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Australian Earth Heat Resources considers secondary listing on TSX

Australian Earth Heat Resources considers secondary listing on TSX Earth Heat Resources website snapshot
Alexander Richter 6 Dec 2010

Australian Earth Heat Resources trusts the quality of its projects to enable the company to consider various JV and finance options, and considers a secondary listing on the Toronto Stock Exchange.

In a news piece from Australia, the company reports that “the calibre of the projects belonging to Earth Heat Resources (ASX: EHR) is enabling the company to consider a variety of joint venture and finance options of up to A$70 million (US$69m), for the delivery of key project milestones such as a bankable feasibility study.

The company is considering a secondary listing, such as on the TSX, where there is a greater depth of investor more aligned with its future activities.

Earth Heat now has the potential to establish 180 MW of potential geothermal power via relatively lower risk development projects.

The company currently has a JV agreement for the 150MW Fiale field in Djibouti, East Africa, with 6 wells already drilled and a 2 year old feasibility study in progress with temperatures of 350c at 2000 metres reached.

The company also has a heads of agreement to farmin to the Copahue Project in Argentina and funding is under discussion. The project has a had a full feasibility study, 4 deep wells drilled and has achieved shallow, very high temperatures of 235c at 600 metres.

Transmission lines are within 30 metres of the old pilot plant and has attractive guaranteed offtake pricing.

The company aims to harness geothermal power particularly in emerging economies where it does not have to compete with existing and established infrastructure and pre-existing market share.

Earth Heat has been discussing with potential cornerstone investors various financing models. A number of agreements have been signed with various parties both in Europe and North America, however, at this stage the company has not yet proceeded with any specific third party financing arrangements.

Earth Heat has been actively engaging with various financing groups to assist in progressing key projects in Djibouti and Argentina.

Review of the geothermal sector clearly shows that financing, on the scale of developments contemplated by the company is not readily available in Australia at this time.

In contrast investor appetite for this particular style of investment is much stronger particularly in North America and Europe, as evidenced by recent capital raisings by Magma Energy (TSE: MXY) and Ram Power (TSE: RPG) on the TSX.

Torey Marshall, managing director, said “our high quality projects yield a number of options for the future financing of the company, however the level of interest for financing geothermal power projects is much higher outside Australia.”

Potential cornerstone investors have approached the company and these include both finance organisations in addition to other groups such as engineering firms.”

Source: Proactive Investors