Overseas

Overseas Mainland Spain

Petratherm is set to become the first company to formally develop geothermal energy projects in Spain. It is undertaking geothermal projects in the key large electricity consuming markets of Madrid and Barcelona.

The Madrid project already has three wells - previously drilled to depths of 3.1-3.5 kilometres - providing critical temperature, hot water flow rates and geological data and hence creating a valuable opportunity for significant and low cost project advancement in the near term.

The entry into the Spanish market provides “first mover” advantage and is consistent with the Company’s objective of examining areas where the geology, the energy market and the regulatory environment are conducive to commercially viable geothermal energy projects for shallow geothermal resources, close to market.

Spain (40 million population) is one of the fastest growing member countries of the European Union (EU) and its electricity market is the fifth largest in the EU, with an annual growth rate of 5.0% or double the EU average. Within this, around 50% is thermal generated (coal/gas), 25% hydro, 15% nuclear and 10% renewables.

Canary Islands - Conventional geothermal project

Petratherm has secured a geothermal exploration licence on Tenerife - the largest of the seven volcanic islands comprising the Canary Islands’ archipelago off the northwest coast of Africa. The intent is to tap super hot (over 250°C) volcanic structures at relatively shallow depth of around two kilometres and in an area very close to substantial transmission infrastructure. Commercial success would reduce the Island’s reliance on imported fossil fuels and help cope with peak electricity demand caused by massive summer tourist inflows.

China

Petratherm is the only Australian geothermal developer formally endorsed by the Chinese and Australian governments through the Asia-Pacific Partnership, to help China - the world’s fastest growing market for electricity - rapidly progress its highly promising geothermal energy opportunities. Governments within the Asia Pacific Partnership on Climate and Clean Development (APP) comprise the United States, China, India, Japan, South Korea and Australia.

Petratherm will progressively move into China throughout 2007 and 2008 to identify potential hot rock sites - and plans to take an equity position in sites that offer the best potential for commercial geothermal development. The work will be undertaken in co-operation with Chinese geological institutions, provincial governments and local energy utilities.