Eco Investor October 2013

Pre-Revenue Securities

Geodynamics to Acquire KUTh Energy

Geodynamics is to make a takeover offer for KUTh Energy that if successful would see the consolidation of two of the remaining Australian pure play geothermal companies and perhaps give the struggling industry its best chance of producing a successful geothermal energy producer.

Under the off market, all scrip offer, KUTh shareholders will be offered one Geodynamics share for every five and a half KUTh shares. This values KUTh at $2.65 million and its shares at 2 cents each at the time of the announcement. KUTh shareholders would hold 6.1 per cent of Geodynamics.

KUTh's board unanimously recommends the offer, which is also supported by KUTh's major shareholders who hold 36 per cent of the company.

Combined, the two companies would have an enlarged and more diverse portfolio of projects in the Pacific Islands, and there would be "substantial synergies between Geodynamics' Savo Island Geothermal Project in Solomon Islands and KUTh's Takara Geothermal Project in Vanuatu". KUTh also has applications for licenses in Papua New Guinea and Fiji.

The enlarged Geodynamics would be well placed to build a business using geothermal energy to replace diesel power in the Pacific.

Another big benefit for KUTh shareholders is Geodynamics good cash position. KUTh has cash of only $0.7 million, while the enlarged Geodynamics would have cash of $42 million and a market capitalization of about $47.5 million.

Geodynamics managing director and chief executive, Geoff Ward, said "The combination of Geodynamics' and KUTh's portfolio provides shareholders access to a well balanced portfolio of opportunities offering near term revenue and potential for longer term growth within an overall stronger company that is well financed to achieve the development of these projects. The combination of the two groups will allow equipment, knowledge and capability to be shared effectively across the portfolio providing significant benefits through combined drilling cam





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