The Koroit Geothermal Project

Peter BarnettManaging Director

Hot Rock Limited

10 Market Street, Brisbane,

www.hotrockltd.com

Presentation to Hawkesdale P12 College, 1 December 2010

Whilst this document and presentation is based on the information from sources which are considered reliable, Hot Rock Limited, its directors, employees and consultants do not represent, warrant or guarantee, that the information in this document and presentation is complete or accurate.

To the maximum extent permitted by law, Hot Rock Limited disclaims any responsibility to inform any recipient of this document and presentation of any matter that subsequently comes to its notice, which may affect any of the information contained in this document and presentation.

The information in this Statement that relates to Geothermal Resources has been compiled by Peter Barnett, an employee of Hot Rock Limited. Mr Barnett has over 30 years’ experience in the determination of crustal temperatures and stored heat for the style relevant to the style of geothermal play outlined in this release. He is a member of the Geothermal Resources Council and the International Geothermal Association, a current board member of the New Zealand Geothermal Association, a past board member of the Auckland University Geothermal Institute Board of Studies and a current member of the Economics Sub Committee of the Australian Geothermal Association. Mr Barnett qualifies as a Competent Person as defined by the Australian Code of Reporting of Exploration Results, Geothermal Resources and Geothermal Reserves (2008 Edition). Mr Barnett consents to the public release of this report in the form and context in which it appears. Neither Mr Barnett nor Hot Rock Limited takes any responsibility for selective quotation of this Statement or if quotations are made out of context.

All amounts are in Australian dollars (AUD) unless otherwise stated.

Disclaimer

What is Geothermal Energy? Geothermal means earth-heat. It is related to the thermal energy of the earth’s interior. This thermal energy increases with depth A global average for the earth’s geothermal gradient (temperature

increase with depth) is approximately 30°C/km. The Earth contains an incredibly vast amount of thermal energy The key issue is how to extract this energy.

Greenslopes 1

McEachern 1

Windermere 2

Glenaire 1 ST1

Killara 1

Bus Swamp 1

Nth Eumeralla 1

Tirrengowa 1Paaratte 4

Taralea 1

Ross Creek 1

Waracbarunah 2

PHE-3

Banganna 1

Stoneyford 1

Digby 1

0

500

1000

1500

2000

2500

3000

3500

4000

0 20 40 60 80 100 120 140 160 180

Dept

h Bel

ow G

roun

d Lev

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Otway Basin Wells - Measured & Estimated Stable Bottom Hole Temperatures (BHT, � C)

Horner corrected BHT

Horner Crayfish BHT

Horner Basement BHT

Esso corrected BHT

Esso Crayfish BHT

Esso Basement BHT

20°C/km

30°C/km

40°C/km

Where Does Geothermal Energy Come From?

Geothermal energy largely derives from two primary sources, primordial heat, and radioactive decay in the deep core of the earth.

Primordial heat is what resulted from the creation of Earth 4.5 billion years ago

As Earth’s outside has cooled, it has acted as an insulator for the heat in the middle, which is why Earth is still cool and hospitable on the outside, and hot-rock and metal at its core.

Some of the heat still seeps through the ‘insulation’, the evidence of this is volcanic activity such as that found in Hawaii, New Zealand, Japan and Italy.

Volcanic geothermal systems The highest quality geothermal resources are volcanic systems, limited to

locations with a high level of tectonic activity, at tectonic plate boundaries Within the ‘Ring of Fire’ which circles the pacific ocean there is a lot of tectonic

activity which permits large amounts of heat to rise to Earth’s surface (often resulting in volcanism).

There are a limited number of countries on the Pacific Ring of Fire that can use geothermal power from volcanic systems

Even though Australia has small volcanoes, these are not “Ring of Fire” volcanoes thus Australia has no volcanic geothermal potential.

It does however have considerable potential for “HSA” and “EGS” types of geothermal

Volcanic geothermal systems

generally have very obvious surface expression convective upflow / outflow systems developed around and above

shallow igneous heat sources considerable worldwide experience (11,000 MWe / 100 years)

Volcanic geothermal systems

7Mature liquid-dominated andesitic stratovolcano geothermal

system with exploitable outflow (Source of Graphic: SKM)

conform to predictable models exploration and development now relatively easy

Other geothermal system types – “HSA” and “EGS”

No commercial operations Operating for over 25 years

Operating for nearly 100yrs 96% of installed generation

capacity8

Current world wide geothermal power generation capacity is 11,000 MWe

http://www.globalenergymagazine.com/?p=1658, 20100910

Geothermal Exploration in Australia

• HSA Geothermal• Otway Basin• Gipplsand Basin• Cooper Basin• Perth Basin

• EGS• Largely South

Australia• North west areas of

Western Australia

Australian HSA and EGS geothermal - “blind” plays

HSA Play, Otway Basin

550,000PJ of “inferred geothermal resource” declared to date

EGS Play Innaminka

200,000 PJ of “inferred geothermal resource “

declared to date

But clearly recoverable geothermal energy is present at depth in these ‘blind’ plays

Recent flow testing of Salamander-1HSA Play

Penola Trough S.A.Courtesy of Panax

Surface discharge of Habanero 3EGS Play

Innaminka, S.A.Courtesy of Geodynamics

The Koroit geothermal resource is an “HSA” geothermal system, located in the Otway Basin

Base Graphic: Courtesy of Gescience Australia

A geological cross section through the Koroit geothermal system

Koroit is a large geothermal resource

In-place stored heat1:

Indicated Geothermal Resource47km3 7,600PJ

Inferred Geothermal Resource340km3 59,000PJ

Totals:387km3 67,000PJ

Capable of generating approx 500MWe of electricity

Sufficient for about 500,000 Australia homes

1 Based on the Australian Code of Reporting of Exploration Results, Geothermal Resources and Geothermal Reserves (2008 Edition)

How will we use the geothermal energy at Koroit?:(1) for generation of electrical power

Conversion of geothermal heat to electricity

Organic Rankine Cycle power plant

How will we use the geothermal energy at Koroit?:(2) for direct use of heat

Koroit Geothermal Development Program

19

Beneficial characteristics of geothermal energy

Clean, environmentally friendly• Minimal land use, low to nil emissions of

CO2

Sustainable • Derived from near infinite earth heat

Indigenous independent of commodity prices and

risks

Base load •24/7 operation and with high fuel and plant availability•>90%, vs. 30% wind, 45% solar 50% ROR hydro

Relatively high capital cost but low operating cost

Conclusions:

• Geothermal energy is in widespread use around the world

• It is a very clean source of renewable, base load, indigenous energy

• Australia has a very large carbon footprint and geothermal energy represents a means for significantly reducing this

• Australia is the largest emitter of CO2 per capita in the world and the largest part of Australia's carbon footprint derives from brown coal power generation in Victoria

• Australia has considerably recoverable energy contained in HSA geothermal systems and the largest and best of these are in the Otway Basin and the Koroit geothermal resource is the highest quality HSA resource in the Otway Basin

• The Koroit geothermal project will contribute in a meaningful manner to reduction of CO2 emissions to both the Australian and global atmosphere and to the mitigation of global warming,

• This will allow the people of Koroit to become part of the solution to global warming and heavy dependence on fossil fuels, rather than continuing to be part of the problem

Technical Forum, Resources Victoria ConferenceMelbourne, 14 July, 2010

Exploration and assessment of hot sedimentary aquifer (HSA) geothermal resources in Otway Basin, Victoria

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