Alistair Webb | Geodynamics Limited

1. Geothermal Energy in the HunterPresentation to the Hunter Valley Protection AllianceFebruary 2, 2010 Alistair Webb | Geodynamics Limited

2. Geodynamics • About the Company, Geodynamics: • Is Australia’s leading geothermal energy company; • Is developing the world’s first commercial “hot fractured rock” base load power station near Innamincka in South Australia; • Has tenements in the Cooper Basin, where the world’s hottest granites are located; • Was awarded $10 million from the NSW Government and $7 million from the Federal Government to explore and develop its Hunter Valley prospect areas; • Has a joint venture partnership with Origin Energy in the Cooper Basin; and • Has been listed on the Australian Securities Exchange since 2002.

3. Geothermal energy • Overview: • Three main types of which two are used in Australia (Hot Sedimentary Aquifers or Hot Rocks) – we are targeting hot rocks (volcanic not suited to our conditions); • Also known as hot fractured rocks or Engineered Geothermal Systems (EGS); • Australia has some of the hottest known granites on Earth; • Uses the Earth’s stored heat to generate electricity, instead of burning fossil fuels; • Layers of hot rocks, typically granite, are targeted; • Temperatures in the rocks of more than 200 degrees Celsius are required for commercial production.

4. Geothermal energy Advantages of the geothermal energy we are targeting: • It is renewable energy • It produces NO emissions and NO waste • It is the only renewable energy able toprovide base load power, and • Has a smaller environmental footprint than traditional fossil fuelled power stations. Did you know that 1% of the geothermal heat resource in the top 5 km of the Earth’s crust could provide 26,000 x our annual energy consumption? Geoscience Australia, 2009

5. Geothermal energy Disadvantages of the geothermal energy we are targeting: • It is geographically limited to areas where hot rocks exist; • Proximity of the resource to existing power infrastructure; • Not suitable in highly earthquake prone areas such as San Francisco and Basel, and • The power plant needs to be close to the source of the heat.

6. Types of geothermal energy 1: Conventional geothermal systems: • The most common type of system currently in operational around the world • Uses heat from volcanic areas • Volcanic emissions are well known for being highly toxic • Common in New Zealand, Iceland, Philippines etc. • This type of geothermal energy is NOT available to Australia as it is very geologically stable http://www.agea.org.au/media/docs/agea_workshop_slides.pdf

7. Types of geothermal energy 2: Hot Sedimentary Aquifer (HSA) systems: • One of the types being developed in Australia (Otway Basin in Victoria) • Uses heat from hot water found in deep aquifers • Produces NO emissions • Is NOT associated with the toxic emissions of volcanoes • Not suitable for our prospect in the Hunter Valley as presence not identified http://www.agea.org.au/media/docs/agea_workshop_slides.pdf

8. Types of geothermal energy 3: Engineered Geothermal Systems: • The type being developed by Geodynamics in Australia • Uses heat from hot rocks, such as granite • Produces NO emissions • Is NOT associated with the toxic emissions of volcanoes http://www.agea.org.au/media/docs/agea_workshop_slides.pdf Horizontally fractured granite exposed at surface

9. Why it is needed • People are demanding cleaner energy • Governments are supporting cleaner energy initiatives • Currently coal and gas support Australian base load power stations • Coal fired power stations create other harmful emissions, not just carbon dioxide • Australia needs to begin changing its energy mix • We need to reduce Australia’s carbon footprint The Bayswater power station, Upper Hunter Photo: Kitty Hill

10. Binary Geothermal Power Plant Heat Exchanger Insulating Sedimentary Rocks 0 1 2 3 + + + + 4 + + Granite 0 270 C C 4.5km + + + + How electricity is generated Binary geothermal power: • Uses two closed loops • Cold water is pumped down to the granite • The granite heats the water • The heated water is brought up to the surface • Heat is exchanged with the second loop, and • The second loop provides steam to power the turbine.

11. Government initiatives • Australians are demanding cleaner energy. • Governments recognise Australia needs to develop its own renewable energy resource and start to reduce its dependence on fossil fuels. • $300 million renewable energy demonstration program for renewable energy developers. • $50 million for geothermal drilling programs, $7 million per project. • Renewables to generate 20% of the electricity market by 2020. • Review of national electricity market rules to support infrastructure delivering renewables. • More geothermal exploration licences are being issued by State Governments. http://www.agea.org.au/media/docs/agea_workshop_slides.pdf

12. Exploration in the Hunter - Muswellbrook

13. Exploration in the Hunter - Bulga

14. A Pivotal Point in Exploration • The next well will determine if exploration will continue

15. Future possibilities • Drilling into the granite Phase 1 - Confirm temperature projection, Detailed well design, Site preparation

16. Future possibilities • Drilling a second hole into the granite

17. Future possibilities Establish a power plant – artist’s impression of a 50 MW power plant

18. Where we want to undertake further exploration • Private land, permission sought from landholders • Existing mining lease • Two landholders impacted • Operations not visible • Focused only on this area • Awaiting legislative approvals

19. Radioactivity • All rocks have an underlying level of radioactivity. • Radioactivity occurs naturally all around us everyday. • The granite we are targeting at depth has the same level of radioactivity found in granite outcropping in a paddock.

20. Radioactivity • We use water to create the reservoir, no additives are used. • Water tests – we will share them. • Results in the Cooper Basin: the level of radon was lower in the water from the granite than you find in drinking water. • Results in the Cooper Basin: the level of radon was lower in the steam tests than what was found naturally occurring in the air. • There are NO EMISSIONS in the type of geothermal energy we produce. Dr Doone Wyborn with steam separatorin background

21. Induced seismicity • We use water to create the reservoir, Water is pumped into the granite, hydraulic fracturing, to create the reservoir • Same techniques used for many decades in traditional oil and gas industry. • Already used locally at much shallower levels. • Highly unlikely to be felt: 1:5,000 events in the Cooper Basin. • Installation of a highly sensitive seismic monitoring system similar to that installed in the Cooper Basin. Seismic monitoring stations ready for installation at Geodynamics’ Savina 1 camp inthe Cooper Basin, SA.

22. Induced seismicity • Independent seismic survey to assess risks. • Evidence of the stress orientations to date – CSIRO and the local coal industry. • If there were any seismic activities, they would be thoroughly investigated.

23. No emissions – No waste – No steam • Air cooled (like a car radiator) • Using closed loops (no venting of hot fluid or steam)

24. Power from the Earth Zero emission, base-load power | www.geodynamics.com.au