EDC to buy majority stake in four South America projects

December 1, 2011 12:40pm

Publicly listed Energy Development Corp. (EDC) has signed a deal giving it majority stake in four geothermal projects in Chile and Peru.

EDC told the Philippine Stock Exchange on Thursday that it signed a heads of terms agreement (HOTA) with Australia’s Hot Rock Ltd. to buy 70-percent equity in the South American geothermal projects.

The HOTA sets the framework and main commercial principles involving the 70-percent interest in the Calerias and Longavi geothermal projects in Chile — where EDC has a representative office — and in the Quellaapatcheta and Chocopata geothermal projects in Peru.

The transaction is subject to certain conditions, including full documentation, due diligence, and regulatory and governmental approvals.

Hot Rock has already completed most of the surface exploration in the geothermal projects. In the next six months, EDC and Hot Rock intend to finish the remaining surface exploration activities.

Based on the agreement, EDC and Hot Rock will establish joint venture companies for each of the geothermal projects, with EDC owning a 70-percent interest and Hot Rock owning the remaining 30-percent stake.

“We are excited with the prospect of developing with Hot Rock Ltd. what we consider as some of the best geothermal concessions in Chile and Peru, said Richard Tantoco, EDC president and CEO.

“The ability to grow our business with full control over our steam fuel supply is the strategic rationale for the Lopez Group's acquisition of the controlling stake in EDC,” Tantoco noted.

Dr. Mark Elliott,  Hot Rock executive chairman, said, “We are excited to have executed this HOTA, with the intention of establishing our first major partnership deal with EDC, the world’s largest integrated geothermal company with 35 years of experience in volcanic terrains and with a strong balance sheet.”

As part of its growth targets, EDC, has submitted direct applications for 13 sites and bids for five sites in Chile. The company is also looking at opportunities to develop geothermal projects in Indonesia, Kenya, and Peru.

EDC is the world’s largest integrated producer of geothermal power. It is engaged in the exploration, development and optimization of geothermal fields, as well as the operation and maintenance of geothermal power plants with a combined capacity of 1,130 mega watts. — VS, GMA News

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