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Panax Geothermal acquires 45% in Sokoria project, Indonesia

Panax Geothermal acquires 45% in Sokoria project, Indonesia Field location, Sokoria project, Flores, Indonesia (source: Panax Geothermal)
Alexander Richter 22 Oct 2010

Australian geothermal developing company Panax Geothermal announces the acquisition of 45% in the Sokoria Project in Flores, Indonesia, with a general overall potential of more than 100MW, the initial concession awarded allows for power generation of 30MW.

Panax Geothermal Ltd (“Panax”) is pleased to announce that it has acquired 45% of the Sokoria Project, in Flores, Indonesia. This outcome was achieved following the execution of a “Share Sale and Purchase Agreement” between Panax and PT Bakrie Power (“Bakrie Power”), with Panax now owning 45% equity in PT Sokoria Geothermal Indonesia (“SGI”).
Following the successful tender in September, 2009, SGI was formed by Bakrie Power as a special purpose vehicle to develop the Sokoria Project.

Sokoria is a near term geothermal development project, with the target reservoir at approximately 2,000m depth. Indications are that the overall potential is >100 MW generating capacity, while SGI has already been awarded the concessions to generate power for the first 30 MW.

The Transaction: Following the transaction, SGI’s ownership is now: Bakrie Power, 53%PT Energy Management Indonesia (Persero*) – EMI, 2%Panax 45%

Panax acquired its equity interest in SGI as part of two binding terms sheets regardinggeothermal developments in Indonesia. The equity Panax acquired in SGI is balanced bythe equity rights Bakrie Power acquired in Panax’s Dairi Prima Geothermal Project (see ASX announcement 16 August, 2010).

As part of the transaction, Panax committed to reimburse Bakrie Power 45% of its SGI expenditure to date, or approximately US$100,000, and by also committing to cover 100% of the cost of a future Feasibility Study. As part of the share purchase agreement, the parties also executed a “Shareholders Agreement” which contains the terms and conditions of the Sokoria Project incorporated Joint Venture. Key terms of importance to Panax’s shareholders are: Each of Panax and Bakrie Power have two voting Directors on the Sokoria Project Board, whilst EMI has one non-voting Director; Panax is the “Operator” of the project until the completion of Feasibility Study and the associated development decision.

The advanced Sokoria Project:

  • Is well known from previous work (1974 onwards), including three wells;
  • Is associated with geothermal temperatures estimated at >230°C at depths of
  • 1,500m to 2,000m, i.e. low cost drilling;
  • Has “possible reserves” of 90 MW (see below);
  • SGI has won the concession tender with an offering power tariff of approx.
  • US$12.5c/kWh (US$125/MWh) for the first 30 MW generating capacity;
  • Is strongly supported by the local government as well as by the local community;
  • Is located within 16km of Ende (as the crow flies), the capital of Flores (including
  • harbor and airport) and can be reached by car;
  • Designed to replace local grid power currently supplied by diesel generation.

This advanced geothermal project has an extensive data base, including three exploration wells as well as an extensive magneto-telluric survey (MT) covering the target area, as well as hot spring geochemistry.

Work carried out by the Indonesian Government and detailed surveys sponsored by the Japanese (JICA) government have led to the following geothermal resource/reserve estimates: 145MW classified as resource potential and 25MW possible reserves (Indonesian Government estimates), and 90MW exploitable resource potential (Japan International Cooperation Agency estimates).

Forward Programme: Panax will immediately commence with a data review (MT & Geochemistry) in preparation for well site selection. Supplementary surveys (if required) will be carried out in the first quarter of the 2011 calendar year, followed by well site preparation and drilling in the next financial year. Panax can fund all its share of the expenses for this financial year from current sources.”

Source: Panax Geothermal release via e-mail