agl strikes geothermal deal with torrens, page-2

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AGL acquires 9.99pc stake in Torrens

July 09, 2008

AGL Energy has acquired a 9.99 per cent stake in Torrens Energy and will commercialise geothermal projects with the company.

AGL (ASX: AGK: quote) said it will acquire 9.99 per cent of Torrens by way of a share placement at 40 cents per share for $2.2 million.

AGL said it has also entered into a geothermal alliance agreement with Torrens (ASX: TEY: quote) to commercialise base load geothermal projects close to the national electricity market.

Torrens will be responsible for carrying out the exploration activities and provide AGL with the option to farm-in to Torrens’ geothermal exploration licences at permit and project level.

AGL said it will have significant long-term obligations under the federal government's mandatory renewable energy target scheme, which the government intends to substantially expand by 2020.

“If successful, geothermal energy could play an important role in meeting AGL's longer term renewable energy obligations and provides further technology diversification to AGL's position as Australia's largest renewable energy company,” it said.

AGL said a recent opinion from an independent geothermal consultant supports expectations that heat flow values from Torrens' permit areas are comparable to those recorded in Copper Basin in the north of South Australia.

“Torrens' permit areas have the added advantage of being located in close proximity to established electricity transmission infrastructure, which should provide cost advantages in commercially exploiting Torrens' geothermal resources,” AGL said.

Torrens director John Canaris said the unique alliance represents a “significant milestone” in the company's business strategy and growth.

Torrens listed in March 2007 and has been granted a large geothermal tenement holding in areas close to Adelaide in South Australia.

Torrens said the selected areas are known for high heat flow and coincide with the overlying insulating sedimentary cover required for high temperatures to accumulate.

“In addition, and unique to Torrens, these highly prospective areas are located on the national power grid, close to large energy markets and infrastructure,” Torrens said.

AGL shares were up 35 cents to $14.15 and Torrens was up 4.5 cents to 40 cents, at midday trading.

http://www.theaustralian.news.com.au/story/0,25197,23993310-5005200,00.html