The funds raised will be applied to complete Stage One of the Hot Fractured Rock (HFR) geothermal project in the Cooper Basin. This comprises the drilling of Habanero-2 to a depth of 4,600m as well as the completion of the circulation test to determine the economic feasibility of heat extraction.

The placement represents 12.9% of the existing issued capital, which leaves the company with a total issued capital of 67.9 million shares.

Geodynamics shareholders will now be invited to participate in the share capital expansion of the company through a Share Purchase Plan (also at $0.90 per share), scheduled for May 2004.

Progress made to date in the project has significantly reduced risk with temperatures of 250ºC confirmed at 4,400m depth in the target hot granites; hydraulic stimulation also resulted in the development of the horizontal reservoir, essential for heat extraction on a regional scale, with the stimulated zone being more than nine times larger than expected.

The discovery of water saturated overpressures also raises the potential for the existence of a conventional geothermal field, larger than any of the existing geothermal provinces currently known in the world.

The main outstanding project risk is related to the economics of heat extraction from the developed underground reservoir. This will be tested during a four month circulation test, scheduled for the second half of this calendar year.

Plans are also being made to conduct a flow test to determine the potential for conventional geothermal energy extraction without the aid of water injection (i.e. naturally pressured hot water/steam flows).