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Panax Geothermal reviews draft finance term sheets for Indonesian projects

Panax Geothermal reviews draft finance term sheets for Indonesian projects Project site by Dairi Prima Minerals, Sumatra, Indonesia (source: panoramio)
Alexander Richter 29 Sep 2012

Australian Panax Geothermal reports that it is reviewing financing term sheets for project finance of its Sokoria and Dairi Prima projects in Indonesia, with offers from a Singapore investment fund, European investment fund, and a Chinese conglomerate.

Reported from Australian Panax Geothermal, the company “is reviewing draft term sheets for financing its Indonesian geothermal projects, which are close to having their Power Purchase Agreements finalised.

The draft term sheets have been provided by a number of groups with Panax identifying a number potential funding partners that it considered would most likely complete a funding deal.

These include:

  • A syndicated group of Singapore based investment funds that are part of a group with prior investment experience in Asia Pacific geothermal projects and capable of providing the required equity capital;
  • A European based investment fund with substantial investment in renewable energy projects in Europe and Asia that can provide the majority of the required equity capital; and
  • A Chinese conglomerate that can provide the required equity and project finance requirements as well as substantial technical and development experience.

Draft terms sheet have been exchanged and are being reviewed with a number of these groups, which have either largely completed or are in the process of completing their required due diligence.

Panax is being assisted in this process by a number of parties, including two International advisory groups (one based in Hong Kong, and the other in the USA) and three Australian based advisory groups, who have been retained by Panax to assist in this process.

Panax said that both Indonesian electricity regulator PT PLN and Indonesia’s Ministries of Finance and Energy have confirmed that all negotiations relating to the terms and conditions of the Power Purchase Agreements for the Sokoria and Dairi Prime geothermal projects in Flores and North Sumatra are now final and the final execution copies of these agreements are now being reviewed and prepared.

It added that while the final execution process for these documents is taking a little longer to complete than expected, no issues or impediments have arisen in regard to the execution of these Agreements, and it is expected that these Agreements will be executed in the very near future.

The finalisation of these agreements is a significant milestone for the company and will be the key to enable Panax to progress to finalising required project financing for these two projects.

Both Sokoria and Dairi Prime have planned initial electricity generation capacity of 30 megawatts.

Panax and its Indonesia partner PT Bakrie Power are targeting to start electricity production at Dairi Prima by late 2013, coinciding with the expected start of lead and zinc production from PT Dairi Prima Minerals’ Dairi Prima lead/zinc underground mine in North Sumatra.

Electricity produced at Sokoria will be sold to PLN. ”

Source: Proactive Investors