Ladies and gentlemen, thank you for standing by, and welcome to the Polaris Infrastructure Inc. Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Anton Jelic. Thank you, sir. You may begin. Thanks, April. Good morning, everyone, and welcome to the 2021 second quarter earnings call for Polaris Infrastructure. In addition to the press releases issued earlier today, you can find our financial statements on MD&A on both SEDAR, and shortly on our corporate website at polarisinfrastructure.com. Unless noted otherwise, all amounts referred to are denominated in US dollars. I'd also 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 Infrastructure and 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 our company's annual information form for the year ended December 30th, 2020. I'm also joined this morning, as always, by Marc Murnaghan, Chief Executive Officer of Polaris. At this time, I'll walk you through our financial highlights. Power generation. Consolidated power generation for six months ending June 30th, 2021 and 2020 were 331,659 MWh and 347,949 MW h respectively. These production figures are net of all plant downtime, both planned and unplanned. With respect to Nicaragua, we saw total megawatt hours of 111,848 in the second quarter of 2021 versus 129,678 in the same period last year. In Peru, total megawatt hours in the second quarter of 2021 was 38,828 versus 35,863 in the same three-month period in 2020. Revenue. The company generated $12 million in revenue from energy sales for the three months ending June 30th, 2021, lower compared to the same period in 2020. Net earnings. Net earnings attributable to owners was $0.2 million for the three months ending June 30, 2021, compared to a $1 million loss for the same period in 2020. Net earnings increased due to other gains recorded during the period, compared to other loss in 2020, partly offset by lower revenue. Adjusted EBITDA. Adjusted EBITDA was $10 million for the three months ending June 30, 2021, compared to adjusted EBITDA of $15.1 million in the same period in 2020. Cash generation. Net cash from operating activities for the six months ending June 30 of $24.2 million, increased by $5.7 million from the same period last year, mainly due a favorable change in non-cash working capital due to the improved accounts receivable collection during the period and lower interest paid, partly offset by lower revenue and higher costs compared to the same period in 2020. Net cash used in investing activities for the six months ending June 30 was $1.5 million compared to $2.5 million in the same period in 2020, largely due to the decrease in spending related to the construction of the Generación Andina facilities El Carmen y Ocho de Agosto. Net cash from financing activities for the six months ending June 30, 2021, of $22 million compared to $0.3 million net cash financing activities last year. The increase was driven by higher net proceeds related to the common share offering during the six months ending June 30, compared to lower net proceeds of debt issuance in the comparative period. Dividend. Finally, I would like to highlight once again that we do intend to pay our 22nd consecutive quarterly dividend on August 29 of $0.15 per share to shareholders of record on August 16. This continues the board and management's commitment to regular positive distributions to shareholders, coupled with an ongoing emphasis on attractively valued accretive acquisitions. With that, I will turn the call over to Marc, who will elaborate on current business matters and corporate end results. Thank you. Thanks, Anton. I'll jump in to just start with a couple of the things that affected the results and then get into sort of the go-forward things. We did maintenance at San Jacinto, which was expected. That ended up being around $1 million sort of reduction in sort of revenues and EBITDA, which was expected. The comment I would make, though, is given COVID, last year, we had to do it in August. There's nothing we could do to get around that. The quarter-over-quarter comparisons can be a little bit tricky. Going forward, we will aim to continue to do the maintenance in the same quarter every year just so that the expectations are clear on that, but there was little we could do. That has about a $1 million impact on the EBITDA line planned. We did have an unplanned downtime at Ocho de Agosto in Peru, which net cost about $500,000 in the quarter. The issue has been rectified, and we don't expect that to continue in the future, but that did have about a $500,000 impact there. We also had about a $500,000 impact on the G&A line, actually, at the corporate level. About just under $400,000 of that is temporary, timing/one-time issues that we don't expect to continue. About $100,000 is, call it, a more longer-term increase on a quarterly basis in the G&A as we have ramped up initiatives to look at other assets and acquisitions, which does require, call it, certain technical, legal, and accounting expenses that we do expense on an operating basis as opposed to capitalizing those to a potential future deal. That's the reason for the, call it, the reduction on the EBITDA line relative to prior quarters. In terms of the overall comment about production, it's hard to see, but in Nicaragua at the plant, both before and after the maintenance, we were running at about 55 net, which has been quite stable. We've been at, I would say, since end of January or February, we've been running around 55 net since then. We ran about 55 net before the maintenance. We were running 55 net after the maintenance, since the maintenance to now. I would suggest that the field is stabilizing without any more drilling. It's been that way for, call it, six months here. That's what we're seeing on the production levels at San Jacinto. Really, it has confirmed