TIDMWAS
RNS Number : 7370Q
Wasabi Energy Limited
17 October 2013
17 October 2013
Wasabi Energy Limited
("Wasabi", "The Group" or "The Company")
Wasabi Energy to Complete Acquisition of 50% of Advanced
Geothermal Power Project and Completion of Pre-Feasibility Study
for 30 MWe Expansion.
-- Internal pre-feasibility study (PFS) validates Imparator
Enerji's plans for large-scale (30 MWe) expansion of the Tuzla
Geothermal Power Project (TGPP).
-- Detailed financial modeling of a 30 MWe Kalina Cycle(R)
conceptual development at the TGPP, with indicative NPV of $142
million and indicative IRR of 57%, providing strong investment
case.
-- Expansion project underpinned by updated resource estimate
indicating the most-likely (P50) size of the TGPP geothermal
resource is potentially greater than 80 MWe, confirming findings of
past studies.
The Chairman of Wasabi, Mr John Byrne, commented: "The results
of the pre-feasibility study underline the Wasabi Group's stated
objective of having 25 MW of power production directly attributable
to Wasabi either under construction or in operation by 2015 and
maintaining that minimum growth at that rate thereafter."
Mr Byrne added: "The Tuzla project alone has the potential to
deliver 18.5 MW towards our primary objective and indications are
that our Asian subsidiary can more than provide the balance. The
results of the pre-feasibility indicate that 15 MW share of TGPP as
envisaged by Wasabi can deliver in excess of $70 million of net
present value. As more Kalina Cycle(R) plants come on stream,
interest in the technology is expected to continue to grow
dramatically. At present, there are three Kalina Cycle(R) plants
under construction, two of which are currently being commissioned
and are expected to be operational before the end of the year."
Overview
Wasabi Energy (ASX: WAS, AIM: WAS, OTCQX: WSBLY) is pleased to
provide an update on the progress of its wholly owned Turkish
subsidiary, Imparator Enerji1. As first announced in April 2012,
Imparator holds an option (the "Option") to acquire up to 50% of
the project company that owns the Tuzla Geothermal Power Project
(TGPP) in Çanakkale, Turkey.
Since acquiring the Option, Imparator has been working with
Egenda Enerji, the plant owner and operator on a range of
initiatives including plans for an upgrade of the existing plant
and future expansion of installed generation capacity at the TGPP.
Following a recent upgrade of the geothermal resource at the TGPP
(Geologica, July 2013), Imparator recently finalised a
comprehensive pre-feasibility study (PFS) based on a 30 MWe Kalina
Cycle(R) conceptual development (TGPP-2) at the TGPP. The PFS has
been prepared with the support of experienced third parties, most
notably Power Engineers, a U.S. based recognised global leader in
geothermal power plant design and development.
The key findings of the PFS are highly encouraging and support
Imparator's development plans for the installation of additional
power generation capacity at the TGPP. In addition to the modelled
financial performance of TGPP-2, the PFS concluded that, provided
the PFS can be advanced to a bankable feasibility study (BFS) by
the end of CY2014 (and financial close reached shortly thereafter),
first power from TGPP-2 could be realised in the second-half of
CY2016, adding significantly to existing project cashflow.
To date the Wasabi group has invested in the order of $10
million on the acquisition and development of the project and
intends to provide the outstanding acquisition related
consideration ($3.7 million) before the end of the year.
Wasabi has been in discussions with several groups interested in
investing directly into Imparator Enerji, or Imparator's project
company, Imparator-Tuzla(1) and is also evaluating a range of other
corporate options to fund the upcoming TGPP Option payment.
Following the completion of the PFS and with several funding
options at the advanced stages of evaluation, Imparator recently
provided formal notice to Egenda Enerji of its intention to
finalise the acquisition.
Proposed 30 MWe Expansion Project (TGPP-2)
Encouraged by the increased size of the geothermal resource
estimate at the TGPP, Imparator increased the scale of its proposed
power plant design from the previously flagged 17.5 MWe to a larger
30 MWe design, as part of the recently completed PFS.
Imparator's preferred development concept involves integration
of 2 x 15 MWe Kalina Cycle(R) units, providing significant design,
site and operational synergies. In addition, the modular design
also provides flexibility with respect to construction schedules as
well as optimising project sanction timelines.
The power plant development concept outlined in the PFS is
Imparator's preferred development concept, however will require
approval from a range of parties, including the project JV partner
(Egenda Enerji) as well as typical regulatory approvals.
