Ann: GENERAL: MRP: Mighty River Power Development

• Release Date: 13/06/12 11:00
• Summary: GENERAL: MRP: Mighty River Power Development Project Update
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MRP
13/06/2012 09:00
GENERAL

REL: 0900 HRS Mighty River Power Limited

GENERAL: MRP: Mighty River Power Development Project Update

Summary

Mighty River Power has today released an update of its key development
projects, both domestic and international.   Securing economically attractive
development options and developing these when appropriate continues to be the
key focus of our business development strategy.

Geothermal represents 0.3% of generation globally but is growing strongly as
many companies look to expand their domestic electricity generation from
renewable sources. Through its investment in GGE the Company has built a
platform for international geothermal growth, which leverages its experience
and rare competencies in this global niche.

Mighty River Power continues to progress domestic options to ensure we are
well-placed to take them forward when market conditions support the
investment case.
Domestic developments

Ngatamariki

The Ngatamariki Geothermal Power Station is a $466 million, 82MW development.
 The project received resource consent in May 2010 and construction commenced
in July 2011. Two injection wells and two production wells have been
completed, along with civil and earthworks for the power station.  A third
injection well is underway. Drilling of the second deep injection well
brought some challenges for the project team, but these challenges remain
within project contingency.

The total project cost of $466 million includes:

- pre-construction costs (exploration drilling, consenting and
reservoir modelling) of $65 million;
- costs incurred since the start of construction of $164 million;
- capitalised interest of $56 million; and
- a contingency estimate as appropriate for greenfield developments.

The Ngatamariki project presents an attractive business case with a real long
run marginal cost that is less than market estimates of $80 - $85/MWh. The
planned infrastructure also allows for a low marginal cost expansion in the
future.
The next significant milestone for Ngatamariki is the completion of planned
injection capacity. The project remains within budget and on track for
commissioning in mid-2013.

Puketoi Wind Farm

In August 2011 Mighty River Power lodged resource consent applications for a
53-turbine 326MW wind farm in the Puketoi Ranges, south of Dannevirke. This
project has progressed through a public hearing and a decision on the
awarding of consents is now imminent.

Te ia a Tutea

Mighty River Power has signed a joint-development agreement with Okere
Incorporation and Ruahine & Kuharua Incorporation for the investigation and
development of a geothermal power station on the Taheke field, northeast of
Rotorua.    The agreement enables initial exploration of the resource and,
subject to consenting arrangements, exploration drilling is expected to start
on the field within the next 12 months.

International developments

Hudson Ranch, California, United States

The 49.9MW John L Featherstone plant (previously known as Hudson Ranch I) on
the Salton Sea reservoir in California was formally opened in May 2012 and is
the first of Mighty River Power's international geothermal developments to
move into commercial operation.

Through the GeoGlobal Partners I Fund (GGE Fund) Mighty River Power has
invested US$92 million for a majority share in the US$400 million  project,
which is owned by EnergySource.  Post-construction project refinancing is
underway.

GGE's investment not only provided equity to develop the power station, but
also secured a 20% shareholding in EnergySource, which will allow Mighty
River Power, through GGE, to participate in other nearby developments.

EnergySource has recently announced a second 49.9MW development - named
Hudson Ranch II - on an adjacent site.  A power purchase arrangement has
been signed with Salt River Project in respect of this future development.
Salt River Project - an AA1/AA (Moody/S&P) rated Arizona utility with 900,000
customers in the region - is the purchaser of output from the John L
Featherston plant. Drilling on Hudson Ranch II is planned to start in July
this year, and construction in late 2013.

Tolhuaca, Chile

Positive progress has been made on the Tolhuaca geothermal project in
southern Chile, with drilling on two production-scale wells now completed.
The second well was completed on schedule and under budget, following delays
in drilling the first well in winter 2011.  The next step in the project is
to test wells for temperature and flow, which we expect to be completed
before summer.

Weilheim, Germany

Surface testing on the Weilheim prospect is largely complete, and we are now
awaiting permits to enable drilling.  Surface testing and planning are also
underway on four concessions acquired in 2011.

ENDS
End CA:00223803 For:MRP    Type:GENERAL    Time:2012-06-13 09:00:09