Corporate Presentation

M
Marchh 2010
06/04/10
Disclaimer; Competent Persons Statement
This presentation has been prepared by Panax Geothermal Ltd (Panax). The information contained in this presentation is a
professional opinion only and is given in good faith.

Certain information in this document has been derived from third parties and though Panax has no reason to believe that it is not
accurate,, reliable or complete,
p , it may
y not have been independently
p y audited or verified by
y Panax.

Any forward-looking statements included in this document involve subjective judgement and analysis and are subject to
uncertainties, risks and contingencies, many of which are outside the control of, and maybe unknown to, Panax. In particular, they
speak only as of the date of this document, they assume the success of Panax’s strategies and they are subject to significant
regulatory, business, competitive and economic uncertainties and risks. Actual future events may vary materially from the forward
looking statements and the assumptions on which the forward looking statements are based. Recipients of this document
(“Recipients”) are cautioned not to place undue reliance on such forward-looking statements.

Panax makes no representation or warranty as to the accuracy, reliability or completeness of information in this document and
does not take responsibility for updating any information or correcting any error or omission which may become apparent after
this document has been issued.

To the extent permitted by law, law Panax and its officers,

officers employees,
employees related bodies corporate and agents (“Agents”) disclaim all
liability, direct, indirect or consequential (and whether or not arising out of the negligence, default or lack of care of Panax and/or
any of its Agents) for any loss or damage suffered by a Recipient or other persons arising out of, or in connection with, any use or
reliance on this presentation or information.

All amounts in Australian dollars (AUD) unless stated otherwise.

The information in this presentation that relates to the estimation of Geothermal Resources has been compiled by Dr Graeme
Beardsmore, an employee of Hot Dry Rocks Pty Ltd. Dr Beardsmore has over 15 years experience in the measurement and
estimation of crustal temperatures and stored heat for the style of geothermal play under consideration. He is a member of the
Australian Society of Exploration Geophysicists and abides by the Code of Ethics of that organisation.

D Beardsmore
Dr B d qualifies
lifi as a Competent
C t t Person
P as defined
d fi d byb the
th Australian
A t li C d for
Code f R
Reporting
ti off Exploration
E l ti R
Results,
lt
Geothermal Resources and Geothermal Reserves (2008 Edition). Dr Beardsmore consents to the public release of this report in the
form and context in which it appears.

2
 Outline of Presentation

• Who is Panax?;

• Geothermal Energy Background;

• Penola Project, Limestone Coast, S.A;

• Other Advanced Projects;

j ;

• Exploration Projects;

• Summary.

3
 Who is Panax?

“Panax is pursuing a strategy of

securing and developing advanced
conventional geothermal projects
(i.e. commercially proven) in
Australia and Internationally”.

Panax Geothermal Ltd

• 100% geothermal focus;
• National and International.

4
 Who is Panax?

• Company is just over 2 years old (Dec. 2007);

• Pioneer in HSA geothermal resources in Australia
(e.g. Salamander-1 – Pioneering HSA well);
• Ranked
R k d No.1
N 1 in
i Measured
M d Geothermal
G th l Resources,
R 10 ti
times
nearest competitor (AGEA Code);
• Penola Project,
Project only HSA project underlain by “Measured
Geothermal Resource”;
• Ranked No.1
No 1 in cash position amongst pure HSA
explorers/developers.

5
 Corporate & Financial Overview

• Share Capital: 307 million Shares on issue;

• ASX code: PAX;;
• Cash Position: A$17.5 million (31 Dec. 2009), plus $4.55 million
GDP grant, zero debt;
• GDP Grant: A$7.0 million, first drawdown received
($2.45 million);
• Market Cap: Approximately A$50 million.

6
Experienced Management

Dr. Bertus de Graaf Founder and past Managing Director of

(Managing Dir. & CEO) two other Resource Companies (Ross
Mi i & Geodynamics).
Mining G d i )

Mr. Kerry Parker

Mr Ex CFO Arrow Energy
Energy.
(Exec. Director, CFO >15 years in resource development.
& Co. Secretary)

Mr. Ron Palmer Geoscientist with > 20 years in Mineral

(COO) Exploration. Founder of Osiris Energy &
Hot Dry Rocks Pty Ltd
Ltd.

David Jenson g
Mechanical engineer with 30 years
y experience
p
(GM - Geothermal in design, construction, commissioning and
Engineering) operation of geothermal power plants.
7
 Geothermal Energy Background
= Holy Grail of Clean Power, 24hrs/day, 7 days/wk

• Commercially proven since 1920s;

• Base-load,
Base load, zero emission power (24hrs/day, 7 days/week);
• 9,000 MW new development in pipeline (EER, 2009);
• Major incentives (eg: Europe > €190/MWh).
Total Installed Global
Capacity of Conventional
Geothermal Power
Generation in 2008 ~ 10 GW.