Indicative Project Financials
As part of the PFS a detailed project financial model was
developed, based on installed project cost, the basic geothermal
tariff ($0.105/kWh) and a range of assumptions deemed to be
appropriate at the time of preparation. In addition to detailed
project design and development related information; the key
financial outputs of the study indicate the following:
EBITDA: $19.6 million (As of the first full year of commercial
operation)
NPV: $141.6 million
IRR: 57.1%
Whilst every effort has been made to ensure the accuracy of the
PFS, the above numbers are provided on a best-estimate basis and do
not represent a financial forecast.
For commercial reasons the forecast capital cost of the proposed
expansion project (TGPP-2) at this stage will not be publicly
disclosed, however the cost has been confirmed to be in the lowest
quartile of geothermal projects globally.
TGPP Power Plant Information
The existing power plant (TGPP-1) at the project site utilises
an organic rankine cycle (ORC) binary power generation technology.
Both Egenda Enerji and Imparator are fully committed to utilising
the most appropriate technology to develop subsequent stages of the
TGPP. As part of an Expert Engineer's Report for the TGPP-2 PFS,
leading geothermal experts, Power Engineers indicated that:
"Based on the engineering work conducted to date, the Kalina
Cycle(R) is deemed to be an appropriate power cycle technology for
the proposed large-scale TGPP-2 power plant development."(2)
TGPP-1: Operating 7.5 MWe Power Plant Information
-- Operating 7.5 MWe (gross nameplate capacity), air-cooled,
organic rankine cycle (ORC) binary power plant utilising a pentane
working fluid. Due to a combination of design, operational and
current brine/steam production constraints the power plant is
operating below nameplate capacity.
-- The Tuzla geothermal power plant is designed to extract
thermal energy and generate electricity from the geothermal brine
produced from two production wells with the cooled brine then
reinjected into the reservoir in a closed loop system.
-- The power plant successfully passed acceptance tests and
commenced commercial power generation in January 2010. Electricity
sales under Turkey's feed-in tariff (US$0.105/kWh) system on 1
January 2012.
-- On 11 May 2004, the Energy Market Regulatory Authority (EMRA)
granted a 40 year power generation license.
-- Engineering studies by Imparator and Egenda Enerji indicate
that modifications at the TGPP power plant can be expected to
increase annual power generation from current levels to at least
nameplate capacity.
TGPP-2: Planned 30 MWe Power Plant Information
-- The thermodynamic modelling for the proposed plant was
performed by Recurrent Engineering, Wasabi Energy's Houston based
engineering team.
-- Imparator worked closely with Recurrent Engineering, Power Engineers, an established local engineering-procurement-construction (EPC) contractor and a number of leading suppliers to develop a detailed design and cost estimate for TGPP-2.
-- Imparator is pursuing a best-in-class design and build
philosophy where it is working exclusively with contractors and
suppliers with an established track-record of successful project
delivery.
-- The proposed 2 x 15 MWe development concept for TGPP-2 is
based on up-scaling a proven Kalina Cycle(R) design to reduce
technology related risks.
-- The vast majority (96%) of total project costs for TGPP-2 is
supported by vendor quotes from reputable suppliers, therefore
there is a high level of confidence in cost estimates.
-- Finally, the installed cost of TGPP-2 as outlined in the PFS,
is in the lowest quartile of all new-build geothermal development
projects globally.
TGPP Geothermal Resource Assessment
The TGPP resource has been extensively studied since the 1960's,
with the Mineral Research & Exploration General Directorate
(MTA) drilling the 814 m deep discovery well in 1982, which proved
the presence of a 174(o) C resource at 330 m.
The presence, distribution and productivity of the TGPP
geothermal resource is based on the analysis of an extensive
database of technical data including, geological, hydrogeological,
geophysical, geochemical and direct well-bore data.
