ferrets stock to watch: petratherm limited

Ferrets Stock to Watch: PETRATHERM LIMITED
09:08, Tuesday, 30 January 2007

A COMPANY THAT IS LOOKING HOT TO TROT

Sydney - Tuesday - January 30: (RWE Aust Business News)
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OVERVIEW
********

The market is still awaiting the outcome of "confidential
negotiations with a third party over various transactions" disclosed by
Petratherm Ltd (ASX:PTR) to the Australian Stock Exchange last week.

The company had been responding to to a please explain from the
ASX over its sudden share price rise from about 45c to 63c.

Yesterday Petratherm was in a trading halt after finishing at
66.5c last Thursday.

Petratherm is an energy exploration company that searches for
hot geothermal rocks from which energy is drawn by water circulated
underground and extracted by a surface heat exchanger (hot rock) to
generate electricity.

The heat extracted from the water in turn heats a
low-boiling-point liquid, which boils, producing high-pressure steam that
is used to drive electricity turbines.

Yesterday Petratherm reported progress in the December quarter.

A landmark Memorandum of Understanding for the supply of power to
Heathgate Resources's Beverley uranium mine was established on November
1.

Petratherm also announced that it was successful in obtaining
project endorsement from the Asia Pacific Partnership on Climate and
Clean Development (AP6) to undertake a study to identify high prospect
geothermal energy projects in China.

Joint venture opportunities for geothermal exploration and
development at Paralana are being explored, with discussions under way
and progressing well with a number of interested third parties.

The company successfully completed a placement of 6.5 million
fully paid ordinary shares at 32c in November, raising $2.08 million
before expenses.

At the end of the quarter the company held $3.071 million in
cash.

On on the operations side, an exceptionally high heat flow of
129 milliwatts per square metre (mW/m2) was established in December at
the Paralana geothermal site, providing further confidence in the
economic viability of the thermal resource interpreted to be located
at a depth of 3.5-4 kilometres.

The company secured a new geothermal exploration licence (GEL
254) to cover the full extent of the thermal resource at Paralana. This
new tenement brings the company's tenure position at Paralana to
approximately 2,000 square kilometres.

In November Petratherm announced that the Chinese were interested
in "hot rocks" and its newly created technology.

The company has won the right to help China best determine if,
how and where geothermal or "hot rocks" generated power can help service
that country's emergence as the world's fastest growing market for
electricity.

This project would facilitate exploration in non-volcanic
regions of China, using a tool kit developed by Petratherm to locate and
evaluate "Hot Dry Rock" resources that could be economically developed
for power generation.

The decision to award preference and potential government funding
for the work to Petratherm has been backed by the Federal Government and
key countries in the Asia Pacific Partnership.

These cover the six-member Governments of the Asia Pacific
Partnership on Climate and Clean Development (AP6) - the United States,
China, India, Japan, South Korea and Australia.

Petratherm is the only geothermal energy company to secure the
AP6 Project endorsement.

It will see Petratherm on the ground in China over the next nine
months identifying hot rocks sites.

It's like drilling for oil but instead geologists are searching
for rocks in the earth that give off tremendous heat.

Shareholders of Adelaide-based Petratherm should have been
encouraged by the words of chairman Derek Carter at the annual meeting
after he described the company's exciting future as an explorer and
developer of geothermal energy.

Mr Carter told the meeting that Petratherm had made significant
progress in 2005/2006 towards achieving its stated mission which is to
"explore and develop, emission free, commercially sustainable geothermal
energy projects."

SHARE PRICE MOVEMENTS
*********************

Shares of Petratherm are still in a trading halt and last
Thursday posted a sale of 66.5c. Rolling high for the year is 66.5c and
low 25c. The company has 49.8 million shares on issue with a market cap
of $33.1 million.

The company's key strength is its innovative exploration model
that focuses on "shallow hot rocks close to market".

The model has been successfully applied to identify high-prospect
sites in South Australia, notably Paralana, Callabonna and
Ferguson Hill.

Petratherm has already signed a Memorandum of Understanding
with Heathgate Resources, operator of the Beverley uranium mine in South
Australia, for the mine to potentially take future electricity supplies
from any successful commercialisation of the Paralana project just 11
kilometres from the mine.

The chronological highlights over the 2005/2006 year include:

* September 2005 - Following shallow Phase 1 drilling at the
Paralana and Callabonna project sites, exceptional temperature gradients
of 81C/km and 68C/km, respectively were confirmed.

* January 2006 - Successful capital placement of $1.97 million
to fund the Phase 2 extension of the Paralana well.

* May 2006 - Appointment of a managing director, Terry Kallis,
who has extensive experience in the power industry and renewable energy
project development to complement the skills and capabilities of
Petratherm's board and management.

* June 2006 - Successful Phase 2 drilling program completed
within budget and ahead of schedule at Paralana with the geothermal test
well being extended from 485 metres to 1,807 metres where a temperature
gradient of 500C/km was recorded.

Since the end of the reporting period the company has continued
to take further significant steps that have helped position it for its
next major stage of development and future growth.

These include confirmation of world class thermal resource at
Paralana and vindication of the Petratherm Exploration model, with
temperatures of approximately 200C expected at a depth of 3.6 kilometres,
and last week's successful capital placement of $2.08
million to fund the preparatory work for Phase 3 drilling at Paralana
and ongoing working capital.

BACKGROUND
**********

Petratherm was established on October 24, 2003, with the aim of
obtaining tenements suitable for the production of economically viable
hot rock energy, together with methodology and research data to assess
the potential of such tenements.

To date, three tenements have been obtained which are
characterised by:

* Potential occurrence of substantial rock masses with naturally
occurring radiogenic minerals;

* Proximity to major infrastructure;

* Depth to top of target rock in the three kilometre range;

* Potential heat exchange reservoir characteristics; and Location
not affected by problems of restricted access.

Petratherm believes that the requirement for power from
renewable energy sources will increase, and that hot rock energy is one
of the few forms of renewable energy that can provide base-load power
without significant impact on the environment.

ENDS

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