Polaris Renewable Energy Inc

F:N4T

Earnings Call Transcript 2019-Q2

[Operator]

Good morning. My name is Sheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Polaris Infrastructure 2019 Second Quarter Earnings Results Conference Call. [Operator Instructions] Thank you. Mr. Jelic, you may begin your conference.

[Anton Jelic, Chief Financial Officer]

Thank you, Sheryl. Good morning, everyone, and welcome to the 2019 second quarter earnings call for Polaris Infrastructure. In addition to the press releases issued earlier today, you can find our financial statements and MDA -- MD&A on both SEDAR and shortly on our website at polarisinfrastructure.com. Unless noted otherwise, all dollar amounts referred to are denominated in U.S. dollars.I'm joined this morning, as always, by Marc Murnaghan, Chief Executive Officer of Polaris Infrastructure. At this time, I will walk through our Q2 2019 financial results and comment on our recently announced quarterly dividend. After which, I will turn the call over to Marc for additional commentary.There was once again an impact on year-over-year production due to planned maintenance. Our major maintenance in San Jacinto for 2019 occurred early in the early part of April or Q2 and was completed successfully. The prior year maintenance wrapped up in February 2018, thus Q1 '18 revenue and adjusted EBITDA were impacted negatively earlier than this fiscal year. We have thus looked at comparable metrics for the 6 months ending June 30, allowing for better comparison of company performance and accounting for the mismatch in maintenance periods.For the 6 months ending June 30, San Jacinto operations in Nicaragua delivered net average 61.6 megawatts versus delivery of net average 58.6 megawatts in the prior year 6 months. The Canchayllo facility in Peru's net production for the 3 and 6 months ended June 30, 2019, was 7,179 megawatt hours and 15,958 megawatt hours, respectively. Given the requirement under the power purchase agreement of 25,000 total megawatt hours for the year, the facility is progressing well towards meeting target operating results.Gross consolidated revenue for the 3 months ending June 30, 2019, was $17.3 million versus $17.7 million for the same period in 2019. Furthermore, gross revenue for the 6 months ending June 30, 2019, was $35.9 million versus $32.4 million in 2018, a $3.5 million uptick.The company generated adjusted EBITDA in Q2 of $14.5 million versus $15.1 million in the prior year period. Furthermore, for the 6 months ending June 30, we reported adjusted EBITDA of $30.4 million versus $27.5 million for the same 6 months in 2018; 6-month totals, again better representing company performance given aforementioned maintenance mismatch.The company reported a net loss for Q2 2019 of $6.7 million versus net earnings of $3.9 million in the prior year. For the 6 months ending June 30, 2019, we reported a net loss of $3.4 million versus net earnings of $4.4 million for the 6 months ending June 30, 2018. The principal driver of the net loss in the quarter and year-to-date was $11.6 million impairment charge associated with our Casita development site in Nicaragua that we have determined where we will not be proceeding with at this time.Focusing on our results by region. We saw total earnings and comprehensive earnings for the 6 months ending June 30 at San Jacinto of $8.1 million versus $4.1 million in the same period in 2018. Direct costs, depreciation and G&A cost at San Jacinto remained relatively flat year-over-year. Our Peruvian operations generated $780,000 for the 6 months ending June 30 with no comparable 2018. The Canchayllo facility in Peru had $415,000 in total earnings and comprehensive earnings for the same period with, of course, no comparable 2018 given our acquisition of the related companies being in Q4 of 2018.Finally, I would just like to emphasize that we have declared our 14th consecutive quarterly dividend, which was confirmed by the Board of Directors on August 7. It will be paid on August 30 to shareholders of record on August 19. The $0.15 a share dividend reflects a 36% payout ratio based on our Q2 2019 results and continues the Board and management's commitment to regular positive distributions to shareholders of Polaris.With that, I'll turn the call over to Marc, who will elaborate on current business specifics around our ongoing completion of the development projects in Peru and 8 de Agosto and El Carmen. We will be happy to take questions once Marc has completed his comments. Thank you.

