Salamander-1 Well Ice Breaker Meeting. 21 January, 2010 Bertus de Graaf, Managing Director

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1 Salamander-1 Well Ice Breaker Meeting 21 January, 2010 Bertus de Graaf, Managing Director

2 Disclaimer 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 d from third parties and thoughh Panax has no reason to believe that it is not accurate, reliable or complete, it may not have been independently audited or verified by 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, Panax and its officers, 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. o All amounts in Australian dollars (AUD) unless stated otherwise. 2

3 Welcome to the Salamander-1 Well Icebreaker Safety is vital to this operation; Safety is a mindset; Safety is looking after your mates; Safety is adhering to rules and regulations; All accidents are preventable; Panax ranks safety above profits or costs. 3

4 Outline of Icebreaker Presentation Who is Panax? Geothermal Energy; Penola Geothermal Project; Salamander-1 Well; Safety and Environment; Conclusion. 4

5 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; Panax has a growing portfolio of projects; Take advantage of window of opportunity; (Panax = Panacea = universal remedy). 5

6 Geothermal Energy Background Commercially proven; 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. 6

7 Geothermal Energy Background Two Types of Geothermal Systems in Australia 1. Conventional (HSA) commercially proven; 2. Enhanced (e.g. HFR) still experimental. 7

8 Penola Project Limestone Coast Excellent Infrastructure Large tenement position (3,200km 2 ); Excellent infrastructure: HV power lines overhead; Interstate grid connection on leases; Close to customers Large potential Competitive power ($51 pre-finance, $83 post 10% discount rate). 8

9 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 ( O C ( ,500m to 4,000m). 9

10 Penola Project Limestone Coast Region Dormant volcanic province; Four troughs in the area, targeting HSA; Large potential; Excellent infrastructure; Geothermal resource estimates for the Penola Trough and two others based on extensive conventional gas drilling in the area. 10

11 Penola Project Independent Geothermal Resource Assessment (AGEA code, HDRPL, Jan./Feb./Mar. 2009) Limestone Coast Geothermal Resources 1. Trough Measured (PJ) Indicated (PJ) Inferred (PJ) Total (PJ) Report Date Penola 11,000 32,000 89, ,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 31/03/2009 Total 11,000 32, , , by Dr. Graeme Beardsmore of Hot Dry Rocks Pty Ltd, Melbourne, Australia Penola Trough Measured Resource the largest in Australia; only one of three; 1,000 PJ sufficient for 100 MW power station for 30 yrs. 11

12 Penola Project Measured Geothermal Resource Measured Geothermal Resource = 11,000 PJ Measured Resource restricted to top 800m of Target Reservoir; 28 deep petroleum wells + logs + core + Bottom Hole Temperatures (BHT); Deepest wells approx. 3,500m or >800m of target reservoir penetrated; 400 km 2 3D seismic; 1,000 km 2D seismic. 12

13 Penola Project Regional Map Excellent infrastructure: National & State grid; Tarmac roads; Flat terrain; Local gas fired station & substation (86 MW) owned by Origin Energy; Note 3D seismic cover; Close to Mt. Gambier Airport. 13

14 Penola Project 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. 14

15 Penola Project Drill test Ladbroke Grove-1 intersected 875m of target reservoir with transmissivity in the range of D.m; Minimum requirement = D.m for 175kg/sec production rate per well; High porosity zones determined from detailed 3D seismic/well log data; Reservoir temp is known. The Ladbroke Grove-1 well intersected 875m of the target reservoir. 15

16 Penola Project Drilling Salamander-1 First well to demonstrate conventional geothermal energy in Australia; Drilling slot secured for last quarter 2009 (Steam!); Well design completed; Designed as production well; Off set data from more than 20 deep wells; Well cost estimate approx. A$15 million; Temperature is known (160 4,000m); Aim to prove Australia s first Geothermal Reserve. 16

17 Previous Drilling in the Penola Trough 28 petroleum wells have been drilled; 11 wells are deeper than 3,000m, averaging 3,240m; Average drilling time to T.D. for these 11 wells = 28 days; Deeper well (Katnook 4) reached 3,499m in 24 days Salamander-1 well maximum T.D. = 4,000m 17

18 Penola Project Resources to Reserves Drilling and Well Testing Programme Salamander-1 designed to carry out well testing programme as designed ed by SKM (NZ) & signed-off by GeothermEx. e (USA); Single well tests are designed to establish initial geothermal reserves for making a development decision (cf. HFR); Gid Grid-connected d59mwd 5.9 demonstration ti plant t(1 prod. &1i inject. well) could be operational in Months 18

19 Penola Project 60 MW Stand-Alone Case Schematic lay-out; Directional drilling; Small foot print; Two 30 MW modules; Fast development time; Good infrastructure (under the grid). 19

20 Safety & Environment at Salamander-1 Well Weatherford is the drilling contractor; AGR is the operator of the well, appointed by Panax; Safety is of paramount importance for all parties; Panax has adopted a policy that all Lost Time Incidents (LTI s) will be reported to the market; 20

21 Safety & Environment at Salamander-1 Well (cont d.) Panax ranks safety above profits or costs, i.e. short cuts can never be justified; All LTI s will be investigated; Responsible Managers/Foremen have to account for why a LTI occurred on their watch; Aim to reach a new safety record for Salamander-1. 21

22 Salamander-1 Well Penola Project Always think safety, no matter what tasks. 22

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