feb 09 oppies, page-6

geojac,

Firstly it's not off the track because SA Government interest in establishing such a DC link would do wonders to the short term shareprice.

Now back to your question.

I too, have been wondering about the wisdom of selling so much electricity to one very powerful customer. Certainly striking a balanced price could be very tricky. On the other hand GDY has to start selling the power somewhere and there is an undeniable synergy. Provided all the tests do go the right way, GDY will need to start selling the power somewhere and Olympic Dam which already accounts for some 40%??? of SA's power will more than double??? its power needs after the expansion. (Someone please check these figures, I think I have the order of magnitudes right but that's about all.)

Adding to this synergy, Olympic Dam would have to be the closest, large electricity market and where else would this mine be likely to get their additional power? I see potential for a win, win situation with Olympic Dam gaining an assured power supply, and GDY gaining an assured initial market. I don't know how much the unit power costs are for Olympic dam at present but I do expect they would be prepared to pay higher prices for additonal, assured, supply. In spite of the size of BHP Billiton, I expect their need for power might outweigh their negotiating clout.

The concept of an assured initial market is the key for GDY. I know their vision is to extend the DC lines to the Eastern states but I would submit that as a first step they should consider negotiating with BHP Billiton to supply power for Olympic Dam. In this way they will gain significant cash flow as they develop and refine the concept of building large numbers of 50MW power modules.