Kentor Gold (ASX: KGL) will look to dial in to the geothermal energy sector in the Solomon Islands, after being granted a three year prospecting license by the Government.
The license is centres on the island of Savo, which is a dormant volcano with vigorous geothermal activity - which is around 35 kilometres from Honiara.
The deal was struck with a subsidiary of Kentor Gold known as Kentor Energy, which the company plans to divest into a separate self-funded entity in the future.
Simon Milroy, managing director, commented on the strategic decision:
"The Solomon Islands desperately needs cheaper and more reliable power and the country's development partners and international development banks are very keen to see significant infrastructure investments like this.
"The Solomon Islands Government and the people of Savo are providing great encouragement for the project."
Kentor Energy plans to study the feasibility of constructing on Savo a geothermal power plant which will potentially supply the entire Honiara grid and provide future extensions to other demand centres on Guadalcanal.
A legally-binding Surface Access Agreement has already been signed with customary landowners on Savo and initial fieldwork during 2012 will involve geothermal mapping and a 3D geophysics survey which will focus on identifying an Inferred Geothermal Resource under the Australian Geothermal Reporting Code.
If successful this will be followed by exploration drilling and estimation of an Indicated Geothermal Resource.