geothermal article, page-4

"Pole position BABY!!!"

I'd have to agree with you there. With a measured heat resource in place, extraction rates modeled on known permeability data, a rig secured for drilling later this year (though I expect further delays to be announced, compliments of PTR), and grid connection on site, it is clear the next major development for the company needs to be a JV partner.

Whether it is an industry or financial partner, I think it is extremely important for the company to structure the bulk of the deal around project equity. There will inevitably be large placements made to the JV partner(s), and as a shareholder I welcome these cornerstone investors, however, the poor structure of the TEY JV with AGL must act as an example of what not to do.

The TEY JV allows AGL to earn 50% equity in any project for drilling one demonstration well per project, in effect the same as issuing 50% company equity to AGL for one or two wells.

To contrast this, the excellent structure of the GDY / Origin JV gave Origin a 30% working interest in the Cooper Basin project for $105.6 million, whilst GDY shareholders retained the rights to the upside presented by the other projects. Both the TEY and GDY JVs included a significant placement of shares to the JV partners, both of which seemed quite reasonable.

It is particularly important for PAX to achieve a structure like this as their international projects are perhaps more interesting than the Limestone Coast project itself. Project equity for the LC JV allows shareholders to retain the rights to the upside presented by Panax's diverse portfolio of projects.

A good JV will really move the share price along. The more project equity relative to the placement issued the better, in my opinion.

Cheers,

tawnyport