Shares in Geothermal Resources, which is trading under the ticker “GHT”, opened at 25c, in line with the isue price, but had dropped to 22c at 1pm, Sydney time.

Geothermal Resources raised $3 million through issuing 12 million shares. It plans to put this into drilling work and the interpretation of geophysical data.

The company has two hot dry rock exploration areas in South Australia’s north-east where it says the key ingredients of hot granite buried by a thick layer of insulating sediment appears to be present.

Havilah retains a majority shareholding in Geothermal Resources.

Last April, Havilah announced it had successfully spun-off its uranium assets into Curnamona Energy, and the following month reported its subsequent entry into geothermal energy.

At the time, Havilah said it believed its substantial land position south of Lake Frome in South Australia covered an area of buried granite with the potential for a discovery of geothermal energy.

Havilah’s preliminary exploration work will involve gravity surveying followed by deeper drilling of geothermal target zones to identify reliable heat flow measurements. The company said if results were positive, it expects future exploration to follow the same course as Geodynamic’s Cooper Basin project.

Geothermal Resources issued 12 million shares to raise $A3 million, which it plans to spend on drilling work and interpreting geophysical data as it looks for underground hot spots.

Chairman Bob Johnson said a successful geothermal energy project could be good news for South Australia, which has dwindling coal reserves, limited gas supplies and is currently importing electricity from Victoria.

“If geothermal energy can be generated in South Australia the economic significance is monumental,” he said in the company’s prospectus.

“A low-cost energy source, which is greenhouse-gas free, will be available for generations to come.”