Financing secured for Argentine geothermal projects
Fellows Energy Ltd. (OTC: FLWE) announced that it "has entered into an agreement with Copper King Mining Corporation to finance the Valle del Cura and Tuzgle-Tocomar advanced geothermal projects in the Andes Region of Argentina.
Fellows Energy Ltd. (OTC: FLWE) announced that it “has entered into an agreement with Copper King Mining Corporation to finance the Valle del Cura and Tuzgle-Tocomar advanced geothermal projects in the Andes Region of Argentina. Both project were recently acquired from Geothermie Andina, SA, a private Argentine entity (see earlier blog post).
The agreement also calls for the financing of two additional projects now being negotiated by Fellows in connection with its acquisition of Grupo Minero Aconcagua SA (¨GMA¨), a private Argentine company in advanced stages of negotiation to acquire rights to geothermal and wind energy projects in central and southern Argentina.
The agreement provides for the acquisition from Fellows of a 50% interest in the projects by providing or arranging for financing for the first three years of feasibility and development expenditures and project payments. Copper King has stated that it plans to provide or arrange the funding through a combination of third party investors and from the cash flow expected to be generated from the operation of its copper-gold-silver-magnetite mill now in the final stages of construction and start-up near Milford, Utah.
The Valle Del Cura and the Tuzgle-Tocomar projects are each entering the pre-feasibility stage and host an estimated combined 300 MW of electric power generating potential. Fellows has targeted a third project in Argentina which has been the subject of a feasibility study covering the first 30 MW of an estimated 100 MW of generating potential. The three projects combined would host an estimated 400 MW of potential. The Company is also working toward the completion of its acquisition of GMA, which will bring additional geothermal and wind energy projects to the Company’s mix.
It is expected that the financing being arranged by Copper King will substantially move the projects through the feasibility stage and potentially place them into a position to obtain bank or other project financing. In addition, it will allow Fellows time to strengthen its balance sheet and restructure its capital, while minimizing the need for ongoing working capital funding. The Company has already commenced the technical analyses and evaluations to begin to move forward with the projects.
In spite of the current conditions in the financial markets in general, the Company believes that a number of financial incentives and an emerging, favorable market and attractive financing terms for geothermal, wind and other alternative energy projects will provide a solid basis to move forward. In addition to the revenue associated with generating power, it is also expected that the projects will qualify for ¨carbon bonds¨ and national premiums that will further enhance the cash flow potential of the projects. Although the Company is now actively refocusing its efforts to take advantage of the alternative energy segment of the industry, it also continues in its efforts to obtain joint venture financing on its oil and gas exploration projects in the western United States.
“The signing of an agreement for a financial commitment for these projects and the opportunity to collaborate with Copper King, a company just now entering into significant cash flow from its production, will help to bring the Company to a new level and allow us to build substantial value,” said Fellows CEO, George Young. “We look forward with enthusiasm to working with Copper King and advancing rapidly with the feasibility and development of the projects and acquiring the additional projects now under negotiation.”
Source: Company announcement