jolokia 1 spudded, page-2

Intersuisse comments:

Geodynamics Limited GDY Tuesday, 18 March 2008
Flow test commenced at Habanero 3
Recommendation Speculative Buy


GDY has announced that its third Cooper Basin geothermal drill hole, Habanero 3, was
opened under controlled flowing conditions on March 14. The well cleaned up rapidly from
drilling mud and assumed relatively constant output. The well is sustaining production of 18
kg/second at a flowing pressure of 27.5 Mpa (3,991 psi) through a 12.5 mm fixed choke.
Current flowing temperature is 208 C. The flow is directed to a steam separator designed
for up to 25 kg/second input. Productivity is 400% higher than that obtained from Habanero
2 in 2005 where lost down hole equipment impeded flow and eventually caused blockage
from the main fracture zone.
During production and shut in of Habanero 3, the monitored well head pressure at
Habanero 1 responded as expected, indicating good communication between the wells at
4,250 metres depth. Flow testing of Habanero 3 will shortly be followed by combined flow
from Habanero 3 and re-injection into Habanero 1. A successful test will mark proof of
concept. The high pressure pumps required for the re-injection have arrived on site.
Origin Energy (ORG) is farming into 30% of GDY’s South Australian geothermal tenements
together with 30% of the Lightning drilling rig. In addition to its 30% share of on-going
project expenditure, ORG will contribute up to $106.5 million towards all project cash costs
comprising $96 million plus an additional $9.6 million should GDY complete its Stage One
proof of concept phase by 31 March 2008.
The funds provided by ORG will be used to drill the next three to four wells which will be
focused on upgrading the known resource to proven reserves in support of a planned
500MW development by 2016. The wells will be located across the project area, ranging
up to 9 km from the existing wells. Initially the company is focused on delivering power to
the electricity grid in 2012 with a 50 MW plant. The drilling rig is currently on the site of the
next well, Jolokia 1.
Detailed design is currently underway for a 1MW pilot power plant with the intention of it
being in operation by late 2008. The plant will be built using Habanero 3 as the production
well and Habanero 1 as the injection well.
Geodynamics Limited is Australia’s largest listed public company focused on hot fractured
rock (HFR) geothermal energy. The company is confident it can eventually deliver a
quarter of Australia’s new generating capacity.
HFR geothermal energy is produced using heat extracted from buried hot granites by
circulating waters through an engineered, artificial reservoir or underground heat
exchanger. These hot granites represent a massive source of renewable energy, free from
CO2 emissions.
The development of HFR geothermal energy relies on existing technologies. HFR
geothermal projects are currently underway in France, Switzerland, Germany, California,
and Japan. Australia has a recognised potential for the development of HFR geothermal
energy.
Geodynamics Limited has secured significant geothermal exploration rights in South
Australia, New South Wales and Queensland and is investigating the potential in other
states.

Impact
GDY has pushed the boundaries of geothermal drilling techniques on an international
scale, with no one else having successfully drilled 4,000 metres into granite that contains
multiple fractures and water under pressures of up to 12,000 psi. Lessons regarding rigs,
bits, drilling fluid and pressure management were learnt from the initial drills on Habanero
1 and Habanero 2 and the knowledge gained has been vital in the successful drilling of
Habanero 3, the first hole on a commercial scale. Following the successful drilling of
Habanero 3 testing of the concept has begun, marking a milestone for the company.