Geodynamics enters deal for development in the Solomon Islands
Geodynamics enters earn-in and joint operating agreement with Kentor Energy to acquire an interest of up to 70% in the Savo Island geothermal power project on the Solomon Islands.
In an announcement yesterday, Australian Geodynamics announces it is about to acquire an interest in the Savo Island Geothermal Power Project on the Solomon Islands in the Pacific.
The company entered into a two stage earn-in and joint operating agreement with Kentor Energy Pty Ltd, a
subsidiary of Kentor Gold Ltd (ASX: KGL), to acquire up to 70% interest in this conventional geothermal power supply project in the Solomon Islands.”
This is an interesting step for the company that to this point has focused mostly in its EGS project, while its Australian peers have increasingly looked at conventional geothermal projects beyond Australia. ThinkGeoEnergy reported before on the project, see here.
“Under the terms of the agreement, Geodynamics is entitled to earn an initial 25% interest in the Savo Island Geothermal Power Project (“Project”) following the completion of initial geophysical studies to determine target locations for a drilling program. The Company has the right to earn an additional 45% interest through exploration drilling and the
completion of a feasibility study for the Project.
The Project is located on the island of Savo, 14 km off the north coast of Guadalcanal where a volcanic based geothermal resource has been identified. Preliminary exploration studies indicate that the island could host a substantial geothermal reservoir at temperatures in excess of 260°C and at depths of 500 – 1,500 m.
Honiara, capital city of the Solomon Islands has a current maximum demand of 14 MW. Local electricity supply is high cost diesel based resulting in consumers having to pay among the world’s highest prices for power, currently around A$0.80 per kWh*. Additional customer demand for the geothermal project is possible through supply to the Gold Ridge Mine, recently acquired by St Barbara Limited.
The project has strong support from the local community on Savo Island, as well as the Central Province Assembly and the Solomon Islands Government. A Surface Access Agreement has been signed and is in place with customary landowners on Savo to undertake initial fieldwork and surveying. A 3D MT (magneto-telluric) survey was completed in October 2012 by Fugro Ground Geophysics Pty Ltd. Geodynamics is targeting release of a maiden inferred resource statement and scoping study for the project by June 2013.
Mr Geoff Ward, Geodynamics’ Managing Director and CEO, said, “The Savo Island Geothermal Power Project presents a high quality conventional geothermal development option for Geodynamics. The preliminary exploration work gives us significant confidence that a high temperature resource can be proven at Savo which will be an economically attractive option for Honiara.”
“The provision of reliable renewable energy in place of more expensive, unreliable diesel supply will bring many benefits to the Solomon Islands through lowered costs to business and consumers and the opportunity to provide access to power to more people in the Honiara area.”
Mr Simon Milroy, Managing Director of Kentor, said, “Geodynamics is a leading geothermal exploration company with the resources and expertise to explore and develop this project making the Company an ideal partner for Kentor. We look forward to building a strong partnership.”
Source: Company release (pdf)