Earth Heat Resources reports extension of funding agreement with IDB

Earth Heat Resources reports extension of funding agreement with IDB Cordillera, Cerca de Copahue, Argentina (source: flickr/ patricia_sgrignuoli, creative commons)
Alexander Richter 30 May 2012

Earth Heat Resources announces extension of its financing agreement with Inter American Development Bank for its Copahue geothermal power project in Argentina.

In a release last week, Australian Earth Heat Resources Limited provided the following update for its shareholders and stakeholders on its ability to fund its flagship geothermal project in Argentina. As
announced to market on the 25-11-2011, the Company has executed an agreement with the Inter American Development Bank (‘IDB’), which covers an extension of facilities to fund an enlarged project.

As detailed in recent Company announcements, Earth Heat has remained focused on the requirements of project financiers in order to advance our core projects and transform fully into a utilities company receiving cashflow from electricity sales.

The highlights of the agreement include that IDB to directly invest up to $75 million, IDB to arrange the syndication of $135 million for the balance of total senior debt of $210 million, and the mandate for the raising of funds successfully executed between both Earth Heat Resources and the Inter American Development Bank (IDB).

This event is extremely significant, as it will enable the final parts of the funding and feasibility processes to be undertaken with clear parameters, and address certainty for key power purchase partners. Closing the initial phase of the financing in line with previously announced plans, will be subject to the completion of a Bankable Feasibility Study and the meeting of all the requirements and covenants of the senior lenders.

The project would be consistent with the IDB Integrated Strategy for Climate Change Adaption and Mitigation, and Sustainable and Renewable Energy, which aims at increasing the Bank’s sustainable energy portfolio of 25% by the end of 2015. As such, by having a large exposure to the region, Earth Heat is looking forward to building the relationship with the IDB through this initial investment, which will hopefully expand in time.

Earth Heat Managing Director Torey Marshall commented, “To date our continuous progress in a sector somewhat bereft of positivity more recently has been very solid. As a utilities company we need to provide our offtake partners with a level of clarity that we are able to fullfill their needs, both at the technical and commercial levels. In this way we are able to fund an enlarged project in Argentina to supply power, and build on our growing reputation in the region where we see significant opportunities in a fast growing sector. ”

Source: Company release (pdf)