, like you’re – there’s no rush essentially to get PPAs in the door to be able to raise that financing, that you’re okay with the way things are for now?
Marc Murnaghan
With the current one, absolutely, yes.
Naji Baydoun
And what about, let’s say the next tranche of projects in Panama?
Marc Murnaghan
Yes. So it really – it depends on which type we are doing. We have a couple on the solar side with the same developer that would be – that we think would be ready back half of next year. As well as the hydro project that we have been working on for quite some time and it’s decided to deal several years ago. It’s still in our queue. It actually has contracts, so if we were to move ahead with that and our go no go on that is in the next three months as the same company, we could use those contracts. The actual – what the amount of contractor is higher than what the first solar plant would produce and it would actually be a good percentage of the next ones. So it could be a good little package in which case we wouldn’t have to get new contracts if we did it that way.
If we do not do the hydro project and we just go do call it the few more solar, we absolutely would look for 8 percentage of contracting such that it just makes the financing a little bit easier, even though again the percentages on a pro forma basis would be quite small as a company. We would want to raise some debt locally in the market in Panama because it’s a very – it’s actually a great market from that perspective. So maybe we try to get 40%, 50% contracted as a package when you include the new ones and the current one.
Naji Baydoun
Right, okay. That makes sense. I was just thinking about, if you can pull any [indiscernible] those projects, but it’s, I guess we’ll hear more about Chuspa in a few months?
Marc Murnaghan
I think we would in the sense that if you – let’s just say all we did was the solar and let’s just say each one’s $10 million and we’ve already spent $10 million, we could probably do the next two on debt using local debt, but not if it was – if the whole package was 100% merchant. You probably need to get 40%, 50% contracted and then you could, and then we – our equity quote has already been spent and invested.
Naji Baydoun
Exactly. Okay. That’s good. And just on Canoa 2 is that maybe you just give us an update on the timelines and sort of milestones to get that project moving for next year?
Marc Murnaghan
Yes. So I think as I said, we’re now into negotiations with PPA. We’re going to start doing certain land prep immediately. I think it’ll take us to be truly like large – the full construction start probably not until April or May. We will have – next year we will have some of the works done. So I would say I don’t think we would have it for a full year until 2024 likely and the Q1 ready 2024.
Naji Baydoun
Okay. Okay. And – but I guess an FID soon and then construction, so call it mid- to back half of next year for 2024?
Marc Murnaghan
Yes.
Naji Baydoun
Okay. And just one last question if I can add-on to go back to the Ecuador, I mean, just based on public [indiscernible] information. It seems like it’s kind of big competitive process with a lot of interested parties. I’m just wondering if you talked about the pricing on the hydro, which I think is going to be about 150 megawatts, but also I think looking to add wind and solar in that [indiscernible], is there any more you can say about that? Is that something that you’re interested in and what – let’s say they come out with the awards in Q1 next year. What would be kind of the timeline to build those projects?
Marc Murnaghan
So just on, I don’t think the wind and solar is as interesting. It’s not that we wouldn’t do that in Ecuador, but that really wasn’t what we wanted to focus on. So I think you’d be partly because I think there is a little bit more competition. I don’t think I’d say medium competitive on those, whereas it’s low- to mid- on the hydros. So I think for us, we know one scenario would be if we – if the hydros don’t happen, there’s going to be people that get some solar and wind and that don’t have the equity capital to go ahead. We absolutely look to work on that, because that whole call it dynamic of still capital constrained small project developers. I mean that’s not only does it exist still; it’s gotten a lot worse, so I think that’s better for us.
So I think we would play more of a wait and see on those. And I’m sure we would get a call on the solar and the wind. And then in terms of the hydro, yes, I don’t think, what I think would happen on a call it project win in Q1, let’s say assuming that happens, the original thinking I would’ve been that a hydro project comes online call it for 2025. So if you had sort of Canoa 2 plus the Solar Panama and maybe the Hydro Panama coming on in call it 2024. You have the hydro 2025, I don’t think that’s changed, but it’s probably be push back three to six months to mid in 2025.
Naji Baydoun
That’s very helpful. And then will definitely sort of be continuation of steady pace of growth. Okay. So focus on the hydro and maybe keeping some options open to partner with someone else on end of solar.
Marc Murnaghan
Yes.
Naji Baydoun
That’s great. Thank you very much for those details.
Operator
Okay. Up next we have Vivek Punjabi [ph] with National Bank Financial. Your line is live.
Unidentified Analyst
Hi, Marc. This is Vivek from National Bank on behalf of [indiscernible]. Thank you. I just want to circle back on carbon credits. I know you provided some commentary around that. But just to understand how should we think about carbon credit sales and leading into the next year? Should we see it at a higher run rate pace from what was in Q3? And is the strategy more dependent on pricing for the recent verifications versus the old ones, just we would love some comment?
