Of all the listed geothermal projects Kuth is probably the most prospective at present. For such a small market cap company that might sound a strange thing to say. However the jigsaw pieces for Vanuatu are just hovering before coming together. After various lengthy hurdles, the leading permittings are in place and the PPA negotiations are with a company (UNELCO) that understands business expediency. Economic profitability is virtually guaranteed when the alternative source of energy is diesel at about $600 per MWh.
The funding situation has not yet been defined but development banks appear to be most interested in the Pacific region. Much prospect summarising in reports for large numbers of Pacific Islands has been completed and these banks would like to see an actual first working geothermal project in the region. Kuth has this advantage. I suspect negotiations are at a fruitful stage although some juggling is still required. The World Bank endorsement has helped enormously. Even so Kuth will have to find some of its own capital.
The “work has commenced” statement would generally apply to early works at no great cost. It may also be a strategic technique for getting certain persons over the line to final decisions.
Going straight into production drilling will be a real time saver and likely a fund saver as well since moving drill rigs on and off Pacific islands several times without substantial warfing facilities would not be cheap. As the temperature gradient is reasonably high the wells do not need to be deep so that once a rig is in situ you may as well keep drilling. A normal test temperature gradient well might require 250m depth but a production well may be only four or five times that figure. (I also pushed a bit.) Precise geological structure information also requires a full well depth. It is only the optimum location (or direction of drilling) that is not yet known. From various discussions I note that the project is being very carefully executed. It is getting exciting in fact.
Full marks are deserved by David M for getting and keeping an excellent team together for a considerable time on a very low budget.
Juke
KEN Price at posting:
1.5¢ Sentiment: LT Buy Disclosure: Not Held