what we've been doing a lot of extra work on the numerical model, that barring any further drilling, it looks like the field has settled into equilibrium here around this level, and we can expect some small declines from here, but small. In Peru, the comment I would make is, I did comment on the unplanned downtime at Ocho de Agosto. The other plants were fine. El Carmen ran fine. Canchayllo ran fine. I would say El Carmen, the hydrology was probably a little bit better. Despite the unplanned downtime at Ocho de Agosto, we do know that the hydrology was better. To give you an example, in 2020, in Q2, Ocho de Agosto did 27,300 MWh. This quarter, it did 21,400, but we estimate that the downtime cost us over 9,000 MWh. We would've been north of 30,000 MWh relative to 27,000 last year, which is about 10%-12% increase. That confirms that last year was somewhat of a drier year that we started in, and that when we run our numbers now based on our projection of, call it, 115,000 to 120,000- 125,000 seems reasonable, provided that we have much higher availability, which we do expect going forward. The other comment would be, we would expect that pricing this year is lower, which we did expect because of Ocho de Agosto is running below the committed energy. Starting in January of next year, we will be able to reduce the committed energy to a level that we think is achievable. We had always expected that we would have to do that. The actual, call it, with the pricing penalties that we're at this year, it makes it, we're just going to be generating lower this year, but we expect that that can get back to "normal" with prices moving from the low $40s to the mid-$50s starting next year. I would also just say that we did, after the quarter, receive $1 million in the insurance proceeds, which does not end up call it, going into the revenue and EBITDA line, although we had those expenses expensed, for the reparations were expensed in the EBITDA line. Then the cash has come in now. In terms of, call it, the go forward, we made the announcement on the binary unit last night. When we initially started out, it was looking sort of, we had initially thought sort of 7 to 8 MW in our contract. We are allowed to do up to 10. Based on the numerical modeling process that we did with Jacobs, we looked at many scenarios, and the 10 MW seems very safe to do because we have an ability with our certain injection wells that have no connection to the production field that we can go to the higher number, and safely without impacting reservoir temperature. So that's very good news. That there's a big difference between, it's almost $1 million in revenue per megawatt, so about $900,000 in revenue per megawatt. So that adds, call it, another $2.5 million in revenue. Yet, realistically, our budget for the whole project is $25 million. So to move from seven megawatts, we had a budget of $20 million, but to get to 10 with $25 million, obviously you can see that the economies of scale really work in your favor for that. We were very happy to sign that, and with a company like Ormat, who is the world leader in providing this type of equipment, we look forward to working with them. Based on this, we're moving forward and a commissioning date, call it in late Q4 2022, with full commercial operation commencing Q1 2023. That ties into, call it the other initiative at San Jacinto, which is the refi. We have narrowed it down and have signed an engagement letter with, call it a lead arranger in the region. They're an arranger, but also will provide capital on the loan. That we are now in the process of talking to both existing and potential new lenders about a restructuring of the current loan. I'd call it technically a refinancing, I guess. We're looking to do the same amount of money, same amount of capital, which is around $100 million-$110 million total. With a big change in the amortization schedule, which was part of the plan after redoing the PPA in December last year, with something that has an amortization period that ties much better to the length of the contract. Right now, it's aiming down quite rapidly. What that would do for us is really free up a lot of cash in the next three or four years. That is set in motion, and we should have clarity on that by Q4 this year. The binary unit does tie into that somewhat in the sense that once we've signed the contract and we're moving forward, the numbers already look quite good. With the binary unit, it's not like drilling, it's a pretty bankable revenue stream coming in. That should help it. They do dovetail. Those are the two big things that we're working on in Nicaragua. When it comes to the growth, the other growth with Chuspa in Panama, we are in the last stages of choosing a contractor. We had to get revised budgets based on the fact that we're ready to go. Given that there has been inflation in the world, you need to go back to people and get them to go back and quote their suppliers, et cetera. We had to go through that process. We're in the very last stages of that. I would suggest that given that a lot of the materials had already been on purchase, including turbines and some of the piping for the conduction channel, we have not seen a very large change on that front. That's good. We would expect to be moving forward with signing the, call it, share purchase agreement in the next 60, 90 days and mobilizing thereafter. That would be a project that would come on, call it early 2023. I would just reiterate the small carbon credit sale that we did, which is only, call it $400,000 of revenue. That will likely close Q4 this year. We continue to see, I would suggest, interest in carbon credits at both our San Jacinto facility, but also we are still in the process of certifying both Ocho de Agosto and El Carmen, which we expect to have ready