Wasabi Energy acquires 50% in Tuzla project in Turkey

Cannakale, Turkey (source: flickr/ iriskh, creative commons)

Alexander Richter 17 Oct 2013

Wasabi Energy reported today that it is to complete the acquisition of 50% in the advanced Tuzla Geothermal Power Project in Canakkale, Turkey.

Its wholly owned Turkish subsidiary, Imparator Enerji, holds an option to acquire up to 50% of the project company that owns the Tuzla Geothermal Power Project (TGPP).

Since acquiring the Option, Imparator has been working with Egenda Enerji, the plant owner and operator on a range of initiatives including plans for an upgrade of the existing plant and future expansion of installed generation capacity at the TGPP. Following a recent upgrade of the geothermal resource at the TGPP (Geologica, July 2013), Imparator recently finalised a comprehensive pre-feasibility study (PFS) based on a 30 MWe Kalina Cycle® conceptual development (TGPP-2) at the TGPP. The PFS has been prepared with the support of experienced third parties, most notably Power Engineers, a U.S. based recognised global leader in geothermal power plant design and development.

The key findings of the PFS are highly encouraging and support Imparator’s development plans for the installation of additional power generation capacity at the TGPP. In addition to the modelled financial performance of TGPP-2, the PFS concluded that, provided the PFS can be advanced to a bankable feasibility study (BFS) by the end of CY2014 (and financial close reached shortly thereafter), first power from TGPP-2 could be realised in the second-half of 2016, adding significantly to existing project cashflow.

To date the Wasabi group has invested in the order of $10 million on the acquisition and development of the project and intends to provide the outstanding acquisition related consideration (~$3.7 million) before the end of the year.

Wasabi has been in discussions with several groups interested in investing directly into Imparator Enerji, or Imparator’s project company, Imparator-Tuzla and is also evaluating a range of other corporate options to fund the upcoming TGPP Option payment. Following the completion of the PFS and with several funding options at the advanced stages of evaluation, Imparator recently provided formal notice to Egenda Enerji of its intention to finalise the acquisition.

Encouraged by the increased size of the geothermal resource estimate at the TGPP, Imparator increased the scale of its proposed power plant design from the previously flagged 17.5 MWe to a larger 30 MWe design, as part of the recently completed PFS.

Imparator’s preferred development concept involves integration of 2 x 15 MWe Kalina Cycle® units, providing significant design, site and operational synergies. In addition, the modular design also provides flexibility with respect to construction schedules as well as optimising project sanction timelines.

The power plant development concept outlined in the PFS is Imparator’s preferred development concept, however will require approval from a range of parties, including the project JV partner (Egenda Enerji) as well as typical regulatory approvals.

A financial draft of plans at the Tuzla Geothermal Power Project (TGPP) showed an indicative net present value (NPV) of A$142 million, an internal rate of return (IRR) of 57% and EBITDA (underlying earnings) of A$19.6m.

The Chairman of Wasabi, Mr John Byrne, commented: “The results of the pre-feasibility study underline the Wasabi Group’s stated objective of having 25 MW of power production directly attributable to Wasabi either under construction or in operation by 2015 and maintaining that minimum growth at that rate thereafter.”

Mr Byrne added: “The Tuzla project alone has the potential to deliver 18.5 MW towards our primary objective and indications are that our Asian subsidiary can more than provide the balance. The results of the pre-feasibility indicate that 15 MW share of TGPP as envisaged by Wasabi can deliver in excess of $70 million of net present value. As more Kalina Cycle® plants come on stream, interest in the technology is expected to continue to grow dramatically. At present, there are three Kalina Cycle® plants under construction, two of which are currently being commissioned and are expected to be operational before the end of the year.”

Source: company release via London Stock Exchange