Mr. Bob Emmott reports

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

Maxim Power Corp. has released financial and operating results for the second quarter and six months ended June 30, 2023. The unaudited condensed consolidated interim financial statements, accompanying notes, and management's discussion and analysis will be available on SEDAR+ and on Maxim's website on Aug. 10, 2023.

Operating results

During the second quarter of 2023, Maxim recorded net income and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $6.0-million and $9.0-million, respectively, as compared with $8.6-million and $18.8-million, respectively, in the same period of 2022. Net income in the second quarter of 2023 decreased as compared with the same period in 2022 primarily due to the Milner 2 unplanned outage arising from the non-injury fire, which resulted in no generation from M2 in the second 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 M2 unplanned outage in the second quarter of 2023, partially offset by the business interruption claim.

M2 return to service update

Maxim is near completion of the necessary repairs to restore M2 to operational service and has commenced 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 approximately 300 megawatts and lower operations and maintenance costs per megawatt-hour as a result of operational efficiencies.

M2 CCGT expansion project update

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 H.R. Milner facility. The estimated project cost, excluding borrowing costs and the net effect of $20-million of grant proceeds, is currently $162-million.

At this time, Maxim forecasts it has sufficient liquidity to finance 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.

Insurance information update

Maxim confirms coverage for the non-injury fire incident subject to the terms and conditions of the corporation's property insurance policy, including business interruption provisions. As of the date of this press release, Maxim has cumulatively submitted claims for $72.5-million, of which $54.5-million relates to business interruption and $18.0-million relates to property damage. As of the date of this press release, $50.6-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.

Maxim submitted an additional insurance claim for a delay in start-up related to the non-injury fire incident under its course of construction (COC) insurance policy, which includes a provision for delay in start-up (DSU) coverage relating to the CCGT expansion of M2. The corporation has received a denial of coverage under this policy from the insurer and is currently evaluating its options in relation to this claim. No amounts have been recognized by the corporation in relation to this claim. The COC policy continues to remain in effect during the construction and commissioning of the CCGT expansion of M2.

About Maxim Power Corp.

Based in Calgary, Alta., Maxim is one of Canada's largest truly independent power producers. Maxim is focused entirely on power projects in Alberta. Its core asset -- the 204-megawatt H.R. Milner plant, M2, in Grande Cache, Alta. -- is a state-of-the-art natural-gas-fired power plant that commissioned in second quarter 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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