[Marc Murnaghan, CEO & Director]

Okay. Thanks, Anton. So deal with a few items here before we hand it over for questions. So in terms of the Peru progress, we're very happy with where the construction sits in the quarter. And a little bit subsequent to the quarter, we completed what I think are sort of the 3 biggest derisking milestones, which were completion of the excavation of the new tunnel at El Carmen and the new tunnel at 8 de Agosto. So those will be 2 of them. They were redesigned effectively in early January. We had to redesign the construction, and both projects, we added tunnels to lower the risk, both during construction and for the long life of the projects. So we finished the excavation of those 2 tunnels, and we are now in the process of just doing the, call it, the support from the [ Cementos ] deal, but the excavation is what we consider to be in the high-risk part of that process. So that's done.And then the other, which is less of a construction issue but is the -- when we took over these projects, there were still some rights of way that hadn't been nailed down on the transmission line, which is about a 60-kilometer transmission line that we will own. And so we were able to sign up all the rights away, and now we're finishing the -- putting up the towers, which really isn't the biggest construction issue. So I think from a, call it, construction risk perspective, we're not completely out of the woods, but I do think that we hit the big milestones. And so all of the other work that's happening right now based on the process, we -- it is looking like, call it, an end-of-October in-service date is definitely doable. We have started some precommissioning tests, very early days on that. But so we are now -- we have already tested the turbines. So the projects really are getting ready, and so we're very happy with that progress. And obviously, we would be providing more of an update, call it, in 45, 60 days, assuming we stay on track for that. So that was one item.The second one, just -- I did want to add something. Anton gave a few of the Peru numbers. But just from an EBITDA perspective, so people can back that out, the way -- the total Peru only added about $130,000 of EBITDA for the quarter. I'm talking just Q2 now. Canchayllo itself was about $250,000, and then there was about another $120,000 of G&A that we do expense, although once the Generación Andina projects are put into operation, we would expect the bulk of that to be absorbed sort of within those projects. So there is a little bit of a drag on a quarterly basis from the, call it, the G&A in Peru. So just wanted to give people those numbers.I did want to talk about the cash on hand as well. So just at a very high level, so we had $55 million of cash on hand U.S. at June 30. About $17 million, $18 million of that is in, call it, the debt service reserve account and the major maintenance reserve account for San Jacinto. So that leaves you about $37 million, $38 million. We estimate that -- the remaining cost to complete Peru or at least the investment we need to make is about $21 million. So that would reduce that $37 million, $38 million down to, call it, $16 million or $17 million of "excess cash", which is effectively the net proceeds in U.S. dollars of the Canadian dollar debentures. So that's sort of the high level on the cash breakdown.And then we do talk about strong cash flow generation in the headline, but we just talk about EBITDA in terms of the actual cash flow. So for the quarter, and I reiterate that would have -- this was -- we did do maintenance, and that has about a, call it, my estimate is about a $1.25 million negative impact on the quarter, which flows on EBITDA down to cash flow. But even after that effect, we generated about $10.2 million of operating cash flow, U.S., which is about USD 0.65. And in terms of free cash flow, which is after principal repayment, we paid down about $3.6 million of principal debt in the quarter, [ downwards of ] $6.56 million or USD 0.42 just for the quarter. And again, that is a quarter with -- that had a reasonably sizable negative impact with the major maintenance. So -- and even with that, though, it was about a 36% payout ratio on the dividend.I did just want to mention the decision on Casita. I don't view it as a big deal. It's a noncash item. We have been carrying around $11 million from previous investments on the books. It's just that it's in limbo with the World Bank. We have disclosed that we've been speaking with the World Bank. Given the uncertainties in Nicaragua just for the foreseeable future, we don't know if we're going to -- we don't think we'll be able to secure that financing. So based on discussions with the auditors, it just seemed a prudent thing to do to take that write-down.And then lastly, vis-a-vis San Jacinto, I think we'll be able to give, after current quarter or Q3 quarter when we report that, guidance may not be the right word, but a sense as to sort of what we would see for 2020 for San Jacinto but also what we might be doing. We are finishing up a numerical model that we're working on with Jacobs, who's our technical advisers out of New Zealand. And with that, we're going to be running a whole bunch of scenarios about what's assuming 0 investment in the project with what we think it can produce over the long run. We don't foresee a 0 investment in it though, so we will -- we're working on a few, what I'd call, low dollar optimization projects. One of which is perforating one of the wells that we have. There's a lot of data that suggests of the shallow steam zone, buying that well for a very sort of small cost, I think $7 million on that. We think there's a chance to add 3 or 4 megawatts possibly. So we're going to be working on all that this quarter. And so I'm hoping to be able to rediscuss parts of them all but also what the decision is in terms of plan for 2020 for San Jacinto, combined with the fact that if we do achieve, call it, an end-of-October in-service date for the Generación Andina projects, we'll be in a better position to talk about 2020, what our estimates are for 2020 as obviously those 2 projects will improve the cash flow numbers that I mentioned a reasonable amount coming in 2020.So that's it. So I'll now turn it over to everybody for questions.