8
Clean Electricity Price – Geothermal well placed

9
 Geothermal Energy Background
Panax is Pioneer of HSA in Australia
Two Types of Geothermal
Systems in Australia
1. Conventional (HSA) –
commercially proven;
2. Enhanced (e.g. HFR) –
still
till experimental.
i t l

10
Technology Ranking 2030 – Zero or low CO2 power generation options.
Levelised cost of technology (2009 A$MWh).
(Weighted cost of capital at 8.4%, excludes grid connection & transmission).

CCS = Carbon Capture and Storage

CCGT = Combined Cycle Gas Turbine

PC-Oxy Black = Pulverised Coal and

Oxygen Injection, Black Coal

IGCC Black = Integrated Gassification

Combined Cycle, Black Coal

SCPC Brown = Super Critical

Pulverised Brown Coal

PV = Photo Voltaic

OCGT = Open Cycle Gas Turbine

11
Penola Project
Limestone Coast – Position!
Excellent Infrastructure
• Large tenement position
(3,200km2);
• Excellent infrastructure:
– HV power lines
overhead;
– Interstate grid
connection on leases;
– Close to customers;
– Large potential; i l
– Competitive power
costs ($51 pre-finance, $83 post
fi
finance @ 10% di
discount rate).
)

12
 Limestone Coast
SA - Otway Basin

Hot Sedimentary Aquifer (HSA)

• High Heat Flow (Otway Basin)

(recent volcanism & basement);
• Insulating layer
(Eumeralla Formation);
• Productive Reservoir
(Pretty Hill Sandstones);
• Geothermal temperatures
(150-200OC (302-392°F) @ 3,500m to
4,000m).

13
 Penola Project
Limestone Coast – Potential

• Dormant volcanic
p
province;
;

• Four troughs in the area,

targeting HSA;

• Large potential;

• Excellent infrastructure;

• Independent geothermal
resource estimates for all
four troughs, based on
extensive petroleum
database.
database

14
 Penola Project – Resources

Independent Geothermal Resource Assessment

(AGEA code, HDRPL, Jan./Feb./Mar. 2009)

Limestone Coast Geothermal Resources 1.

Measured Indicated Inferred Total
Trough Report Date
(PJ) (PJ) (PJ) (PJ)

Penola 11,000 32,000 89,000 132,000 18/02/2009

Rivoli & St. Clair 53,000 53,000 28/01/2009

Rendelsham 17,000 17,000 28/01/2009

Tantanoola 130,000 130,000 31/03/2009

Total 11,000 32,000 289,000 332,000

1. by Dr. Graeme Beardsmore of Hot Dry Rocks Pty Ltd, Melbourne, Australia

• Penola Trough “Measured Resource” the largest in

Australia; only one of three (two owned by Panax);
• 1,000 PJ sufficient for 100 MW power station for 30 yrs.

15
 Penola Project
Measured Geothermal Resource = 11,000 PJ

• “Measured Resource”
p 800m
restricted to top
of Target Reservoir;

• 28 deep petroleum
wells
ll + logs
l + core +
Bottom Hole
Temperatures (BHT);

• Deepest wells approx.

3,500m or >800m of
g reservoir
target
penetrated;

• 400 km2 3D seismic;

• 1,000 km 2D seismic.

16
 Penola Project – Excellent Infrastructure

• National & State grid;

• Tarmac roads;

• Flat terrain;

• Local gas fired station &

substation (86 MW) –
ownedd by
b Origin
O i i Energy;
E

• Note 3D seismic cover;

• Close to Mt. Gambier

Airport.

17
 Penola Project – Extensive Data Base

Low Acoustic Impedance Zones = High Reservoir Transmissivity

• Seismic line from

Ladbroke Grove-1
well to SE;
• Black = Pretty Hill
Sandstones;
• Low acoustic
impedance (AI)
shown in “colours”
correlate with high
transmissivity
zones intersected
by petroleum wells.
18
 Penola Project – Reservoir Quality

• Ladbroke Grove-1
intersected 875m of target
reservoir with
transmissivity in the range
off 48 - 68 D
D.m;

• Minimum requirement =
10 - 12 D.m
D m for 175kg/sec
production rate per well;

• High porosity zones

determined from detailed
3D seismic/well log data; The Ladbroke Grove-1 well intersected 875m of the
target reservoir.
• Reservoir temp is known.

