Panax acquires 45% stake in Sokoria geothermal project from Bakrie

Australian-listed firm Panax Geothermal Ltd announced Wednesday that it has acquired a 45 percent stake in the Sokoria geothermal project, on Flores island, East Nusa Tenggara province from PT Bakrie Power.

?This outcome was achieved following the execution of a Share Sale and Purchase Agreement between Panax and PT Bakrie Power, with Panax now owning 45% equity in PT Sokoria Geothermal Indonesia (SGI),? the company said in statement.

SGI was formed by Bakrie Power as a special purpose vehicle to develop the Sokoria project.

Sokoria has a geothermal reservoir at approximately 2,000m depth. Indications are that the reservoir can generate more than 100 MW power, while SGI has already been awarded the concessions to generate power for the first 30 MW.

Following the transaction, SGI?s owners are Bakrie Power (53 percent), PT Energy Management Indonesia (Persero) (2 percent) and Panax 45 percent.

SGI has won the concession tender with an offering power tariff of approximately US$12.5c/kWh ($125/MWh) for the first 30MW generating capacity, it said.

As part of the transaction, Panax is committed to reimbursing Bakrie Power 45 percent of its expenditure to date, or approximately US$100,000, and cover the whole costs of a future Feasibility Study.

The parties also executed a ?Shareholders Agreement? which contains the terms and conditions of the Sokoria Project incorporated Joint Venture.

Works carried out by the Indonesian Government and detailed surveys sponsored by the Japan International Cooperation Agency (JICA) have led to the following geothermal resource/reserve estimates:

	MW	Classified	MW	Classified
Indonesian Gov't*	145	Resource Potential	25	Possible Reserves
JICA**	90	Exploitable Resource Potential
*Directorate General of Mineral, Coal and Geothermal
**Japan International Cooperation Agency

Panax will immediately commence with a data review (MT & Geochemistry) in preparation for well site selection. Supplementary surveys (if required) will be carried out in the first quarter of the 2011 calendar year, followed by well site preparation and drilling in the next financial year. Panax can fund all its share of the expenses for this financial year from current sources.

Panax acquired the stake in SGI as part of two binding terms sheets regarding geothermal developments in Indonesia. The equity Panax acquired in SGI is balanced by the equity Bakrie Power acquired in Panax?s Dairi Prima Geothermal project in North Sumatra. Panax now has a 51 percent stake in Dairi Prima Geothermal project.

In August 2010, the Dairi Prima Geothermal announced that that they will focus supplying approximately 25 MW of base-load geothermal power to PT Dairi Prima Mineral's (DPM) planned underground zinc/lead mine in North Sumatra.

DPM is unit of Indonesia-listed firm PT Bumi Resources Tbk. (kanti)