[Operator]

[Operator Instructions] Our first question comes from Mac Whale from Cormark Securities.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

I was going to ask you about -- just about the steam field at San Jacinto and whether you're going to do make-up drilling or anything of that. But I guess you kind of answered it. It sounds like there's sort of a Q3 sort of thoughts will go into that then is -- sounds basically wait.

[Marc Murnaghan, CEO & Director]

Yes, the -- and it's not -- yes, there's -- you see the 6-3 one I gave you, Mac, is a good example of like a $400,000 job. There's a couple of others like that. The 2 big things, I would say, is at the high level. I know Jacobs thinks that we can potentially get more steam out with a less -- with the same amount of mass. And so there's ways to do that. And also, the model can really -- we do -- we see certain injection schemes. We changed injecting one well to another well. It does impact. We know there's links to wells, and so the model will help us with that as well as what's the best injection sort of configuration. So...

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

I recall there was this plan. At one point, there was a thought that you could tap and that there is like a dome of scheme that was kind of forming and that you might be able to drill into that or reverse another well, another hole that was put there. Is that -- how did that -- whatever came of that?

[Marc Murnaghan, CEO & Director]

Yes. So that's -- so for instance, the 6-3 would be -- if you were to go on to pass 6, you would see that there's -- that we've cleaned it up through cementing and grounding, but there's steam like literally coming up towards surface versus 1.5 years ago, there was nothing. And when you look at the temperature loss on the well, you see the temperature spikes, around 250 to 350 meters depth. And we kind of -- that's what we hit [ just as ] when we were drilling the well, but we had to close it up because it's, whatever, 2,000-meter well.So 6-3 is not the only one. There's a couple of other wells where that exists and so the thinking is to do some perforations. It's -- that's actually the cheapest way to start that because drilling a new well into that is probably in the $2 million to $4 million range, whereas perforating a well, all you're doing is literally punching holes in your casing. And the 6-3 is the best target just because the temperature profile is so striking. We think there's a couple more. And in a way, to promote that upper steam field that the concept is you do need to start taking some out in order to -- you actually want the pressure to draw down a little bit or else it won't develop.So that is still there. I think the only issue is it's taken Jacobs longer to get the model done. They've been working on it for the last 4 or 5 months now. We don't -- we didn't want to make any decisions in terms of promoting or developing that concept without having that numerical model in hand.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

Okay. Okay. So you gave a good description on the development of the status of the construction in Peru. You've gone through another major maintenance that's very successful, less time than you did. You've got your sort of handle on what you're going to do with like no big cash outlays required on in San Jacinto. You're not proceeding with Casita. You've gone through the kind of the worst quarter of sort of cash -- free cash flow generation, and payout ratio's still 35%. So are you comfortable -- you must be getting close to being comfortable on raising the dividend. What's your thoughts on that?

