KUTh Energy (ASX: KEN) has been awarded a production licence from the Vanuatu Government to carry out geothermal development on the main island of Efate.
The company will now move on to carry out deep drilling and resources assessment, which will require the completion of agreements with key stakeholders including the landowners and state utility UNELCO.
KUTh will be required to finalise terms with landowners once the resource has been delineated and the exact location of production drilling and power plant construction are identified.
In the interim, the company will agree terms with landowners for exploration drilling with options for long term lease if successful.
It is also negotiating the final terms of the power purchase agreement with UNELCO. This is expected to be finalised during the current quarter.
This will allow KUTh to start a program of exploration and development that will lead to the commencement of construction of an 8 megawatt geothermal power plant within 36 months of the signing of the PPA.
UNELCO has also started extending the transmission infrastructure along the coastal ring road which will bring the transmission lines within about 10 kilometres of the proposed geothermal plant at Takara.
Once resource confirmation is complete the arrangements for connecting up Takara will be initiated.
KUTh has three resource targets within the licence area but will initially concentrate on the Takara resource area.
The 30 year production licence establishes a minimum tariff for geothermal power of 23.9 vatu (A$0.25) per kilowatt hour and the rights to earn carbon credits.
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