Earth Heat Resources secures funding for Copahue project in Argentina
Australian Earth Heat Resources announces it has secured funding of up to $134 million for its 30MW geothermal power project at Copahue, Argentina by Inter-American Development Bank.
Australian geothermal developer Earth Heat Resources announces it has moved further on its 30MWe Copahue Project geothermal power project in Argentina, “by securing up to US$134 million in project finance for the development of the project.
The capital injection is a major vote of confidence in Earth Heat’s operations and management, with the funds to be comprised of a direct investment of US$48 million by the Inter-American Development Bank.
The bank will then arrange with assistance from Earth Heat, the syndication of US$86 million, taking advantage of the significant market and investor interest for the Copahue project.
Another big plus for Earth Heat is the significant savings to the project as a result of having this relationship with Inter-American, which is well known in the area due to being one of the largest financier of projects in the region.
A mandate has now been successfully executed by Earth Heat and the bank for the raising of the funds.
Torey Marshall, managing director of Earth Heat, commented on the good news, and said, “With this mandate in place, it prominently places Earth Heat at the forefront of the Australian geothermal developers and is an enormous vote of confidence in the execution of our business strategy.
“At the moment, we believe that Copahue is the only geothermal project that has this maturity in project financing discussions in South America. Inter-American Development Bank has undertaken significant due diligence to date and found that Copahue is extremely promising.”
The next financial step for Earth Heat is to close the senior debt facility, rounding out the project finance with an additional hybrid facility, and executing the physical development of the project.
Marshall added, “Earth Heat will continue to take the necessary steps to ensure its projects meet criteria set by various project lenders who generally account for 50%-75%, of total development capex. The main issue for small cap companies is their ability to fund their projects without significant shareholder wealth dilution.
“Pleasingly, Earth Heat is now well on the path to establishing independent funding sources which significantly reduce the need for equity raisings through the project development cycle.”
The agreement will enable the final parts of the funding and feasibility processes to be undertaken with clear parameters. Closing the initial phase of the financing in line with previously announced plans by Earth Heat, 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 Inter-American Development Bank’s 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.”
Source: Proactive Investors