[Marc Murnaghan, CEO & Director]

What I would say and have said is I think until we get the Generación Andina projects into operation, I don't think we would consider increasing it because, yes, it's $21 million less. We have a lot more cash than that. So I think we're comfortable. There still could be more cost overruns. We don't see it, especially given that we've done what I think is the, call it, the heavier lifting on the high-risk parts. But when you take that combined with the fact that we are -- we do see and are looking at other interesting transactions like the one we did with Union Energy Group, both in Peru and in other jurisdictions, having some dry powder ends up being the reason that people are talking to you or -- so if we start cranking up the dividend a bit too soon, I guess we're just not really thinking of that realistically until next year once those are up and running and been in operations for, call it, 3 to 6 months. But at that point, then, yes, we -- I think you start to consider that, call it, early next year, assuming a late October or early November in-service date for those, is definitely something we'd consider.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

And is that -- those other jurisdictions, those potentially -- those other projects somewhere else, is that a 2019 event that, that would be something you think you could announce in this year? Or is it going to take longer?

[Marc Murnaghan, CEO & Director]

That's sort of the $64,000 question I guess. So with these things, you just -- I can't -- it's very -- I'm not going to sort of put a time line on that other than to say it could be. There's no reason that it couldn't be this year. But with these types of transactions, with the Union Energy Group one, we had actually had all of the economic terms, the restructuring with the lenders agreed upon in January of '18, but because we needed an extension to the PPA, agreed upon by them, we didn't actually get that extension until September. And we could have gotten it in February of '18. So you just -- and so what we're looking at, I'd say, this is the similar vein where projects that are capital invested, they're stuck; where getting maybe economic terms agreed upon isn't that hard. But actually, getting, call it, conditions satisfying, that's the part that could be a month or can be 6 months. So it's really hard to comment on that. But I can say that there's a fair amount of balls in the air, and I think something's absolutely going to land. I just don't know exactly when, call it, the announcement would be.

[Operator]

[Operator Instructions] And our next question comes from [ Tom James ], private investor.

[Unknown Shareholder]

Well, just more of a comment than a question. I've been an investor in Polaris for some time, off and on, and I know we have these maintenance issues that come up that are scheduled and required. I'm just wondering, wouldn't it be more prudent just to accrue for some of the scheduled maintenance so that you don't have the bumpy quarters? I just think that would smooth out the quarters a little bit better, and it doesn't do anything about cash or anything. But just a suggestion.

[Marc Murnaghan, CEO & Director]

So okay. It's an interesting thought. I don't think we have thought of that before. I'll pass it over to Anton, CFO. But just so you know, in terms of scheduling them, there is a reasonable amount of, call it, negotiation that goes on back and forth between us and Fuji. So Fuji has to send over technicians. They do maintenance plans all over the world. So just from even a practical perspective, at times, it's very difficult to do it in the exact same period from a practical perspective. But from an accounting perspective, I'll pass it over to Anton.

[Anton Jelic, Chief Financial Officer]

Yes. I would say that it's not really a question of accrual. It's more -- as Marc has indicated, it's a scheduling issue. I mean we do -- our auditors review our results on a quarterly basis and then audited on an annual basis. And we do accrue for our costs relative to what goods or services have been provided in the period.

[Marc Murnaghan, CEO & Director]

I mean just thinking out loud, I think less -- like 1 year, we had to wait until July or August to do it. So does that mean that in the first 2 quarters you would be, in a way, reducing your cash flow and earnings because you're going to be doing it in July or August? I -- that might be tricky from our conversations with the auditors to do that.

[Unknown Shareholder]

An accrual does not affect the cash flow. It's just an accounting accrual that you can put in on a monthly basis. And then you just dip in to the accrual whenever you have the events take place, and it would just smooth out the quarters and just at least some of the bumpiness. I mean accruals are just estimates anyway. They don't have to be an exact item, but they would just continue to grow if the actual maintenance is delayed. So what? This just accrues. It just keeps on accruing because you have something coming up the next year or the next whenever.

[Marc Murnaghan, CEO & Director]

But just to be clear, this is not an expense, right? This is -- we don't deliver as much electricity. So for expenses that we have that we know are lumpy during the year, for some of the G&A stuff, we absolutely accrue because...

[Unknown Shareholder]

You can also accrue for lost revenue. I mean you have a pretty good sense if it's going to take 6 weeks to do that you're going to lose that revenue. You can accrue for that as well. I mean you can...

