Geodynamics growing shareholder base and market capitalisation

Geodynamics first listed on the Australian Stock Exchange in September 2002 with a market capitalisation of $20 million. The Company has grown steadily since then, and as at 30 June 2009 boasted more than 16,800 shareholders holding a total of 290.1 million fully paid shares. Market confidence in Geodynamics has continued to rise in the new financial year, with Geodynamics supported by more than 17,100 shareholders with a market capitalisation of $274m on 30 September, 2009. Substantial shareholders, or those owning more than five per cent of shares, comprise Trust Energy Resources (Tata Power) with a 10% share holding, National Nominees (7.3%), Origin Energy Limited (6.8%) and Mr Robert Healy (5.5%).

An outstanding resource position underpins the vision

Geodynamics has accumulated geothermal exploration licences covering more than 3,500 km2 across several Australian states, with an excellent resource and a proven concept. The Company’s current focus is in the Cooper Basin in South Australia, where our licence areas cover 1,962 km2. Benefits of the Geodynamics tenements include:

In addition to those in South Australia, Geodynamics holds geothermal exploration licences in New South Wales and has accepted offers for Exploration Permits Geothermal (EGPs) in Queensland.

Power generation from enhanced geothermal systems

Enhanced Geothermal Systems (EGS) use the natural warmth of the earth to heat fluid which in turn drives a turbine generator to produce electricity without producing the emissions of conventional fossil fuel generation.

EGS is a well known geothermal technique that is ideally suited to our Cooper Basin resource with its temperatures of at least 250oC at the projected well depth. During the process, water (geofluid) is injected into a well at a specific depth where it passes through a fracture system in the rock, extracting heat fromthe hot rock mass. It is then returned to the surface through adjacent wells. At the surface, the heat is transferred to a secondary working fluid via a heat exchanger, forcing the secondary fluid to expand before being passed through a turbine generator. The two fluids remain separated in their own closed loops, with the geofluid returned to the fracture system while the secondary fluid cycles between the heat exchanger, the turbine and downstream air coolers which are used to condense the secondary fluid, eliminating all water loss.

Granite, like that in Geodynamics Cooper Basin tenement, is an ideal rock mass as it typically exhibits similar properties extending over many tens to hundreds and even thousands of cubic kilometres, with families of natural fractures extending over long distances. The fracture permeability in granites can be considerably higher than the permeability of sedimentary rocks.

Geodynamics has proven the concept

In March 2009, Geodynamics announced that it had successfully proven its ability to extract heat from hydraulically stimulated hot fractured rock to create power. The achievement of ‘Proof of Concept’ is one of the major milestones for Geodynamics since its inception nine years ago and marked the completion of Stage 1 of its business plan.

Proof of Concept followed a successful closed loop test between Habanero 1 and Habanero 3 and an independent analysis of the test results by US-based geothermal consultants GeothermEx. The achievement was the culmination of six years of hard work by Geodynamics staff. Key elements demonstrated by the proof of concept testing included:

Through the development process Geodynamics has demonstrated:

The commercialisation challenge

Now that the concept has been proven, the challenge for the Company is to demonstrate the extraction of geothermal heat and production of power on a commercial scale at a competitive price. Geodynamics is confident that the information it has gained to date and the work program over the next 18 to 24 months will put the company and its joint venture party Origin Energy in a position to be able to take the investment decision on a commercial sized demonstration plant. To be able to take that decision, the work program has been designed to focus on the following four areas:

The Company believes that a successfully operating commercial demonstration plant will allow access to debt markets to finance the commercial expansion and transmission infrastructure required to bring this vast resource to the national electricity market.

Data centre feasibility study Geodynamics has forged ahead with stage two of its three-stage business plan by investigating the possibility of co-locating a communications and storage data centre with its commercial demonstration plant. A detailed feasibility study is being conducted into the viability of the project by the Strategic Directions Group. The Company believes the concept of a co-located data centre is feasible due to the following key factors:   • Data centres are intensive consumers of electricity and the commercial demonstration plant (CDP) will be ideally placed to provide long term electricity supply contracts at competitive prices.     • The CDP will be in a position to provide the data centre with a perfect hedge against the volatility of fossil fuel prices and carbon emission prices     • Communications infrastructure costs (laying underground optical fibre) are considerably lower than high voltage transmission costs.