Marc Murnaghan
Yes. So where I think we’re going to go, so it was – would’ve been a year ago or maybe it was a year and a half ago CORSIA, which was – is the – so the airlines have a buying consortium, it’s called CORSIA. And they’re one of the – and there’s also an oil and gas one called IETA. They’re big buying consortiums and they’re – I think they’re in the voluntary market; they would be some of the larger buyers. But a year, year-and-a-half ago well, yes, it was 2021 they – of course came out and said if it’s before 2016 vintage we’re not really interested. And so they – that kind of had a bit of a demarcation line in terms of pricing. So any vintages because again, you don’t need to sell these right away, you can inventory them. So that made a bit of a demarcation line.
So we’ve gotten rid of. Now interestingly, we were able to sell some 2015s this quarter or the past quarter at $2.30, whereas call it what I call more recent vintages. So below five years are seem to be in the $4 and $5 range. So what I think we will do is, and I would view that as a risk. I think it’s great that you have these buying groups dictating a little bit as to where this market goes as opposed to the accrediting agencies. But your risk is that they say; okay, now we only want things that are not five years, but three years, no more than three years dated. And so we still have, so for instance, at San Jacinto, ours – there were some remaining inventory just for 2017 and 2018 alone is like 300,000 tons, okay. So I think what our policy will be to start moving off older inventory to remove that risk before it kind of switches into a lower pricing environment that’s being dictated.
And what we’re seeing in the market is the $4 or $5 is being achieved with some 2017s and 2018s, because it’s still within that sort of five-year thing. So I think what we’ll start next year is doing that. I don’t think we would, so let’s just say we did 300,000 next year and $4 to $5 you can do the math. So, $1.5 million that I don’t know if I’m – I don’t think I can say that’s sort of a guidance, but that’s at least the thinking right now. I think the thinking is that, as I said, the fact that it’s still at four or five in this environment to me suggests that to the extent we do reach any form of normalization, I think that there should be more value in these, even more than recent vintages than $4 or $5.
Unidentified Analyst
Sure. Thank you for that. And just to circle back on the Panama Solar that was recently acquired, I know, you said December or January, but just wanted to learn if there’s any risk that it could be delayed further than probably worst case early January?
Marc Murnaghan
There is – the risk is I think it’s small. I mean it’s a smart transformer from Huawei, which is what were the last piece of equipment. And it’s supposed to be delivered the last week in November and that’s the last communication we had. If they – if that slips now that just to be clear that already is later than what we thought. But if that happens, we’re still good for what I said if that’s two weeks late, it might be two weeks late. But that’s sort of we’re down to kind of one key piece of equipment from a much, much larger set. So we think we’ve wrestled it down to a reasonable low risk. But yes, so the – likely speaking or you could get pushed out. And it’s coming down to that one.
Unidentified Analyst
Sure. Sure. It sounds good. Thanks for that. I’ll leave it there for now. Thank you.
Operator
[Operator Instructions] It looks like we have a follow-up from Nick Boychuk with Cormark Securities. Your line is live.
Nick Boychuk
Thanks, Marc. Just coming back to the 8 de Agosto maintenance, can you just kind of give us a little bit of color on what work was done at the plant? If this is not the annual moving forward and if other run-of-river hydro assets improved and require similar work?
Marc Murnaghan
And not some, so you do try to do your maintenance in the dry season, obviously, it was mostly turbine blade cleaning, was the big work. And other what I would call more routine maintenance. I do think that this should go down a lot going forward. These are not big dollar calculate, it’s just its downtime and you try to minimize the downtime by doing it the dry season. I would suggest that of the – we call it hydrology versus maintenance. It’s all of them. It’s like 90% hydrology for the quarter, not the maintenance, in terms of the difference in production.
Nick Boychuk
Okay. So I guess a follow-up into that if, is there any read-through in terms of that weak hydrology changing, what this asset should be doing in the future?
Marc Murnaghan
No. Probably no, I mean you’re just going to have – you’re going to have years that are low. You’re going to have years that are high. I mean, if you look at the nine-month spaces, we’re actually ahead of where we were last year, right. So when it’s just a quarter and it’s just the dry season, you are going to have you’re dealing with lower numbers too. But – so yes, the nine-month numbers aren’t that far off as I said, I think they’re a bit better. So and we’re running right on budget in October. So, no, I – we don’t see any reason to change our numbers.
Nick Boychuk
Okay, perfect. Thank you.
Operator
[Operator Instructions] Okay. It appears there are no further questions in queue.
Marc Murnaghan
Okay. Thanks, everyone.
Anton Jelic
Thank you.
Operator
Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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