[Anton Jelic, Chief Financial Officer]

I mean -- and to be fair, we have to book our revenues based on what's the delivery and what's the invoice, so I don't believe that principal [ auditors ] would allow us to accrue for revenues that have not yet been received.

[Marc Murnaghan, CEO & Director]

But we can talk to them. I think we'll talk to them...

[Unknown Shareholder]

Yes. Anyway, it's something to consider. That's all. Just thought I would point that out. The other point I want to do to raise, the shares took quite a drop prior to the release of the quarters. And I was just thinking, it seems as though somebody may have known that you had a significant write-off or that you had a weak quarter coming up. And I just wanted to raise that as an issue and see your comments on that.

[Marc Murnaghan, CEO & Director]

Might disagree on the weak quarter. Nobody cares about not [indiscernible].

[Unknown Shareholder]

No. Well, I agree. All I'm just saying, the headline news was weak, and you had a write-off of $11 million. We all see through that. I mean we knew that development was really a pretty iffy thing. But I'm just saying that there was a very large sell-off of the -- on the stock, and it's just coincidental that we had these announcements. I mean I think it's all very positive.

[Marc Murnaghan, CEO & Director]

Well, listen, obviously, I will tell you that between the Board, myself, Anton and the auditors, nobody had their statements.

[Unknown Shareholder]

Okay. Okay. I -- okay. I think that it's very, very positive. Your construction is proceeding well and that you're going to be starting to generate revenue in the fourth quarter from the hydro projects without any great delays or overruns, I think, is very positive. And having heard that you have other acquisitions in the pipeline are also very positive. So I think this is terrific news. And I picked up another couple of thousand shares just to see this should be a nice bounce back.

[Operator]

Our next question comes from Mathieu Boudreau from Industrial Alliance.

[Mathieu Boudreau]

Just a couple of questions. Can you provide just an update on the transmission line constructions in Peru? Is that now substantially complete? Is that done?

[Marc Murnaghan, CEO & Director]

It's -- I'd say, it's about 85%, 90% complete, the actual construction. The only reason it's not is you can't until you get the rights of way. So when we inherited the project, there was, call it, ballpark 180 rights of way that were needed, and I think we inherited it with 130 maybe, ballpark. And so we tried to currently go in and get all the rights of way, and that takes some time. We got the final 1 only about 6 weeks ago -- not even probably, 4 weeks ago. So there's always a few people that are the hold outs. We've got them all now, but you can't really go and do anything until you got the rights of way. So call it 85% to 90% done now with -- as I mentioned, I don't -- the mounting of the line plus the -- putting up the tower tends to not be a big construction issue. We don't see that as a gating item whatsoever.

[Mathieu Boudreau]

Okay. Appreciate that. Yes, yes. I just thought that you might have had them earlier and you were further along. But no, that's great. It's good to hear. And just one last question. You've highlighted you're continuing to look at M&A opportunities in Peru and elsewhere. And Peru, as you said before, is an active market for potential deals there. But outside of Peru, where would be kind of your -- was your focus or your top market, most interesting opportunities, where would those be geographically?

[Marc Murnaghan, CEO & Director]

I'd say the other ones that we've been -- that we are -- where we have conversations or just at a high level, looking at are -- in addition to Peru would be Panama, Colombia. Colombia, there's very large opportunity set in terms of the number of megawatts that they need to build there. But that would be a bit more earlier and I'd say some interesting ones in Panama. And we like both of those jurisdictions just from a -- again, we think the perceived political risk would -- is much better than Nicaragua. There's also Chile. There's -- which is -- would be, call it, the lowest perceived political risk or the best perception out there. We are looking at some things there, but that's sort of earlier days than the other 2. But -- so we are keeping the focus so that Peru has a better perception from a market's perspective. And our next move, we will keep that sort of principal for sure.

[Mathieu Boudreau]

Got it. And still focused on hydro or depends on the opportunity that presents itself? You'd be open to other technologies outside of geothermal and hydro.

