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Southern Gold Ltd. shows attractive economics for South Australian EGS project

Alexander Richter 6 Oct 2009

Australian Southern Gold Limited provides updates on its geothermal strategy and its Roxby Geothermal Project in South Australia.

In its recently released annual report, Australian Southern Gold Limited provides updates on its geothermal strategy and its Roxby Geothermal Project in South Australia.

What makes the project of Southern Gold so compelling is its closeness to big mining companies that are in dire need of electricity, as well as the closeness to existing transmission infrastructure. With up and coming renewable requirements for sourcing electricity, this project could be a good role model for the mining industry to connect to geothermal power developers. There are similar approaches and projects by mining companies in Chile and of course the very successful role model of electricity generation from geothermal resources on Lihir Island in Papua New Guinea.

In the report the company talks about that “during the past 24 months, Southern Gold’s 100% fully owned subsidiary, Inferus Resources Pty Ltd has made major progress towards the identification and development of a large scale, innovative, engineered geothermal system (EGS) for a renewable power generation project in South Australia.

Subject to a range of parameters, preliminary economic modelling of the Roxby Geothermal Project demonstrates a potentially highly attractive baseload renewable energy development project with favourable power generation costs compared to other forms of renewable energy.

The Roxby Geothermal Project (RGP) transects major power infrastructure in the form of high-voltage transmission lines concentrated in the North-South corridor between Port Augusta and Olympic Dam (spanning approximately 270 km), potentially presenting significant savings in connecting a potential geothermal development to the national power grid.

The RGP is in close proximity to a number of established mines including BHPB’s (ASX: BHP) giant Olympic Dam copper, gold and uranium mine, Oz-Minerals (ASX: OZL) Prominent Hill mine, developments at Whyalla and adjacent to Teck’s (NYSE: TCK) major copper discovery at Carrapateena.

The planned expansion of Olympic Dam will require an additional 600 megawatts (MWe) of electricity, equivalent to half of South Australia’s entire power generation capacity, presenting a potentially attractive opportunity for the rapid development of the RGP. Recent geotechnical modelling of the RGP by geothermal consultants Hot Dry Rocks Pty Ltd (HDRPL) established an inferred geothermal resource of 260,000 Petajoules (PJ) for GEL 302, an exploration license which covers only 5% of the RGP exploration area.

Southern Gold is adopting a lower risk, phased project development pathway consisting of the Proof of Concept; Validation & Optimisation; and Commercial Scale-up stages. Southern Gold has applied for A$7 million in funding under the second round of the Federal government GDP grant scheme.”

Source: Company annual report