logo-loader

Earth Heat Resources bucking the trend with funding for Argentina geothermal project

Last updated: 03:47 03 Jan 2012 GMT, First published: 04:47 03 Jan 2012 GMT

no_picture_pai

Earth Heat Resources (ASX: EHR) is moving closer to obtaining project funding for its Copahue Geothermal power project in Argentina.

The company is seeking up to US$134 million in project finance for the development of the project from the largest funding agency in Latin America, Inter-American Development Bank.

Reflecting the quality of the project; with an offtaker in tow and the large need for power in Argentina, demand for the package of funding has been reported as strong.

Which is a coup for Earth Heat given the prevailing tougher capital raising conditions and the Bankable Feasibility Study has not been completed.  Normally funding sources would wait for the results of the BFS before comitting to a project.

Interest has also been received for a placement into the company at a significant premium to prevailing share price.

Earth Heat had earlier signed an agreement for a power purchase offtake for Copahue with Electrometalurgica Andina SAIC, with an initial allotment of 30MWe per annum that has significant potential for further expansion.

The formal bookbuild process for the project funding is anticipated to be completed during early 2012. Formal close of the entire Senior debt facility is anticipated to take place in the first half of 2012.

The expectation is that the subordinate, hybrid, facility could be announced as soon as the end of January 2012, and formally close concurrently with the Senior Debt, although the latter is subject to macro economic conditions.

This would mean the project could be up to 100% Project financed without any reliance upon significant equity contributions from existing shareholders.

Torey Marshall, managing director of Earth Heat Resources said the funding solution for the project "will virtually eliminate the chances of future large equity raises for this project."

Marshall also said "the company is now connected with just about every major Geothermal financier in the world on some level, and has exceeded any reasonable expectations for obtaining project finance."

FTSE rises ahead of Easter weekend, JD Sport gains on upbeat outlook -...

The FTSE 100 gained on the final morning of this shortened Easter trading week. Festive cheer was limited though, as Thames Water confirmed shareholders would not provide it with a £500 million rescue package, prompting speculation over the London supplier’s future. On a more positive...

1 hour, 39 minutes ago