[Marc Murnaghan, CEO & Director]

Yes, absolutely open to others. In fact, we are looking at, call it, most of the renewable mix, although more than 50% would be hydro just because in terms of the sizes and sort of the, call it, issues. Solar is a bit difficult, although we are looking at some solar things. But solar tends to be done by some bigger players now with their -- it's almost more like a financial product, which we're not there yet. So I would kind of -- less likely that, that happens, although we are looking at a couple solar but lower probability for me on that front.

[Operator]

Our next question comes from [ Peter V. Lindon ] from -- also a private investor.

[Unknown Attendee]

Got quite late on the conference call. So my questions might have been answered. In case, just let me know, then I'll listen to the replay. But a quick question about the covenant. You may have or in the release mentioned that there was a small breach or that you were in breach of one of covenants. Can you get some more color on that?

[Marc Murnaghan, CEO & Director]

Oh, yes, that's -- we have a -- as part of our PPA, in Nicaragua, our offtaker, [ Des Tarde de Sur ], has proposed an LC 1 month. And for a period of time, we -- that was not posted, and we were not, call it, in compliance. But we are now in compliance.

[Unknown Attendee]

Okay. But no. And then also, Nicaragua, is there any as well?

[Marc Murnaghan, CEO & Director]

Well, keep going because I think I know where you're going with your question. And then I...

[Unknown Attendee]

Yes. Also in Nicaragua, in terms of I think patriation of cash, is there any problem with that? Or you don't see that?

[Marc Murnaghan, CEO & Director]

No, in fact, our receivables did come down for the quarter, which is good. The cash collections have improved. We didn't mention that, but -- so it's a little bit -- it was not too tricky, but because of the maintenance, again, receivables should have come down a little bit, like about $1 million. But it came down more than that, so -- and that's because our cash collections were accelerated. They improved a fair amount in the quarter actually. So that's -- to us, that's the most important, call it, thing that we look at is the cash collections [indiscernible] in the quarter.

[Unknown Attendee]

And in terms of getting actually the catch up of the country, is there any problem with that? Or that's also still quite normal?

[Marc Murnaghan, CEO & Director]

No. It never has been. I'd say the only thing that had changed since last year was that collections started to get slower. They've improved again, which is great. In terms of getting capital out of the country, it's -- we have always -- the minute money comes in, other than maybe $1 million to $0.5 million for true local operating costs, the money effectively goes to Citibank in New York because we've been retaining debt since 2013 on the project. And so that money has always kind of been transferred "out of the country" into the Citibank account since 2013, and there's been absolutely no changes to that process.

[Unknown Attendee]

Okay. Fair enough.

[Anton Jelic, Chief Financial Officer]

[ This is Anton ]. Virtually, as soon as we receive our payments, we convert to U.S. dollars and then they're transferred.

[Unknown Attendee]

I'm sorry. I did not hear that comment.

[Marc Murnaghan, CEO & Director]

[indiscernible] as soon as the money comes in, it's transferred. Other than what we think we need to keep in the country for, again, operational reasons, which is not a lot, I think $1 million, anything in addition to that gets transferred. It actually technically gets transferred into the operating accounts, which are accounts at Citibank in New York City. And then -- so they will sit there in those accounts for a while until such time as we pay down debt, for instance, and that's basically 4 times a year. And then we do distributions after we pay down the debt effectively similar time but just a week or 2 after we pay down the debt. So the money will sit there in New York City, but it leaves, call it, Nicaragua that day.

[Unknown Attendee]

Okay. That's fair enough. And then few ones on Peru. I got some input from the regulator and Peru website that production went down in June. Is that information correct? Or am reading this wrongly in Canchayllo?

[Marc Murnaghan, CEO & Director]

Yes, yes, we had some unplanned maintenance on the turbine but doesn't affect us that much because it's the dry season. So we actually took advantage of that to do some other planned maintenance.

[Unknown Attendee]

Okay. Fair enough. And that's finished. That is for the moment already. Is that correct?

[Marc Murnaghan, CEO & Director]

Correct.

[Unknown Attendee]

Okay. Fair enough. And then on the CapEx requirements in Peru as well on the 2 projects in construction, it showed an increase of, if I remember correctly, about $4 million of expected CapEx. Is this due to cost overruns? Or is it more strategic that you decide to increase the CapEx there?

