Earth Heat Resources (ASX: EHR) continues to advance operations at speed in Argentina, and is positioned to be the first ASX listed geothermal company to complete a Bankable Feasibility Study and order long lead items for a commercial geothermal power project.
In an update to the market, Earth Heat has outlined the company's progress at the Copahue Project in Argentina, with the completion of a number of highly significant project milestones recently.
Copahue has now been advanced to a much more mature stage than most peer projects, due to its existing database of information, proximity to infrastructure and power demand metrics.
Torey Marshall, managing director, added “The company has been extremely active in taking its investments to the next level in Argentina.
"We are satisfying the criteria of project financiers, receiving enormous interest for power off take, and receiving strong support from the Provincial Government in what is a fantastic administrative jurisdiction.
“At this stage, we are well positioned to be the first ASX listed geothermal company to complete a Bankable Feasibility Study and order long lead items for a commercial (not pilot) geothermal power project.”
Major milestones in Argentina
- Completion of a resource review at Copahue, which resulted in a significant upgrade of around 150%, demonstrating not only the enormous potential of projects within Argentina, but the extremely high quality of the resource itself.
- Completion of a Stage 1 Environmental Impact Assessment (NYSEMKT:EIA) at Copahue suggests no major issues are likely to be encountered, and as is common worldwide, serves as a masthead for the future environmental compliance of proposed development activities.
This study will be further augmented by a second stage to be completed during the Bankable Feasibility Study
- Negotiated a Letter of Intent and Heads of Agreement to enter into a binding Power Purchase Agreement (NYSEARCA:PPA), with a very well respected industrial group, Loma Negra, within Argentina.
- The establishment of a fully operational team in country, giving full capacity to undertake this exciting project within Argentina.
- Execution of several CSR policies, particularly in communication activities within communities close to the project’s site, providing local inhabitants, school teachers, media, provincial and municipal authorities and local key players with full educational access to the project’s planned development.
Most importantly for Earth Heat's operations in Argentina, the company has received extremely strong support from all the branches of the Provincial Government in Neuquen, in addition to support from the Argentinean Federal Government and the Australian and Canadian Embassies.
As example of this support, despite delays Earth Heat and the Provincial Government have agreed to the framework of the concession contract and now look forward to formal execution in November of this year.
Operations progressing on several fronts
Djibouti - resource review due February 2012
Earth Heat has operations in several African countries as well, and continues to explore value-adding options for taking its Fiale Geothermal Project (Fiale) forward, which is located in Djibouti.
The company is already eyeing one or more potential joint venture partners, with commercial negotiations to continue and no particular outcome is certain.
Marshall added, “The company has really taken some major steps in undertaking this large project by introducing potential Joint Venture partners and we work diligently to bring such discussions to a conclusion.
"A formal review of the Fiale Geothermal resource is to be completed by February 2012 and we look forward to announcing a maiden resource statement for the project to demonstrate to our shareholders why the company has made such a significant commitment to the area."
Kenya - initial project to be announced
The company has previously signalled an intention to grow its business in the most strategically important “Geothermal Country” in East Africa.
This commitment has extended to the lodgement of an exploration licence application over a specific area where Earth Heat sees enhanced development potential.
Whilst the outcome of this process remains uncertain, but the Company remains confident that it will be able to establish a cornerstone project in Kenya in the short to medium term.
Marshall commented on operation in the country, saying, “Kenya represents the final pillar supporting the future of Earth Heat and rounds out its risk management in terms of sovereign and project risks.
"The company has been engaged in a number of fantastic conversations with significant and strategic Joint Venture partners and looks forward to announcing its initial project entry into such a prospective country."
South Australia - full update after approvals
Earth Heat has been actively progressing the rationalising of its existing Geothermal Exploration Licence (‘GEL’) portfolio with Primary Industries and Resources of South Australia.
This will result in the relinquishment of certain tenements and the consolidation of the number of GELs attributable to the company.
It is anticipated that a full update will be made to the market once all formal approvals have been received and the Company anticipates that the overall consolidation process will not be completed until December of this year.