ABID - Panax Geothermal - Due Diligence and Valuation Report
09 Jul 2012
Available for Immediate Download
Panax is a geothermal exploration and development company. It identifies, explores, develops geothermal resources, and converts them into geothermal reserves to generate zero-emission base-load power for commercial purposes. Panax’s portfolio includes conventional (HSA) geothermal projects in Indonesia, Australia and India. The company is currently focusing on its projects in Indonesia and expects to produce 165MW of power (net to Panax). Panax, along with PT Bakrie Power, has acquired participation in the advanced “brown fields” attractive conventional geothermal projects in Sokoria and Dairi Prima in Indonesia. Strengthening the relationship further, it entered into its third agreement with PT Bakrie Power in April 2011 to develop the 165MW Ngebel geothermal project, in which Panax will own a 35% interest. The combined potential of the three projects is estimated to be above 265MW, of which Panax’s interest would be 90MW. Panax has agreed to the terms of the Power Purchase Agreements at attractive prices. In March 2011, Panax entered into an agreement with government-owned company PT Petrogas Jambi Power to commence exploration on the east coast of central Sumatra. Panax has a 95% interest in the Jambi project, with a target capacity of 75MW. Panax also has a 49% interest in India’s Puga Valley, a part of the Himalayan geothermal belt, where 35MW Yangbajing geothermal project is already operational. The Puga Valley project has a potential of 60MW and is targeting reservoirs identified at a depth of 2,000m and temperatures exceeding 260°C. Limestone Coast HSA project in Australia, acquired in 2007, is close to the national transmission grid. In 2008, the project was expanded by acquiring two exploration licenses covering the Penola Trough; one of the largest of the three measured geothermal resources currently reported in Australia. According to an independent geothermal resource assessment, the Penola Geothermal Project has a measured geothermal resource of 11,000PJ. In June 2012, PT PLN in conjunction with the Indonesian Ministries of Finance and Energy confirmed the finalization of Power Purchase Agreements for both Sokoria Geothermal Project and Dairi Prima Geothermal Project. The Indonesian Government, to incentivize geothermal projects, plans to increase the tariff either to a flat rate of US$125/MWh, or to US$120/MWh for developments close to the national transmission grid and US$145/MWh for projects on smaller Indonesian islands or with limited access to infrastructure. Arrowhead believes that Panax has a high growth potential with a risk profile lower than most of its comparable. Based on the intrinsic revenue capacity of the Penola and Hutton projects in Australia, the Sokoria, the Dairi Prima, the Ngebel and the Jambi projects in Indonesia, and the Puga project in India, Arrowhead believes that the company’s fair share value lies in the AU$13.5c to AU$31.7c bracket.