19
Penola Project
Reservoir Modelling – Top Zone Only (GeothermEx, USA)

• One prod. well and

one inject. well;

• 175l/sec;

• 30yrs;

• Only minor cooling

over 30yrs (2ºC).
 Penola Project Drilling
Salamander-1
Salamander 1 = Pioneering Well
• First well to demonstrate conventional
geothermal
th l energy in
i Australia;
A t li

• Designed as production well;

• Off set data from more than 20 deep wells;

• Well cost estimate approx. A$15 million;

• $7M GDP grant from Commonwealth Gov’t

(Dept. Resources, Energy & Tourism);

• T
Temperature
t is
i known
k (160˚C @ 4
4,000m);
000 )

• Aim to prove Australia’s first Geothermal

Reserve”.
Reserve”

21
Penola Demonstration Binary Geothermal Power
Plant – two closed loops
p – zero emissions

22
 Salamander-1 Progress

• Cost: $15 million ($7M GDP grant);

• Spudded 31 January
January, 2010 @ 2345hrs;

• Depth 8 March, 2010 @ 0600hrs: 3,330m;

• Expected total depth 4,000m by mid-

March, 2010.

23
 Penola Project – Resources to Reserves
Drilling
g and Well Testing
g Programme
g – Development
p

• Salamander-1 designed to carry out well testing programme as

designed
des g ed by SKM
S (NZ)
( ) & signed-off
s g ed o by GeothermEx.
Geot e (USA);
(US );
• Single well tests are designed to establish initial geothermal reserves –
for making a development decision (cf. HFR);
• Grid-connected
G id t d 5.9
5 9 MW demonstration
d t ti plant l t (1 prod.
d & 1 inject.
i j t well)
ll)
could be operational in 2011 – a first for Australia.

1 2 3 4 5 6 7
Months
24
 Salamander-1 Testing Programme

1. Well completion test before contract rig is released

– Well logging;
– Short flow and injection test;
2 1 month temperature normalisation;
2.
3. Longer term flow and injection
tests;
4. Data collected from logging
and testing allows assessment
off reservoir
i quality
lit ((cff HFR)
which could lead to establishment
of first g
geothermal reserves.

25
 Salamander-1 Short Clean-up Flow Test Completed

• Steam release, a first for a Hot Sedimentary Aquifer in Australia

(31/03/10);

• Bottom Hole Temperature (BHT) of 156ºC @ 4,015m (minimum

BHT, as temp not yet stabilised);

• Data collected will be evaluated

and interpreted with well log data;

• j
Extended flow & injection
tests planned for May, 2010.

26
 Reservoir Testing Programme
“Resource to Reserve” conversion using one well only
Step 1 Step 2

1. Flow well using air lift; 1. Re-inject produced geothermal brine using
2
2. M
Measure pressure, temperature
t t and
d flow
fl (surface),
( f ) filtration unit and high pressure pump;
down hole logging tools in the target reservoir 2. Down hole logging tools in the target reservoir
measure pressure, temperature and flow. measure pressure, temperature and flow.
27
 Penola Project Economics – Base-Case Study

Base Case
(Binary Geothermal Power Plant) Target Reservoir

Flow 175 kg/sec Temp. & Reservoir quality known from

extensive open file data base
Brine Temp. 145OC (293OF)

j
Injection Temp.
p 70OC ((158OF))

Ambient Temp. 1) 16OC (61OF)

G
Gross Output
O t t 2) 6 7 MW
6.7 MWe

Net Plant Output 2)

5.9 MWe
(MWe)

1) Aust. Bureau of Meteorology.

2) As supplied by ORMAT.

28
Penola Project 60 MW Stand-Alone Case

• Schematic lay-out;
lay out;

• Directional drilling;

• S ll foot
Small f t print;
i t

• Two 30 MW modules;

• Fast development time;

• Good infrastructure
(“under the grid”).

29
 Penola Project – Stand-Alone Case Power Costs
(Pre- and Post Finance Costs)

MWh*)
Total Cost per MWh
(Capital & Operating Costs, Grid Connected)
Total Cost (MWh) $A
Total No. Net Output**)
P d Wells
Prod. W ll (MW) Pre-Finance Post Finance
(10% discount rate)

Stand-Alone Case 10 59 51 83

• Signed off by GeothermEx; Audited by KPMG;

• Outputs and plant costs confirmed by “Performance Guarantee”

offer from Turboden (Pratt & Whitney Power Systems).

