Panax to kick off construction of geothermal power plant for Dairi mine

Australian-listed Panax Geothermal Limited (Panax) said it is one step closer to commencing development of up to 25 megawatts of geothermal power for PT Dairi Prima Mineral?s (PTDPM) underground lead and zinc mine in northern Sumatra, with the approval of the final mining licences and permits for the PTDPM mine.

Panax Managing Director Kerry Parker said the Indonesian Ministry of Forestry granted the project?s Underground Mining License on 15 November 2011. Panax signed a Binding Terms Sheet Agreement in August 2010 with PT Bakrie Power and PTDPM for the supply of up to 25 megawatts of geothermal power required for the operation of the mine.

This Terms Sheet Agreement is currently being finalized into a formal Power Purchase Agreement, Panax said.

Once developed, the project will supply up to 25 megawatts of geothermal power to the Dairi Prima underground mine at $US150 per megawatt hour for the first eight years and $US125 per megawatt hour thereafter.

Panax and PT Bakrie Power will also be entitled to each receive 50 percent of all carbon credits generated from the geothermal project.

?Receiving license approval was the final hurdle before PTDPM was able to proceed with its project development, with first production scheduled to occur by late calendar 2013,? Parker said.

?Panax can now look at advanced project planning and time-frames to start developing the geothermal project. This means that we are one step closer to achieving geothermal production and our first cash flow.?

Parker said that achievement would make Panax the first Australian-based geothermal exploration company to produce electricity on a commercial basis from geothermal sources. (roffie/demas)