INTERVIEW WITH MR. TERRY KALLIS, MANAGING DIRECTOR, PETRATHERM LIMITED (PTR)

“Wind No Answer to Geothermal Energy”

http://www.brr.com.au/event/49535

MONDAY, AUGUST 18, 2008, 5:30 PM

            BRR    Good afternoon and welcome to Boardroom Radio. Today, we are speaking with Mr. Terry Kallis, managing director of Petratherm Limited. Thank you

10                    very much for joining us today, Terry.

            PTR     Pleasure.

            BRR    Terry, we see in the announcement you've released today that you'll be giving a company update at the Australian Geothermal Energy Conference. Could

15                    you give us an update of what's involved and what you’ll be covering at this conference.

            PTR     Sure. Maybe firstly, just to explain that we have the major Geothermal Energy Conference beginning the afternoon in Australia this weekend in Melbourne and this event's being put together by the Australian Geothermal Energy

20                    Association together with the Australian Geothermal Energy Group and there will be a number if international and national speakers there and should be quite an exciting time for the geothermal sector to basically provide an update on where we're heading and what we're doing, in particula, as companies.

25        BRR    Terry, also presenting at the conference will be your Spanish manager, Mr. Raul Hidalgo. Why has he made the journey down?

            PTR     Yes, it’s because it's an international conference. What a lot of people aren't aware is that Australia has a spotlight on it. There's a lot of people interested from around the world. We've got people coming from the US, parts of

30                    Europe, Germany, France, Spain, the UK, Iceland and other parts of the world. Raul will be here to talk about our main project over in Spain, in Madrid, on our geothermal district heating project,

            BRR    Just lastly, Terry, we also see an interesting analysis that you've done for the

35                    Paralana Geothermal Energy Project and also wind energy, did you want to give us some details on this.

            PTR     Sure, I suppose, first you might just say for our listeners out there that prior to joining Petratherm, I was involved with wind farm development and sector project managed to successful completion of our first wind farm project here

40                    in South Australia, Starfish Hill, so I do understand quite a bit about wind farm economics. Effectively, what we're showing in the presentation is as you look at the key stages of the Paralana Project as it builds to 30 megawatts and as disclosed for, I think, for the first time amongst the geothermal fraternity, the costs in getting to there including the cost of connection. For the Paralana

45                    Project, basically, produce 30 megawatts of power at a cost of somewhere between $190 and 200 million. That's an all out cost, includes all the drilling, all the power generation, all the transmission costs and that produces about 250 gigawatt hours per annum, but it runs baseload 24/7. For an equivalent wind farm project, it has a capacity of 30 megawatts. It actually produces only about 87 gigawatt hours instead of 250 because, basically, the wind is on for about a third of the time so they have a low what we call a capacity factor of about 33% which is about a third of what we would produce in a baseload 30 megawatt equivalent geothermal power station. When you look at that and

5                      you start looking at what the costs are for each of these sort of projects, you soon work out that, you know, 30 megawatts when you take away the transmission costs for the Paralana Project, you're left with about $180 million, works at about $6 million per megawatt installed. To compare that with a wind project, a 30-megawatt wind project, basically it'll cost you $2

10                    million a megawatt installed but it's only producing a third of the power. So in order to produce the same output, the same 250 gigawatt hours, you would need a 90 megawatt plant, a 90 megawatt for wind at $2 million a megawatt, about $190 million again. So, they're quite comparable and in our case, because we have a very close connection distance to overcome, only 10

15                    kilometers away, and when you couple that with a (inaudible) (00:04:07) we start to see and understand the very strong economics that the Paralana Project has. As they say, we're comparable to wind, out right way, and even better in the sense that it's off grid.

20        BRR    Terry, some interesting insight there. We thank you for your time today, we look forward to speaking to you soon.

            PTR     Thank you very much.

            BRR    That was Mr. Terry Kallis, managing director of Petratherm Limited. If you

25                    have any questions about this broadcast or any other broadcast, please feel free to contact us on brr@bb.com.au. I'm Eddie (inaudible) (00:04:40), thank you for listening to Boardroom Radio.

INTERVIEW CONCLUDED

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