Mr. Bob Emmott reports

MAXIM POWER CORP. ANNOUNCES 2023 FIRST QUARTER FINANCIAL AND OPERATING RESULTS

Maxim Power Corp. has released its financial and operating results for the first quarter ended March 31, 2023. The unaudited condensed consolidated interim financial statements, accompanying notes, and management's discussion and analysis (MD&A) will be available on SEDAR and on Maxim's website on May 9, 2023. All figures reported herein are Canadian dollars unless otherwise stated.

Operating results

During the first quarter of 2023, Maxim recorded net income and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $7.8-million and $11.7-million, respectively, as compared with $16.9-million and $15.9-million, respectively, in the same period of 2022. Net income in the first quarter of 2023 decreased as compared with the same period in 2022, primarily due to the non-injury fire incident at Milner 2 (M2), which resulted in no generation from M2 in the first quarter of 2023 and unrealized and realized commodity swap gains in 2022, partially offset by the business interruption claim in 2023. A significant portion of the decrease to adjusted EBITDA was due to the Incident at M2, partially offset by the business interruption claim.

M2 return to service update

Maxim has disassembled the damaged air inlet filter house caused by the incident at M2, procured a replacement air inlet filter house and is actively expediting the construction process to restore M2 to operational service as soon as possible. Installation of the new air inlet filter house commenced in April, 2023, with completion expected late in July, 2023. Maxim does not expect to be generating electricity from the HR Milner (Milner) site until the end of July, 2023, at which point Maxim anticipates commencing hot commissioning activities for the combined-cycle gas turbine (CCGT) expansion of M2. Hot commissioning activities are anticipated to occur over an approximate three-month period, during which there will be periodic outages of the facility resulting in intermittent generation of electricity. The CCGT expansion will increase total generation capacity of M2 from 204 megawatts to 300 megawatts and lower operations and maintenance costs per megawatt-hour (MWh) as a result of operational efficiencies.

M2 CCGT expansion project update

As previously reported, start-up of the CCGT expansion project will be delayed due to the incident. Construction of the CCGT expansion project is currently greater than 99 per cent complete, however, hot commissioning activities cannot occur until M2 is returned to service.

The estimated project cost, excluding borrowing costs and the net effect of $20-million of grant proceeds, is currently $162-million. The estimated project costs increased from $155-million due to incremental costs anticipated to be incurred as a result of the delay in commissioning and exclude the costs related to procuring the new air inlet filter house, which are expected to be recovered from insurance coverage.

Completion of the CCGT expansion of M2 will allow for the capture of waste heat that would otherwise exhaust into the atmosphere and turn it into useful low carbon electricity for the Alberta power grid. The CCGT expansion of M2 will reduce the intensity of carbon emissions by more than 60 per cent compared with the legacy coal-fired HR Milner facility.

At this time, Maxim forecasts it has sufficient liquidity to complete both the CCGT expansion of M2 and the replacement of the air inlet filter house and will finance these costs using cash on hand, available funds through the existing senior and subordinated credit facilities, and anticipated insurance proceeds, as required.

Financing update

Maxim has amended and received consent for certain terms and conditions under the senior and subordinated credit facilities to make the necessary changes to maintain compliance and appropriately address the impact from the incident at M2 and timing of the commissioning of the CCGT expansion of M2. Changes of most significance include revising the timing of the completion of the CCGT expansion of M2, including the air inlet filter house repair program, pausing the corporation's normal course issuer bid until after the CCGT expansion of M2 has achieved substantial completion and addressing other standard administrative changes for an event of this nature.

There were no changes to the availability of the senior and subordinated credit facilities, which give access to an additional $92-million of funding under various terms and conditions.

Insurance information update

As previously reported, Maxim reaffirms insurance coverage for the incident, subject to the terms and conditions of the corporation's property insurance (PI) policy, including business interruption (BI) provisions. The corporation continues to progress an insurance claim for property damage and lost earnings under the PI policy. The PI policy provides $200-million in total coverage, including BI. The PI insurance coverage related to the property damage from the incident is subject to a customary deductible. The sublimitations on the BI provision of the PI policy include a 45-day deductible, a monthly cap of $5.5-million gross margin (plus a 10-per-cent margin allowance) and a policy cap of $66-million total gross margin. The corporation is comfortable that the PI policy limit of $200-million, less any coverage related to the BI provision, is sufficient to cover the property damage related to the incident.

To date, Maxim has submitted claims for $45.8-million, of which $36.3-million relates to BI and $9.5-million relates to PI. To date, $25.0-million has been paid by the insurance company in relation to these claims. The corporation continues to progress the insurance claims for damages and future lost earnings.

About Maxim Power Corp.

Based in Calgary, Alta., Maxim is one of Canada's largest truly independent power producers. Maxim is now focused entirely on power projects in Alberta. Its core asset -- the 204-megawatt HR Milner plant, M2, in Grande Cache, Alta., is a state-of-the-art natural-gas-fired power plant that commissioned in Q2 2020. Maxim is currently increasing the capacity of M2 to approximately 300 megawatts and concurrently will realize an improvement in the efficiency of the plant by investing in heat recovery combined-cycle technology. In addition, Maxim continues to explore additional development options in Alberta, including its currently permitted gas-fired generation projects and the permitting of its wind power generation project. Maxim trades on the Toronto Stock Exchange under the symbol MXG.

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