early next year. At which stage all of our facilities will have carbon credits. We could for sure sell more, and we think we could sell more of our vintages. So we are looking at doing that. Although we do think that there'll be a lot more clarity in November when countries meet and discuss their commitments. Hopefully, that's a positive result. Given what we're seeing in terms of interest levels, we seem to be seeing more interest level in what we have, not necessarily increases in prices yet from what we've done, but we're hoping that sort of more pricing pressure coming in the next six months. We're going to assess that, and I'd say there's a chance we do maybe some more small vintages before the end of the year. We'll at least look into that with a hope towards there being more. For sure, we'll have more product to offer and hopefully some momentum on the pricing side next year. Then in terms of acquisitions, the pipeline continues to fill. I would say we really are looking at two or three that we're narrowing down to trying to get done here. That part is moving a bit slower than we wanted, but we are still confident that we're going to get something done here before the end of the year. The profile of what we're looking at, given that both the binary unit and Chuspa are development projects, call it. We are looking at acquisitions that would be in operation, that have cash flow, revenue, and EBITDA, that would, call it, hit immediately. We are looking at opportunities that have that combination of current revenue cash flow, but also some growth and expansion that comes with it. We really aren't looking at ones that are only development stage. We are looking at assets that have current production. The benefit of that, obviously, to the extent we get something done here, is that while we're waiting for the binary unit in Chuspa to come online, we can have some other revenue and EBITDA come online in between that. That is the, call it, the profile of the things we're looking at, and we're working hard to get something done this year. With that, I'll turn it over to the operator to open up for questions. As a reminder, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your first question is from David Quezada with Raymond James. Yes. Thanks. Good morning, guys. Hey. Morning. My first question, just on the binary unit budget at $25 million. Is that below what you had been expecting? Maybe just any comments now that things have been firmed up a little bit more, what kind of return expectations you're looking at there? Yeah. I would suggest, given that size, I think we would've expected the budget to be a little bit more, partly because there had been, in terms of steel and some materials, there has been inflation, call it the COVID inflation. I think it was just offset by a competitive environment. This is in a part of the world, I think, where equipment suppliers are looking to get some good reference sites. Okay, great. We're very happy with that. The more important one is the increase in size. If we hit that size, which there's no reason to think we won't, you're looking at, call it, $8.5 million-$9 million of free cash on a $25 million investment. You can do those numbers, but it's less than a three-year payback. Yeah. No, that's great. I certainly agree with that. A follow-up question, just on Nicaragua, I guess, more broadly. I know that the election is coming up later this year. Do you think your view on potentially drilling in Nicaragua will change, or could it change post-election, assuming everything goes peacefully there? Just thoughts on whether or not you even need to, just given your comments around the stabilization of the field and the fact that the binary unit is coming online. I think with the binary unit coming online and being bigger than what we were originally thinking, that doesn't rule out drilling, but I think it pushes it further away into, and I'm talking like maybe that's a 2025 event, 2026. I wouldn't say never, but I think it just pushes it out. What we would consider is the western field, which is effectively untapped. Geothermal is starting to see interest from a lot of new players, and we at one point had a grant for almost $1 million to do surface studies over there. We are looking at potentially partnering to drill there, as opposed to, because I do think the current field has found its level, and we would just be pushing the envelope too much on the drilling side. The binary unit's fine and it's a great add. We will look at doing something on the western side. If we can find, call it very cheap or free capital to go do something there, I could see us doing that in the next two or three years, because then that would be additive steam, for sure. That's something we'll look at. It's early days. I think given the level of interest that's kind of emerging in the sector, yes, we'll look at that. Okay. Awesome. Thanks for that, Marc. Then maybe just one last one. I appreciate that these are probably, for the most part, longer-term opportunities. Just wondering if there's any update or if you're still looking at any of the development projects you had in Peru, at the time of the Andina acquisition. I would say short-term, no. Medium-term, yes. I would define medium as two to three years. Okay, great. Thank you for that, Marc. I'll get back in queue. Just on that, David, I would say that we still have two or three live, call it, acquisition files in Peru. That to me is more what we're looking at in the short term. I think the market, they will start to do more calls for power, but it's just a question as to whether it's 18 months or to 36 months. I think that's the range that they will do tenders, and that's, I think, when we'll get back to the pipeline. Okay, perfect. Thank you for that, Marc. Your next question is from