Monday 8th July 2019
|Text too small?|
Geothermal minerals specialist Geo40 is considering a listing to help fund the next stage of the firm’s growth.
The company has operated a demonstration silica extraction facility at the Ohaaki field, in conjunction with Contact Energy and the Ngati Tahu Tribal Lands Trust, for about 15 months.
Today it was granted a $15 million loan from the Provincial Growth Fund to help it establish commercial-scale silica production at the field.
“This funding is a game-changer,” managing director John Lea told BusinessDesk. “It gets us over the hill and into commercialisation.”
Taupo-based Geo40 was formed in 2010 and originally traded as Environmetals. It has previously trialled its technology at Contact’s Wairakei field, at the Norske Skog and Mercury plants at Kawerau, and at Kakkonda in Japan.
The new plant, on Ohaaki’s northern reinjection field, is expected to cost about $20 million.
Lea said the firm is in the market for another $5-7 million and is confident of achieving that with the Crown funding now in place.
Work on the new plant could begin as soon as August and commissioning is possible this time next year, he said.
“Building the commercial plant will enable us to quickly demonstrate the capability of this world-first technology and then move on to expansion on the Ohaaki site and additional projects in other geothermal fields, both in New Zealand and internationally,” he said in a statement.
“Laboratory research in the USA and Japan has confirmed that 85 percent of lithium from the Ohaaki geothermal fluid can be extracted and Geo40 will look to test this technology in its commercial demonstration plant in late 2019.”
New Zealand gets about 17 percent of its electricity from geothermal fields, and more expansion is planned at fields in Northland and around Taupo.
But iwi and other businesses have also been looking to gain more value from the renewable resource, either through direct heat use for things like houses, timber kilns or in dairy processing, or by extracting minerals from the high-temperature geothermal fluids themselves.
Silica is used internationally in a range of products including ceramics, paints, paper and construction materials. Lithium is in growing demand for use in lithium-ion batteries.
The PGF funding comprises a $10 million loan and a $5 million convertible note. The note converts to equity in the event the company proceeds with a public share offer within the coming year.
Lea said the firm is looking to raise about $25 million through a share offer - the earliest window for which would be in November.
New Zealand is a relatively small market and raising funds to date had been “incredibly difficult”, he said. It will look at an NZX listing, but may have to also look to Australia for that next round of expansion funding, he said.
Announcing the Crown funding today, Regional Economic Development Minister Shane Jones called Geo40’s technology pioneering.
“The PGF is investing in this initiative because it has the potential to strengthen New Zealand’s position in the geothermal and mineral extraction industries worldwide,” he said.
“It will create permanent, high-skilled jobs locally, as well as bring in export earnings that will have a flow on effect in the local community. Up to 70 jobs will be created during the construction of the plant, with up to 30 full-time roles created once the plant and its planned expansion is fully operational.”
Contact, which began working with Geo40 in 2017, benefits from the project as the removal of silica from waste geothermal fluid reduces build-up in the field’s pipework and reinjection wells and helps maximise power generation.
“We are pleased that with this support Geo40 will be able to proceed with their exciting venture at our Ohaaki operations,” said James Kilty, the firm’s chief generation and development officer. "It will be a great boost to the region and is pleasing for Contact to continue to support geothermal innovation."
No comments yet
MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite