Hi arthurglaso,Thanks for the article. It is a bit of a "devil's...

Hi arthurglaso,

Thanks for the article. It is a bit of a "devil's advocate" in talking about the threat, but then explains the real risk (which is very low). GDY is working in very geological stable area. A 3.x siesmic event is nothing to write home about and it was caused when they were doing the fracturing on Hab1 in the early days. The Basel plant is near the city and is on top of a known fault.

Please provide more information on the other "hot rock" resource you are talking about. You need to be careful of talking about apples and oranges. The article talks about a couple of specific geothermal projects but none are the same as GDY's. I would like to know why you believe they don't have the worlds hottest rocks.

I don't have the spreadsheet that GDY use to determine that they can produce sub $100/MW from a commercial plant without assistance in building the transmission lines. I just have to trust them on that. The government may have had a look before promising a $90m grant! I believe (don't quote me) that the energy used to circulate the brine at the recent "proof of concept" circulation test was 1/40th of the heat extracted. The circulation test has proven this.

From a recent investor briefing they explained a bit more about the process for material selection for the casing. When Hab1 was drilled, they weren't expecting to find a working fluid. They were expecting "hot dry rocks". The casing material for Hab1 would have been suitable for such a situation. They found there was a working fluid and it was under very high pressure. They finished off the Hab1 well with a higher grade steel in order to handle the higher pressure. It also happens that the higher grade steel happens to handle "sour" (oil & gas term) conditions. The Hab2/3 well casings were designed to handle the pressure, but there was insufficient knowledge at that time to know they required a more expensive steel to handle the sour conditions. As it turns out, Hab2/3 don't have casings to support sour wells. The top of Hab1 can handle sour conditions.

FYI - The higher grade casing material required by GDY is 10% more expensive. Casing material is 20% of the cost of the well.

You must also remember that the risk with GDY is still high, but it is also a lot lower that other hot rock geothermal companies in Australia. Whilst there is high risk, there is very high potential reward. GDY are taking action to reduce the risk of the project, but there are many challenges ahead. Perhaps the biggest risk in the current political climate is that no price (or regulation) is put on carbon and as such, coal continues to be the cheapest power source, leaving GDY worthless.

The GDY shareprice is also vulnerable with no magic "lights on" announcement anywhere in the near future. They also only have sufficient capital for the next 12 months so some sort of capital initiative will be forthcoming. But...the potential upside grows as the shareprice dwindles. Where the balance lies I do not know.

GDY know their Cooper Basin resource well, they have drilled it, they have found it already has the working fluid, they have circulated brine for 3 months, they almost got the power going.

GDY have confirmed they understand the importantance of getting the pilot plant generating electricity. The politicians and people want to see it to believe it. They will endeavour to get it going at an appropriate time in the new work plan.