SP growth in GDY will primarily be linked to achievement of technical milestones. The feedback I have received from the company is that the well design issues are now settled.
Near term catalysts are: (1) positive media and analyst reports to be released next week. (2) progress reports on the pilot plant over the coming months.
But, to answer your question directly, as soon as the market comes to believe that this company is in fact going to build a 25MW commercial scale plant that will operate successfully, then we are going to see a major re-rating of the SP. And GDY is closer to this target than any other Australian geothermal play.
RBS Morgans have a current price target of $2.25 on GDY. They may increase this target slightly now that the REDP grant has been won. I would be surprised if this price target is not hit over the next 12 months. However, assuming there are no major technical set backs, I think the really big price surges will occur in 2012 (when the big end of town – funds, utilities, and the like – will be placing some big bets on the likelihood of a successful 25MW plant and flow on large scale plants).
RNE Price at posting:
91.5¢ Sentiment: LT Buy Disclosure: Held
