Australia’s Geothermal Energy Rush
06/02/2009

MELBOURNE, AUSTRALIA. In the face of the current economic downturn, the Australian geothermal industry has experienced significant growth in the number of companies that have joined the search for “Hot-Rock Energy”, fuelled by the rapidly increasing demand for renewable energy. In the nine months since the Australian geothermal industry launched the world’s first Geothermal
Reporting Code, six companies have reported massive geothermal energy reserves.

Online PR News – 02-June-2009 – – In the May 2009 federal budget, the government announced a $4.5 billion Clean Energy Initiative which involves investing
heavily into renewable energy sources with the objective of reducing carbon emissions. Putting the politics of an emissions
trading scheme aside, Australia remains the world’s biggest carbon polluter on a per capita basis, contributing almost
1.5% of the world’s total carbon emissions.

Geothermal energy is considered an ideal renewable energy, for its potentially attractive production costs over other
renewable sources and because it is the only major renewable energy source that is capable of providing baseload power
– that is non-stop power, 24 hours a day, rain, hail or shine.
Recently, Resource Minister Martin Ferguson told Reuters:
"Geothermal energy which is sometimes known as hot rocks has got a huge potential for Australia, both as a
solution to climate change and in terms of national energy security."

Huge potential maybe, but how much energy are these hot rock explorers targeting? Well, according to Geoscience
Australia’s Anthony Budd, "One percent of reserves would produce 26,000 years of energy supplies". The
actual Geoscience Australia report by Budd, Holgate, Gerner & Ayling goes on to say, “future drilling and extraction
technologies will undoubtebly allow extraction of heat at depths greater than 5 km, meaning that the above
figure is conservative”.

Although there are about 50 geothermal exploration licence holders across Australia which have collectively committed
to spending in excess of $1 billion on geothermal exploration and development, only 8 companies have declared
geothermal resources since the launch of the Geothermal Code in August last year.

The reporting of geothermal resources in Australia needs to be compliant with the Australian Code for Reporting of
Exploration Results, Geothermal Resources and Geothermal Reserves (2008 Edition), which outlines the methods
for geothermal energy classification. The broadest category of energy is referred to as inferred resource, and the
classifications of indicated, measured, probable and proven are used in cases of increasing geological and economic
certainty.

Australian Geothermal Resources
ASX Code Company Project Geothermal Resource* (PJ) Category*
GDY Geodynamics Ltd Innamincka & Hunter Valley 244,680 various
GER Greenearth Energy Ltd Geelong &Gippsland 263,600 inferred
GRK Green Rock Energy Olympic Dam Region 120,000 inferred
PAX Panax Geothermal Ltd Limestone Coast 332,000 various
PTR Petratherm Ltd Paralana 230,000 inferred
TEY Torrens Energy Parachilna 780,000 inferred
SAU Southern Gold Ltd Roxby Geothermal Project 260,000 inferred
HRL Hot Rock Ltd Penola Trough Undisclosed various
* Resource Figures are Indicative Only. More information about

Geothermal Resource categories can be obtained from:
http://www.geothermalindex.org/agi.html

The geothermal energy resource estimates reported by this handful of predominantly South Australia focussed companies
is simply mind-blowing. Between them, they have identified in excess of 2 million Petajoules of geothermal energy. Not
all the geothermal energy identified will be recoverable due to complex geology, economics and the temperatures of
source rocks. Geologists put the economically recoverable proportion of the heat at 15-20%. The energy expected to
be recoverable is still massive. To put it into context, 1 Petajoule of recovered thermal energy is equivalent to 172,000
barrels of oil.

The magnitude of Australia’s geothermal resources is expected to increase significantly in coming months, with numerous
projects progressing with drill rigs and geophysical data acquisition. Assuming only 20% of the 2 million Petajoules of
discovered geothermal energy is recoverable, that equals 400,000 Petajoules - one-thousand times Australia’s total
projected residential energy consumption for 2009!
“In the last 9-months, a handful of Australian Geothermal companies have discovered significant geothermal resources potentially sufficient to provide all of Australia’s residential energy requirements for a thousand years.”

With massive energy resources in place, it’s no surprise the geothermal sector has attracted Australian energy majors
including Origin Energy (ASX:ORG), AGL Energy (ASX:AGK), Stuart Petroleum (ASX:STU) and Beach Petroleum (ASX:BPT). Offshore investors include the Asian parent company of Australian electricity retailer TruEnergy (CLP Group) and India’s largest power company, Tata Power.

Despite, the increasing interest in the geothermal sector the industry has not been immune to the widespread deterioration in capital markets. A benchmark used to measure the performance of the stockmarket listed geothermal companies, The Australian Geothermal IndexTM, has fallen 39% since the start of July last year.

Mr. Bahay Ozcakmak, Managing Director of Activated Logic is optimistic about the future of Australian geothermal energy production.

“Earlier this year, Geodynamics successfully conducted a closed loop test at its Innamincka project in South Australia’s Cooper Basin project, where 50,000 tonnes of brine was circulated between two wells that were approximately 9km apart. Cool water down one end, hot water out the other. It works.”

Mr Ozcamak also said that despite Australian listed geothermal companies trading at significant discounts compared to 2008 valuations, there is good reason for optimism in the sector.

“The valuations of the geothermal sector have fallen significantly in the past year, with the listed component of the geothermal sector now worth approximately $450 million, similar to what the industry leader Geodynamics (ASX: GDY) was valued at a year ago.

However there is good reason for optimism in the sector. We are currently in discussions with a number of international energy utilities, investment firms and superannuation funds looking to use the current downturn in investment as an attractive time to enter the sector.

Only this week, Southern Gold announced a massive 260,000 PJ geothermal resource at its Roxby Geothermal Project. The Southern Gold story is interesting in that the two wells used to determine the geothermal resources of the project were initially drilled as mineral exploration holes by the company while exploring for copper, gold and uranium.

We expect Southern Gold’s geothermal resources to grow further following deep drilling as this initial resource is from an exploration lease which covers only 5% of Southern Gold’s geothermal assets to the southwest of Lake Torrens in South Australia. The project is located approximately 10-15km
from the national power-grid linking Olympic Dam and Prominent Hill to South Australia’s power infrastructure hub at Port Augusta. Proximity to major power distribution networks is essential in improving project economics.”
ENDS -