extremely negative article, page-19

Dex

"I've been neglecting my GDY investment for a couple of months now...is all good with GDY?"

Hmmmm. A couple of months, eh? Keep an eye out for those SPP forms. Who doesn't love free options?

It would be very fair to say that the SP belies the significant recent progress. No doubt you know HAB3 was completed successfully to 4221m, though you may not have noticed the significantly improved drilling rates for Jolokia 1, the 4th deep well for GDY. Currently there are only 200m left to drill before the well head equipment can be installed and a round of hydraulic stimulation can be performed.

Really great progress there, as it shows that drilling issues are non-systemic, and the delays experienced drilling HAB3 were part of a normal (albeit steep) learning curve.

The closed loop circulation test is scheduled to commence within the next few days (maybe already in progress?) on the back of a resoundingly successful open circulation test, for which a sustained flow rate of 20kg/sec at 212C was achieved. Once this data is released, we will have a more accurate idea of the potential flow rates and temperatures (with the production temperature still rising as the well casing and surroundings reach equilibrium with the rising geofluid).

Whilst JOL1 (at least 10C hotter than HAB3!) is being drilled, the rig will be mobilised to SAV1 (the site has been prepared). By the time SAV1 is spudded, we should have further news regarding additional rigs, which have been recently screened by the company.

Further, there has been the significant capital injection from recent placements and option exercise. The option exercise raised $37.4M, the new cornerstone investors (Sentient and Sunsuper) paid $37.5M for 25M shares and 12.5M options, and the SPP will raise $35.5M if even half of the offers are subscribed to. Further, under the assumption of a 50% uptake, and full exercise of the options, there will be another cash injection of over $48M.

The 1MW plant is scheduled to be operational by 09, with power to be provided to Inamincka free of charge (though who can put a dollar value on such effective publicity?).

Upon completion of SAV1, JOL2 will be drilled and a second fracture zone engineered. The first 500MW capacity is really a loose figure to describe a collection of 50MW modules (the actual output is unlikely to ever settle at 500MW, with the attraction of simply adding more modules too high).

In a previous post I put up some revenue calculations. It is likely that 500MW alone will generate over $250M per annum, with opex as low as $20M per annum. I'll have a look later to see if I can drag up the figures. They sure did lend themselves to an exceptionally promising dividend model.

Oh, and the new MD was the head of Tata Power, India's largest private power company. What a commodity for an emerging producer such as GDY.



Not bad eh?