Imparator has previously engaged leading geothermal resource
experts, Geologica to perform several assessments of the TGPP
geothermal resource. The most recent assessment was performed by
Geologica in July 2013 and incorporates significant additional
information (since the maiden resource assessment in 2011)
including recently obtained well data as well as recent well field
performance. One of the key findings of the Geologica report, is as
follows:
"Based on the available data and work to date, the geothermal
resource at Tuzla is proven as sustainable, commercial grade, and
utility scale. Given the available data, the resource would appear
to support Imparator's plans to increase installed generation
capacity at the TGPP."(2)
With respect to the impact of the shallow nature of the
geothermal resource on total project costs for TGPP-2, geothermal
experts, Power Engineers indicated that:
"The installed cost of TGPP-2 compares very favorably to the
majority of geothermal development projects globally, due to
combination of the low-cost operating environment in Turkey and
especially the low cost of resource development."(3)
Following an extensive pan-European research effort by a range
of scientific and research organisations, earlier this year, the
European Geothermal Energy Council (EGEC) launched a GIS database
mapping the geothermal resources of Europe. The GIS database,
highlights the distribution of shallow geothermal resources
(generally the most financially attractive to develop) across
Europe and indicates that the Çanakkale province in Western Turkey
where the TGPP is located, as a highly prospective region. The TGPP
covers the core area of geothermal resources in the region and the
TGPP-1 is the only operating geothermal power plant in
Çanakkale.
Comment from the Chairman
Executive Chairman of Wasabi Energy, Mr. John Byrne
commented:
"Development of renewable power generation projects in Turkey is
underpinned by substantial increases in long-term power consumption
as the Turkish economy industrialises, as well as Turkey's very
high levels of import dependence for energy supplies. With strong
market fundamentals, the Turkish geothermal sector continues to
experience rapid growth with several large scale projects currently
under development, as illustrated by the commissioning of a new 80
MWe project, Kizildere-2 by Zorlu Enerji, in September 2013."
"Finalisation of the pre-feasibility study for TGPP-2 marks an
important milestone for our Turkish subsidiary, Imparator Enerji,
as it confirms the potential for a near-term, large-scale
geothermal development. At the Wasabi level, we have several
options for funding Imparator moving forward and are at the
advanced stages of evaluating the most appropriate strategy to
ensure the long-term success of the company."
"Together with the project development opportunities being
progressed by our subsidiaries in Asia, Africa and Europe, we are
building the foundations for a global IPP business based on our
core power cycle technology, the Kalina Cycle(R)."
Comment from Imparator Enerji
Managing Director & CEO of Imparator Enerji and Imparator
Green Energy plc, Mr. Bahay Ozcakmak commented:
"Since first announcing the acquisition of the Tuzla option some
18 months ago, we have been working closely with our partner on
several initiatives, including the drilling of a successful
geothermal well in September 2012 that enabled the TGPP company to
increase the size of the TGPP geothermal production license area
significantly, from 12 km(2) to 29 km(2) ."
"In an effort to support our plans for increasing generation
capacity at the TGPP, together with our strategic partner, San
Francisco based Geologica, in July 2013 we updated the TGPP
geothermal resource assessment. The revised resource assessment
underpins our plans for the proposed 30 MWe expansion of the TGPP,
as outlined in our recently completed PFS. We are very encouraged
by the PFS results as it confirms our confidence in the TGPP and
highlights the near term potential to sanction a utility-scale
project with attractive financials."
"Whilst our focus has been on preparing conceptual development
plans for the TGPP and completion of the acquisition, we continue
to build our pipeline of project opportunities in both the energy
efficiency and geothermal sectors in Turkey."
References
1 - Imparator Enerji Limited Sirketi, and its wholly owned
subsidiary, Imparator Tuzla Jeotermal Enerji Uretim A.S. are
Turkish companies registered under the Laws of Turkey with offices
located at: Levels 5 & 6, Louis Vuitton Orjin Building, 15
Bostan Street Tesvikiye, Nisantası Istanbul 34367 Turkey.
2 - A Supplemental Update Report for the TGPP Resource
Assessment, Geologica, Internal Report, July 2013.
3 - Expert Engineer's Assessment Notice, Power Engineers,
Internal Report, 16 September 2013.
For further information contact
Enquiries - Australia
Mr. John Byrne / Ms. Diane Bettess
Wasabi Energy Limited
Ph: +61 (0)3 9663 7132
Media Enquiries - United Kingdom
Mr. Josh Royston / Ms. Hilary Millar
Threadneedle Newgate
Ph: +44 (0) 207 653 9850
Investor Enquiries - United Kingdom
Ms. Ivonne Cantu / or Mr. Neil McDonald
Cenkos Securities plc
Ph: +44 (0)207 397 8900 / +44 (0) 131 220 9778
Imparator Enerji Enquiries
Mr. Bahay Ozcakmak
Imparator Enerji
Ph: +90 (0) 212 373 9445
bahay@imparatorenergy.com
This information is provided by RNS
The company news service from the London Stock Exchange
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