KUTh Energy enters MOU on securing exploration licenses in Papua New Guinea
Restorff Island, Kimbe, New West Britain, Papua New Guinea (source: flickr/ maholyoak, creative commons)
Alexander Richter
23 Jan 2012
Papua New Guinea subsidiary of Australian geothermal development company KUTh Energy signs MOU on securing exploration licenses in Papua New Guinea with KULA Energy.
In a series of releases to the Australian Stock Exchange, Australian KUTh Energy also announced that its subsidiary KUTh Energy (PNG) Ltd “has entered into a Memorandum of Understanding (MOU) with KULA Energy to cooperate in securing the KPNG Papua New Guinea (KPNG) geothermal exploration licenses.
The company had lodged geothermal exploration licenses applications over three locations in Papua New Guinea, but was advised by the Mining Advisory Coouncil in 2009 that the applications could not be processed until such time as the PNG government set up a regulatory framework for the exploration and development of geothermal energy. KPNG has its applications in current status pending the set-up of the proposed regulatory framework.
In the key terms of the MOU KUTh Energy PNG and KULA Energy, the companies agreed in an equity investment by KULA to accelerate securing exploration licenses over the application areas lodged by KPNG, KULA will have an initial period of 12 months ending December 31, 2012 to secure one or more of the KPNG exploration license applications (one of which must be Talasea application area) and in return will earn a 49.8% share in KPNG if this condition is met. If KULA does not meet the conditions of securing the licenses noted, it may seek an extension of the time or alternatively may exercise an option to buy all KUTh shares held in KPNG for $502,000.
KULA consists of principals Julian Malnic and John Bishop and has also engaged other management staff to assist in the on-ground licence pursuit. Julian Malnic is no stranger to PNG and the mining sector. He is the founding shareholder of Nautilus Minerals Inc. and Executive Chairman of Direct Nickel, both companies having activities in PNG. He has a long family connection to PNG and his passion to make a real impact on the renewable power sector is a key factor in KPNG considering cooperation with KULA.
John Bishop also has extensive experience in the mining sector and, as one of the founding shareholders of KUTh, continues to have a passion and drive for the development of geothermal around the world. As a director of KUTh, John has not participated in any board decisions concerning the MOU or in the negotiation of the final MOU terms.
The board of KUTh has been evaluating projects and building a pipeline of opportunities. KUTh management sees the need to dedicate resources to the more advanced projects to ensure the best chance of success. The resource potential in PNG is attractive but considerable work will need to be performed to secure the regulatory, landowner, political and market support. The board considers that at this point in the company’s development, capital funding and human resource allocation is a key priority and the expansion of the project portfolio will be better served by alignment and association with collaborators that bring expertise and support funding to move potential projects to the next stage.
Commenting on the signing of the MOU, managing director David McDonald said, “I am pleased that we have been able to reach this agreement with KULA and I know that they are already actively running with this. We recognise the resource potential in PNG and we are keen to see this project moved to the next stage. We are equally aware that the progress now being made in Vanuatu and a number of other target areas means that we
have to focus our limited capital and resources. This style of cooperation has the effect of extending our reach through collaboration. We will support the KULA team in their pursuit of these licences but the on ground driving will need to come from them”
Source: Company release (pdf)