[Marc Murnaghan, CEO & Director]

No, it would be considered cost overruns, although I think it's important to note that when we structured the deal with DEG and FMO, we absolutely envisioned cost overruns. So that's why we have this 15% multiple [ extra ] capital we spend, right? And so unfortunately, some of that, about $1 million to $1.5 million, was literally just -- there's the IGV there, which is the 18%. There's just certain things that we're not going to be able to claim that back, so it's not even really a construction cost issue. It's certain things just don't -- we have to pay it, but we can't reclaim it. It was about $1.5 million of that. And the other is really because of the design change. So effectively, that decision was made back in January for the design change, but still it's the prudent thing to do. But -- and maybe we can bring that number in a little bit. We're hoping. We'll try.

[Unknown Attendee]

Okay. Fair enough. Two final ones, quick ones. One on the contracts, I didn't really get the full language on what's mentioned there. You have an option on that in order to redeem in cash. Is that correct? Or I'm more reading that wrong?

[Marc Murnaghan, CEO & Director]

Sorry, you're going to have to repeat that. I didn't understand.

[Unknown Attendee]

Yes. For the converts that you issued in Canadian dollars, it mentions that you have an option to convert. Am I reading that -- or to pay that off in cash, I'm sorry. Is that correct? Or am I reading this wrong? I didn't fully understand the language there.

[Marc Murnaghan, CEO & Director]

No. Yes, that's not for 3 years. So it's a 3-year noncall. So we can't -- it's really -- it's whether you can force conversion or not. So we could -- we -- at maturity, we could pay it off in cash, but what will happen is it depends on where the share price is. But for us to force the debenture holders to convert into equity, we have to wait 3 years, and the share price will need to be 18.75 or higher for a period of -- I can't remember the trading days. It's only 20 or 30 trading days.

[Unknown Attendee]

Okay. Fair enough. And then final one. In terms of acquisitions that you're looking at, would that be in finished projects already? Or would that be in projects that are still under construction, somewhere like what you did in Peru?

[Marc Murnaghan, CEO & Director]

It's both. It's both.

[Operator]

Our last question in the queue comes from Mac Whale from Cormark Securities.

[MacMurray Davidson Whale, Analyst of Institutional Equity Research]

Marc, a quick follow-up on one of the earlier questions. The -- I think actually the disclosure was really good that you provide. Like the quarter was actually a beat. It was a really strong result. I don't think anyone was surprised. Like where the surprise was on the positive just because your maintenance turnaround was better than we sort of thought, so it actually beat my estimates. I'm not sure about the other analysts. But the -- it does kind of -- I guess does bring up the idea of whether the conversion -- whether the stock just really sold off because of the -- with levels getting up towards the conversion price. I wasn't sure whether there was -- what your thoughts on that or whether there was maybe something going on in Nicaragua that we just weren't aware of. Do you have any comments on that?

[Marc Murnaghan, CEO & Director]

No, I don't know the nature of the sellout. I can tell you that there's been nothing happening in Nicaragua that I know of that would cause that. And the only thing I would say is the shares did move up pretty steadily before that. After we did the debenture, they kind of went from, whatever, 12, 12.50 to over 15 pretty quickly. Based on no news out of Nicaragua, and I don't -- didn't get a lot of calls on that. So I don't know, I can only spend so much time trying to understand why I've spoken to a few dealers, and they -- I'm not getting much color on it. So the unfortunate thing is I think we're here in August, and I think it -- there was a reasonable amount of volume, and we just take maybe somebody had stopped buying. And some people put in some sell orders in the middle of the summer, and just we're down a couple of bucks. So it's probably they didn't know -- I don't know anything in Peru, in Nicaragua that would have caused that.

[Operator]

And that concludes the questions in the queue. Turn the call back to the presenters.

[Anton Jelic, Chief Financial Officer]

Yes. Thank you very much, everyone, for participating, and that's it from us.

[Operator]

Thank you very much, ladies and gentlemen. This concludes today's call. You may now disconnect.