Panax, Bakrie Power in geothermal deal

Australian geothermal firm Panax Geothermal Ltd reported that it has signed an MoU with Bakrie Group-controlled firm PT Bakrie Power (BP) regarding joint exploration and development of geothermal resources and reserves across the whole of Indonesia.

Under the MOU, Panax will be the operator with a 51% interest, with the remaining equity being held by BP. The initial focus of this collaboration will be on the supply of base-load geothermal power to PT Dairi Prima?s underground zinc/lead mine in Northern Sumatra.

The Company said it was in talks with operator of Sibayak geothermal plant which is located some 40 kilometers from Dairi Prima mine project regarding a joint development of the spare capacity of the Sibayak geothermal reserves for supplying power to Dairi Prima?s underground mine.

?During last week?s meetings, encouraging progress was also made in Power Purchase Agreement negotiations, with the potential direct power off taker, Dairi Prima, who currently assumes it has to rely on more costly diesel power generation for its future mine requirements,? the Company said.

Dairi Prima is subsidiary of PT Bumi Resources TBk, which is also controlled by the Bakrie family.

The MOU with BP goes beyond Northern Sumatra and covers geothermal interests it owns elsewhere in Indonesia.

In September, 2009 BP won a tender to develop a 30MW geothermal field at Sokoria on the island of Flores. The tariff offered in this winning tender was USD12.5?/kWh. BP (with others) is currently also bidding for two large geothermal projects in Java (120 MW and 270 MW), the Company said. (alex)