In a release by the company, “Panax Geothermal Ltd (“Panax”) announces substantial progress on the Sokoria Geothermal Project, Flores, Indonesia. Following the recent completion of “Binding Terms Sheet Agreements” with PT Bakrie Power (“Bakrie”) regarding joint geothermal developments across Indonesia (refer ASX announcement 16 August, 2010), Panax and Bakrie recently carried out a joint visit to the Sokoria Geothermal Project in Flores, Indonesia.

The Sokoria Geothermal Project is distinguished by four factors:

• The Sokoria geothermal field is well known from extensive previous work (1974 –present) including drilling;
• The Sokoria Project has an agreed power price of USD12.5¢/kwh (USD125/Mwh) for the first 30 MW generating capacity;
• Strong support from local government as well as from the local community;
• The infrastructure is excellent, being within 16km of the capital of Flores, Ende, which is well serviced by regular airline services and sea port.

The advanced Sokoria Project has an extensive exploration data base, including three exploration wells as well as magneto-telluric (MT) surveys. Geothermal reservoir temperature at depths of 1,500m to 2,000m are estimated at >230°C. A 2008 report completed by JICA* has estimated that the Sokoria field has an “Exploitable Resource Potential” of 90 MW. The Indonesia Government (“DGMCG”**) estimates Sokoria’s resource potential at 145 MW with a current “Possible Reserve” of 25 MW.

The island of Flores has a population of 1.5 million people who currently rely on diesel power generation. Bakrie won the Sokoria Project through a Government tender in September, 2009, at an agreed power price of USD$12.5¢/kwh (USD125/Mwh), excluding carbon
credits, for the first 30 MW generating capacity.

Directors of both Bakrie and Panax met with the Head and Deputy Head of the local government (Bupati), who both promoted expediting the development of the Sokoria Project. Similar sentiments were expressed by the Head of the Sokoria Village (1,600 people), who assured that the project has the full support from the local population.

The Sokoria Project is located at a distance of 16km (as the crow flies) from Ende. The project site can be accessed by car using existing roads (± 30km). Ende (population 60,000) is serviced by airport (including regular scheduled flights), good harbor facilities as well as a
local power grid, currently serviced by diesel power generation.

The next step for the Sokoria Project is the completion of a specific Joint Venture Agreement between Bakrie and Panax (the latter holding 45%), following which fieldwork on the Sokoria Project is scheduled to commence.

Panax looks forward to playing an active role in realizing the potential of the Sokoria Project as well as participating in other geothermal developments across Indonesia. First field activities at Sokoria are likely to commence in the last quarter of this calendar year.”

Source: Panax Geothermal release via e-mail