Brisbane-based Geodynamics Limited is seeking to raise up to $15.5 million this month through a prospectus lodged with the Australian Securities and Investments Commission.

Funds raised will finance the drilling of holes in Hot Dry Rock (HDR) up to 4.9 kilometres beneath the Cooper Basin in South Australia in an initiative consistent with the Federal Government's 'climate change action agenda' announced this week in the national Greenhouse Policy statement.

The managing director of Geodynamics, Dr Bertus de Graaf said the 250-290ºC granite had the potential to transfer large scale energy, equivalent to 50 billion barrels of oil or 10.3 billion tonnes of coal, to the surface by circulating water under pressure.

"This is energy equal to more than 20 times the known Australian oil reserves, or the equivalent of 40 years of current Australian black coal production," Dr de Graaf said.

"Our studies show that HDR thermal energy is more cost competitive than wind or solar power and produces energy all day, every day regardless of weather or darkness," Dr de Graaf said.

Offer details

The minimum fundraising from the prospectus is $11.5 million (23 million shares at 50 cents each) with the maximum amount to be raised, allowing for oversubscriptions, being $15.5 million (31 million shares).

The offer is open until 30 August 30, 2002 with Geodynamics' shares expected to trade on the Australian Stock Exchange from 12 September.

The prospectus notes that approximately $7.8 million was already secured in commitments to apply for 15,717,764 shares under the offer from pre-IPO investors.

The main commitments are from Metasource Proprietary Limited with10,443,392 shares and CVC Reef Limited and The Australian National University (ANU) each holding 2,058,186 shares.

The minimum number of issued shares at listing would be 32,717,295 and the maximum, 40,717,295. If the minimum subscription is achieved, the shares offered under the prospectus would represent 70.3% of the total issued capital, while a maximum oversubscription would represent 76.1%.

There are 1,240,000 Options on issue under a Directors and Employees Share and Option Plan.

The offer is not underwritten. The sponsoring brokers to the issue are ABN AMRO Morgans Limited of Brisbane and Tolhurst Noall Limited of Melbourne.

Three-stage development

Geodynamics' Chairman, Mr Martin Albrecht said the offer came at a time when the energy industry was undergoing major changes as the world grappled with greenhouse gas emissions and climate change, dependence on fossil fuels and the need for renewable, clean energy.

Geodynamics has developed a three-stage business plan to establish the project although only Stage One is funded through the proceeds of the offer..

Stage One funding is also expected to be provided by the Commonwealth Government under a conditional "R&D START" Grant of $5 million.

Dr de Graaf said the Federal Government's Greenhouse Statement this week had identified geological energy sources as one of the means of minimising Australia's emissions.

"Stage One involves the development of a two-well HDR circulation system at the Cooper Basin site to demonstrate the economic extraction of HDR geothermal energy," he said.

"It is expected to be completed by the first quarter of 2004 and be able to produce 20 megawatts of thermal energy," he said.

Stage Two, over the following two years, would entail deepening and expanding the underground heat exchanger, drilling a third well and installing an off-the shelf binary geothermal plant to produce 13 megawatts of electricity for proposed sale to the nearby Moomba gas processing plant.

Stage Three would expand production to large-scale commercial HDR geothermal power generation (275 megawatts) for long term sale of emission free electricity to the national grid. This generating capacity has the potential to be further expanded to many thousands of megawatts.

Funding for Stage Two would be from sources other than equity, while directors anticipate Stage Three should require a mix of debt and equity, or joint ventures with established electricity generators.

Mr Albrecht said the management team at Geodynamics comprised HDR geothermal expertise in combination with extensive corporate and project development experience.

In the HDR process, pressurised water forced down the hole is superheated to over 200°C by the hot rock and returned through two other production wells to a ground level demonstration binary geothermal power plant where it passes over a loop system carrying an organic liquid with a low boiling point.

The organic liquid boils, producing vapour that passes through turbines to generate electricity.

The water and the organic liquid are both in closed loop systems so there is zero emission to the atmosphere.

Once the system has been proved, a grid of injection holes and production holes would be drilled and the proposed plant scaled up.

The prospectus states that the known, world class geothermal resource in the Cooper Basin can be accessed by standard oil well drilling technology.

The system's power plant, to be established in a later stage of the project, is expected to produce power at a cost of about $40 per megawatt hour -- significantly lower than all renewable energy systems including hydro, wind and solar power - with the ability to produce energy 24 hours per day.

The scheme would qualify for Renewable Energy Certificates under the Federal Government's Renewable Energy (Electricity) Act 2000.

Technical expertise

Geodynamics has engaged the technical expertise of Australian National University and the CSIRO as well as a network of overseas experts in France (The European Union funded Soultz Project), Japan (including Tohoku University), the United Kingdom (Asea Brown Boveri) and the United States (Los Alamos National Laboratory and the MIT).

Tenements

Geodynamics holds adjoining Cooper Basin geothermal energy tenements, Innamincka (GEL 98) and Bulyeroo (GEL 97) which cover nearly 1000 square kilometres which previous oil exploration wells shown to contain high temperature granites classified as the hottest known locality on Earth, outside volcanic centres.

Geodynamics has also secured geothermal tenements in the Hunter Valley in NSW and has applied for a permit to explore for geothermal energy in the Eromanga Basin in south west Queensland.

The Board of Geodynamics comprises Mr Albrecht, a former Managing director of Thiess Pty Ltd; Dr de Graaf, the Managing Director of Geodynamics and former Managing Director of Ross Mining NL; Dr Doone Wyborn, a geo-scientist and Visiting Fellow at the ANU Department of Geology and a researcher in the HDR geothermal field; Dr Prame Chopra, Reader in Geophysics at ANU and a researcher in the HDR geothermal field; Mr Neil Galwey, the former Queensland Electricity Commissioner; Mr Bob Flew, formerly the Group General Manager of BHP Coal Australia; and Mr Paul Frederiks, who has extensive experience in public company and secretarial management in the resources sector. An additional Director is to be nominated by Metasource Pty Ltd.