Panax Geothermal (ASX: PAX)has near term geothermal projects in Indonesia and is also pioneering conventional geothermal technology in Australia along with projects in India.
Panax Geothermal aims to become first Australian geothermal power producer with placement
After successfully tucking away $7 million from receipt of an Australian Government Grant, leading Australian geothermal developer Panax Geothermal (ASX: PAX) has upped the ante - by launching a capital raising - via a placement to institutional and sophisticated investors and a 1 for 4 accelerated non-renounceable entitlement offer at 13 cents per share.
The offer is designed to raise A$9.3 million. Funds will be used in tandem with the allocated drilling grant to fund the drilling of the Salamander-1 well at the 100% owned Penola Project in South Australia, leading to the establishment of a geothermal reserve, ready for development. A contract rig has been secured and drilling of the well is scheduled for 2nd half of 2009.
The Penola demonstration plant (6.7MWe gross) is targeting to become the first grid connected geothermal power plant in Australia.
Panax's key project (Penola) is located in Limestone Coast Region of South Australia and close to electricity infrastructure. It is one of two Australian companies with a ‘Measured Resource’ (AGEA code) of 11,000 PJ, sufficient for 100’s of MW’s of power generation. Independently reviewed pre-feasibility study shows Penola Project could generate low cost power (total cost of A$63/MWh)
Panax’s Managing Director, Dr Bertus de Graaf said that after the capital raising Panax will have approximately $22 million in available cash, including the recently signed A$7 million GDP grant from the Federal Government.
The funds will "enable Panax to complete the Salamander-1 production well and to undertake reservoir testing with the aim of establishing a geothermal reserve in Q1 CY2010. The capital raising will put Panax in a strong position to become the first grid-connected geothermal power plant in Australia."
The Penola Project represents a commercially attractive development proposition on pre-feasibility study parameters. As the project advances, further meat will be able to be put on this bone. “Measured Geothermal Resource” is 11,000 petajoules (PJs), based on a significant database of existing petroleum wells which have intersected the productive reservoir and 3D seismic data. The pre-feasibility study indicated 1,000 PJs is sufficient to power a 100 MW power station for 30 years.
The strategy is for Salamander-1 to be the first well to demonstrate conventional geothermal energy in Australia. A drilling slot is secured for September 2009 and well design is completed.
Additional milestones:
- Negotiations with joint venture parties – H2 CY2009;
- Complete Salamander-1 well – Q1 CY2010;
- Complete flow test (conducted by SKM) – Q1 CY2010;
- Book geothermal reserve – Q1 CY2010.
- Grid connected Demonstration Plant – 2nd half 2011;
- Opportunity to accelerate commercialisation from smaller “off-the-shelf” modular plant.
With Panax CEO Bertus de Graf, incidentally a founder of Geodynamics Ltd (ASX: GDY), the force behind Panax, you would not want to take too many bets on the milestones not being achieved.