*) 30 year life; 95% availability;

**) Net = power output net of plant.

30
 Imperial Valley – Southern California
Hot Sedimentary Aquifer in Operation Since 1980s

• Heber, Ormesa and North Brawley

geothermal power plants*), total 200 MW
installed capacity, base-load;
• First operations date back to 1980s, pre
carbon incentives;
• Use of shaft pumps;
• > 25yrs experience.

*) owned/operated by Ormat

31
 Penola Project cf. Imperial Valley, Sth. California,
(operational since 1980’s)
Comparison of Imperial Valley (Heber, Ormesa and North Brawley)
& Panax’s Limestone Coast
Imperial Valley USA
Imperial Valley, USA Limestone Coast
Limestone Coast
Flow per Well
Up to 160l/sec 150 – 175*l/sec
(shaft pump)
Brine Temp.
p 160OC – 171OC 145OC* ‐ 200OC

Injection Temp. 82OC 70OC

Depth of Pump +/‐ 460m +/‐ 400m

Average Annual   
26OC 16OC
Ambient Temp.
30,000 – 50,000 
Salinityy <3,000 TDS**
,
TDS**
* Penola Project ** TDS = Total Dissolved Solids

As compared to the Penola Project, the Imperial Valley plants have:

• Shallower p
production wells (+ve);
( );
• Higher salinity (-ve);
• Higher injection temperature (-ve) and higher ambient temperature (-ve).

32
 Advanced Projects - Cooper Basin Tenements

GEL 220 & 221

• Geothermal temperatures
>260OC @ <3,900m,
many drill holes, various
heat exchangers;
g ;
• Hutton Sandstones, Great
Artesian Basin, HSA target.
GEL 281
• Temperatures 120 - 150OC
(shallow HSA);
• Many oil / gas wells;
• Local power requirements;
• “Measured
Measured Geothermal
Resource” of 11,000 PJ
(HDRPL, Dr Graeme Beardsmore).
33
 Advanced Projects - Puga – India

Puga Project
• Himalayan Geothermal Province;
• Located in extreme high heat flow zone;
• UNDP drill testing 1970’s. Geothermal waters @ >120°C @ 200m

34
 Advanced Projects – Puga, India

India: Puga Project – Location Map

• Leh - ‘tourist’
tourist capital of Indian Himalaya’s;
Himalaya s;
• Leh relies on diesel generation (13 MWe) and small scale hydro
(2 MWe);
• Current demand 59 MWe;
• Puga - Leh = distance of
140km;
• Regional support;
• Attractive p
power tariffs;;
• No social / environmental
issues;
• Local government have
committed to power line.
35
 Advanced Projects - + New Initiatives
Sumatra Project
j – Indonesia
• Off-grid power supply for underground
mining operations in Nth. Sumatra;
• MOU with Dairi Prima (part of the Bumi
Group of Companies);
• Northern Sumatra is geothermal
“ l h t” country;
“elephant” t
• Known wells along the Sumatran
transcurrent fault produce up to 30
MWe per well from approx
approx. 2
2,000m
000m
depth.
• New legislation in place to allow private
companies
p to develop p geothermal
g
power projects away from the grid;
• Panax has in-house expertise on
Sumatra (Sjaiful Bahri, Jakarta & Bill
Cumming, California – both ex-Unocal),
plus Dave Jenson.
36
 Slovakia

• MOU – GeoPark;
• Hot sedimentary aquifer targets;
• Exclusive access to petroleum database;
• Option to earn 75% in new licences;
• A$385 per MWh guaranteed for 30 years.

37
 Summary

• Panax established as a Geothermal Company with National and International

interests focusing
g on conventional geothermal
g energy
gy in advanced projects;
p j
• Penola Project:
– Associated with a ‘Measured Resource’ of 11,000 PJ sufficient for 100’s of
MW’s of power generation;
• Commonwealth Government’s recognition (A$7 million GDP grant);
• Panax is only one out of two Australian Companies with wells within target
reservoirs, with ‘Measured Geothermal Resources’.

38
 Summary continued

• Independently reviewed pre-feasibility study shows that it could generate low

cost power (total cost of AUD$51 / MWh (pre-finance) & A$83 / MWh (post-finance 10%
discount rate));

• Penola Demonstration plant could become first grid connected geothermal

power plant in Australia (late 2011);
• Cooper Basin (HSA),
(HSA) Puga (India)
(India), Sumatra are commercially attractive
conventional geothermal development targets;
• Panax is fully funded for programmes in 2009/2010 FY;
• P
Panax iis engaged
d in
i negotiations
ti ti with
ith severall potential
t ti l joint
j i t venture
t partners.
t

39