Earth Heat Resources (EHR) Annual General Meeting
I averted my eyes from the gaudy array of poker machines on the ground floor of the Tattersalls Club and arrived a couple of minutes late to the meeting room on level 2.
Fourteen motions were passed (ouch) and the trimmed down 3-man board invited discussion before the vote on each one. The atmosphere was friendly despite at least one pair of eyebrows raised over the allotment of 40,000,000 performance options to the deserving Managing Director, Torey Marshall.
No-one likes to see dilution but its good to see that the Directors have their money where their mouth is, and Torey’s KPI are ambitious – so I’m told.
Torey’s presentation sought to cast EHR as a utility company rather than a resources company. A bold move, no doubt, and not without basis given the massive achievement of securing:
a) Funding for the Stage 1 + 2 plant (Senior Debt)
b) Funding for 3 of the possible 4 production wells for stage 1 (Junior Debt), and;
c) Contingency finance from AGS Capital Group.
The presentation included a cheeky table comparing geothermal companies emphasising with a big red “Yes” that EHR was the only one to have secured financing for production wells and plant, although whoever drew up the table correctly agonised over whether to give Petratherm (PTR) a ‘yes’ or a ‘no’ in the ‘drilling information’ column.
Anyone still reading might be interested to know that the company has been working to lift the ‘cease trade’ order that was slapped on its former incarnation – Fall River Resources – by the Canadian TSX-V Exchange. I can just imagine the poor individual having to unravel that mess. 5 years of something not filed, did you say?
The vibe I got was that a re-rating might occur once the planned Canadian listing went forth. Someone said something about more analysts covering geothermal over there. As I understand it, the strategy is to progress the project as far as possible before inviting equity investors aboard, although I didn’t get out of them whether they preferred equity investors in the company or in the individual projects.
The suggestion was that we could see revenue from Copahue in as little as 2 years, and it does look to me like the board is laying the path for the company to issue equity to interested parties, although they were keeping mum about who they’ve been talking to.
What seems certain, however, is that they are angling for equity investors or a joint venture partner to develop the “much bigger” Fiale project in Djibouti – try saying that out loud.
I was wisely counselled to ask about whether they have the human resources to keep up this kind of work. The response was that they have what they need but perhaps not what they want. They seem set to expand their employees for sure – and I hope they will contact the right people.
They are still sussing out further opportunities in Africa. Speaking of which, I initiated a discussion about sovereign risk on that continent. They did concede that there were certain places to avoid, but maintain that Djibouti is secure. Before long, I realised how ridiculous it was to think that locals would have a problem with the company. This is more like it:
“It is wonderful to drive through in the morning and find you have a new power plant and you have a new well discharging, it is the greatest feeling you can ever get. It makes me feel very proud.” – Cyrus Karingithi (Kenya)
That is all.
Updated 24/2/2012 – Obviously, I hold shares.