Ann: Xstrata interested to purchase approximately, page-2

re: Ann: Xstrata interested to purchase appro... Good to see TM making progress and with a major global miner too! As DrDaz mentioned, however, an LOI is not a PPA.

Also, it looks to me as though the El Pachon project is far from assured of progressing beyond the feasibility stage, IMO. No doubt XStrata really do want to make the project happen, however, I doubt they'll be making a decision before the Glencore takeover bid is voted on in July (my opinion only). Glencore's CEO, Ivan Glasenberg, has reportedly said, two weeks ago, that XStrata was "holding back on the big copper investment in Argentina." The reporter was unable to find out which specific project Glasenberg was talking about. Read the May 2012 story here, opens in new window. The comments by Glasenberg are at odds with comments made by an XStrata spokesperson, in the same week, that work was progressing on El Pachon. Read the story here, opens in new window.

El Pachon has also been plagued with an environmental law suit which the Australian and Argentinean governments have offered to mediate. Read the Nov 2011 story here, opens in new window. The organisation that filed this lawsuit is CEDHA. I wasn't able to determine what the outcome was, however, a recent report by CEDHA on a completely different project makes the comment that XStrata had successfully filed an injunction order to suspend the glacier law for El Pachon. The report is otherwise not relevant to El Pachon, but if you want to, you can read the May 2012 report here, opens in new window.

XStrata have a presentation on the El Pachon project. Read the April 2012 presentation here, opens in new window. They also have a project website in Spanish. The website can be accessed here in English, opens in new window.

After this little bit of research, hurriedly conducted this morning, I can understand why this little share price run up has stalled. This LOI is not a PPA and we really need a PPA. So, what are the chances of a PPA with XStrata? I'd say they're probably excellent ... if the El Pachon project goes ahead. And that is not a certainty ... yet. Interestingly, though, KBR received a contract for "concentrator delivery" on five XStrata projects, including El Pachon, which were "well under way" by Feb 2012. Read the KBR newsletter here, opens in new window. I've got no idea what a concentrator is, but it does indicate that XStrata are moving ahead with long lead time items. It makes sense that they would probably want green power ready to purchase when the time comes, and a geothermal power plant is a very long lead time item.

I believe that XStrata would love to make the El Pachon project work, however, I think that there are a number of uncertainties that only time will reveal. They are, in no particular order, the takeover bid by Glencore, the Environmental Impact Study (due mid 2012), and completion of the Feasibility Study (due 2012).

Will any of this stop XStrata from taking the risk of entering into a PPA with Earth Heat in order to ensure "just in time" delivery of green power for their El Pachon project? I'm not sure. One thing I am sure of, however, is that Earth Heat will have no shortage of buyers for their power once the plant is up and running at Copahue. Of course, without a binding PPA, there will be no power plant. Perhaps XStrata may not view this as a significant risk. If the demand is there, XStrata could sell the PPA to another interested party.