Earth Heat Resources reports progress in funding discussions for Argentinian project
Australian Earth Heat Resources is continuing to advance financing negotiations for the development of its Argentinian Copahue geothermal power project, seeking mezzanine finance or junior debt for the early stage of the development process.
In news today from Australia, Earth Heat Resources (ASX: EHR) announces it “is continuing to advance financing negotiations to fund the development of the Copahue geothermal power project in Argentina.
The company previously announced to the market it has been in ongoing discussions with a number of investment organisations to advance the funding options for Copahue.
Importantly, significant progress has been made towards securing bridging Mezzanine finance or Junior debt.
Junior debt participants have been engaged extensively during late 2011 and early 2012, principally from South America, the Middle East and parts of North America.
Earth Heat Resources is negotiating a minimum US$20-30 million finance option which would lower the equity gap for the Phase 1 Copahue development to A$10-15 million.
That level of funding would also provide the proceeds to undertake the company’s drilling plan at Copahue.
The equity gap will be further reduced or eliminated through a combination of additional financial products, a listing on the Toronto Stock Exchange (Ventures) and other corporate initiatives.
The Copahue project area is located in the western part of Neuquén Province, around 300 kilometres from the provincial capital and just a few kilometres from the Chilean border.
The geothermal resource on which the project is based occurs on the North-East flank of the Copahue volcano – a young, historically active stratovolcano whose summit is on the international border.
Four deep wells, reaching depths of 1,414 metres have also been drilled in the area, which has demonstrated the presence of a commercially exploitable, vapor-dominated geothermal reservoir within at least a part of the project area.
During 2011 Earth Heat has increased the resources by 150%, completed an EIA, a Pre-Feasibility Study and most recently signed Letters of Intent for offtake of the power to be produced well in excess of stage 1 and 2 development.
Giving an indication of the quality of the project, it has already attracted US$134 million in project finance from the largest funding agency in Latin America – the Inter-American Development Bank.
The funds will be comprised of a direct investment of US$48 million by the Inter-American Development Bank.”
Source: Proactive Investors