Naji Baydoun with iA Capital Markets. Good morning. Hey, Naji. Maybe just starting on Chuspa. Can you maybe quantify the move in the budgets? I think it was about $20 million at the time that you announced the intention to acquire and develop that project. Is that still sort of the right number? We're running $22.5 now. Okay. The updated budgets, you're getting just a bit closer to 2022, 2023. Okay. Yes. Just a comment on M&A and looking more at, I guess, on operating assets to try to balance the development projects. What's really the trade-off, in your view today, I guess, in valuation of doing an operating asset, just based on what you're seeing in the pipeline? Yeah. It's not operating versus, let's say, Chuspa. It's going to be a low return. We do think, though, that we think we're in the low to mid-teens on Chuspa, for instance, in terms of IRR. What we're trying to do is put together a portfolio, though. If you think of the binary unit, which is north of 30%, Chuspa at, call it, low to mid-teens, and then buying an operating asset, if it's a good asset and it has expansion, you're going to be anywhere from 7%-9%. Right? In this environment, and quite frankly, we've seen transactions happening even lower than that.. With the portfolio of opportunities we're looking at, we think we can land in that range that I quoted, and that we look at it on a bit of a portfolio basis, that if we get some operating at that, we develop, let's say it's 7%-9%, we develop Chuspa at 11%-14%, and we do the binary unit at 30%, that actually is a good blend for everybody. We need all of it. That's how we're seeing it. That is, I think, the delta in the return profiles. What I would say is it is somewhat country dependent. In other words, a big part of the strategy is that given the perceived political risk in Nicaragua, we are looking at jurisdictions where the view is we have to go to jurisdictions that have a lower perceived political risk, hence the seven to nine, right? There would be some jurisdictions. For instance, we could find more assets in Nicaragua operating at higher return thresholds than that, for sure. We don't think that's the right thing to do. If you're going to start to high-grade the jurisdictions, that has to come with lower return expectations. Right. That's the trade-off that you accept, but it makes sense. Okay. That's really cool. Just last question on the carbon credits. Once that certification is done, just wondering what's your view on sort of the strategy there? Would you rather just sell some credits opportunistically, I guess, on a one-off basis? Or is there an opportunity to maybe lock in maybe a lower price, but lock in sort of a recurring selling stream with a particular buyer or several buyers potentially? Well, you've hit the nail on the head in terms of what we're considering. Those are sort of your options. My guess is until November comes around, it would be more the former, i.e., sell just a small amount of vintages if we get a little bit more movement on the price. The vintages, this is policy driven, right? Vintages, to me, it's a bit more of a coin toss as to what's going to happen. I'm more of a believer that in the go forward, there's going to be strong demand. I'm talking voluntary credits here, which is what we have. Vintages, it could be that way. It could also be, well, it's voluntary. There's a little bit more risk, I think, in terms of where pricing goes on voluntary, but there are people out there that think there could be good upward pressure on prices for the historical vintages. We are kind of talking to some of those groups. My guess is it's more we may do something on some vintages this year. Wait on the go forward. There are groups out there that would look at potentially setting kind of a floor price and then maybe you share some upside. Given our cash position, though, I'm not in a rush on that. Of course. Okay. No, that's great. Oh, sorry. Go ahead. No, I think that's it. All right. Thanks. Okay. Thanks. Congrats on signing the contract for the binary unit. Your next question is from Ahmad Shaath with Beacon National Securities. Hi, Marc. Hi. My question is on the refinancing discussion. I remember you mentioned before on previous calls that there was potentially room to do something on a portfolio basis. Is that still the case? If that's so, would that tie into the assets you're looking to acquire being in production? Just trying maybe to get a sense of the potential size of these acquisitions for the assets in production. The thinking at this point is, while that's still a possibility, we think the better path is get something done this year on a restructuring of just the existing amount, San Jacinto, get Chuspa going, get an acquisition done. For that, we raised the capital February, which was just under $40 USD. It was 50,000, call it net, just say $40 USD, so we had sort of $40 USD for, call it, the equity of an acquisition. We want to get something like that done so that the combination, though, of an acquisition plus Chuspa, plus an even better San Jacinto once the binary unit comes online, pushed us to, let's just get restructuring done at San Jacinto this year, look to do a broader corporate level thing once those pieces are all in place. One step first, and then what I would hope would be a bigger, potentially even equity raising corporate debt offering would come after we have more diversification. Sounds good. Thank you. That's all I have. I'll turn it back over to you. Okay. Thanks. There are no further questions at this time. Again, if you would like to ask a question, please press star, then the number one. There are no questions at this time. Okay. Thank you, everyone. Ladies and gentlemen, thank you for joining today's conference call. This concludes the conference. You may now disconnect.