GEOTHERMAL RESOURCES LIMITED · 11/05/2010 ) as they were surrendered on 9/04/2010. Re-interpretation of seismic survey line data . o. Geothermal Resources has a data base of all

GEOTHERMAL RESOURCES LIMITED

ABN 45 115 281 144

Annual Report

Licence Year 1

For the Period:

12 May 2009 to 11 May 2010

GELs 491, 492 & 493

11th May 2011

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CONTENTS Page No.

1 INTRODUCTION ……………………………………………………………………... 3 2 PERMIT SUMMARY …………………………………………………………………. 4 3 REGULATED ACTIVITIES ………………………………………………………….. 8 4 COMPLIANCE ISSUES ……………………………………………………………... 9 5 EXPENDITURE STATEMENT …………………………………………………….. 11 APPENDIX 1 EXPENDITURE STATEMENT ……………………………………… 12 LIST of TABLES Table 1. Current work commitments by licence year ……………………………. 4 Table 2. Final work program and work completed ……………………………….. 4 Table 3. List of reports and data submission ……………………………………. 10 LIST of FIGURES Figure 1. Yalkalpo GEL boundaries (with Seismic line 84-SPL) ………………… 5 Figure 2. Seismic line 84-SPL (reinterpreted) …………………………………… 6 Figure 3. Oblique view of GELs and intersecting seismic lines ………………… 6 Figure 4. Fabris et al. (2009) top of Basement surface superimposed on Fig 3.. 7

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1 Introduction Geothermal Exploration Licences (GELs) 491, 492 & 493 were granted on 12th May, 2009. The licences are located in the Yalkalpo Sub-Basin of the Arrowie Basin, South Australia. This report details the work conducted during Licence Year 1 of the licence (12/05/2009 – 11/05/2010 inclusive), in accordance with Regulation 33 of the Petroleum Act 2000. The licence was surrendered on the 9th April 2010; in consequence the reporting period is 12/05/2009 to 9/04/2010 inclusive.

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2 Permit Summary For the duration of the licence year, the licensee for Geothermal Exploration Licences (GELs) 491, 492 & 493 was:

Geothermal Resources Limited 100% The current work commitments associated with GELs 491, 492 & 493 can be seen in Table 1.

Table 1 Current work commitments by licence year Licence Year

Licence dates Minimum Work Program

Year 1

12/05/2009 – 11/05/2010 Review of available geophysical and drilling data for the area.

Licence Year 1 concluded on 11/05/2010. However, the licence was surrendered on 9/04/2010 ie. before the end of Licence Year 1. The following table displays the minimum work program and the actual work completed up until the end of the current licence period. Table 2 Final work program and work completed (until surrender date) by

licence year Licence Year

Minimum Work Program Actual Work

Year 1 Review of available geophysical and drilling data for the area.

Cover depth and bedrock lithology obtained from open file geophysical and drilling data.

Location of Basement/buried granite bodies obtained via 3D modelling of reinterpreted seismic line data.

Temperature modelling.

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Details on work completed: GELs 491, 492 & 493 were not active for the full year ( 12/05/2009 –

11/05/2010 ) as they were surrendered on 9/04/2010.

Re-interpretation of seismic survey line data o Geothermal Resources has a data base of all 2D SEG-Y files for the

Yalkalpo Sub Basin in South Australia. o This data was loaded and re-interpreted, line by line, using the software

program Eureka–3D. o New surfaces for top of Basement were generated. o This work indicated shallow/inadequate depths to Basement (see

Figures 1, 2, 3 & 4).

Figure 1 Yalkalpo GEL boundaries (with Seismic line 84-SPL) GEL boundaries marked in white.

The 3 northern GELs correspond to GELs 191 to 193. Seismic line trace of 84-SPL marked in green.

Greatest depth to Basement of ~1100m at N end of line (using sonic velocity of 2800ms-1).

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Figure 2 Seismic line 84-SPL (reinterpreted)

Top of Basement marked by green line – greatest depth of ~1100m, at right (ie. North). Cambrian carbonate rich sediments indicated by high amplitude reflections (see above green line).

Figure 3 Oblique view of GELs and intersecting seismic lines GEL boundaries marked in white. Top of Basement marked by green line. Note: depth to Basement decreases to South and to West.

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Figure 4 Fabris et al. (2009) top of Basement surface superimposed on Fig 3 Note:

o Confirmation of depth to Basement o Excellent agreement on N-S seismic line o Initially good agreement on the ~E-W seismic line (Fabris et al. interpret

Basement to be even shallower to West).

Temperature and thermal resource modelling o Temperature data from Yalkalpo 2 was modelled together with data

from Geothermal Resources’ data base. This indicated appropriate temperature gradients; but, the relatively shallow depths to basement indicated by the reinterpretation of the seismic data dictated that the temperatures required for economical geothermal power generation would not be obtained.

o In view of the above the GELs were surrendered.

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3 Regulated Activities Pursuant to Regulation 33(2)(a) under the Act, the following regulated activities were undertaken: No regulated activities were undertaken in the licence reporting period.

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4 Compliance Issues Licence and Regulatory Compliance Licence Non-Compliance Geothermal Resources was compliant with all licence requirements, other than the late submission of the annual report. This non-compliance arose through the company surrendering the GELs part way through Year 1 of the licence and removing the GELs from the report data base. This issue will be avoided in the future by not removing a GEL from our data base when it is surrendered. (A detailed report was submitted with the application for the surrender of these GELs on the 9th April 2010.) Regulatory Non-Compliance Geothermal Resources was compliant with all regulatory requirements.

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Report and Data Submissions Table 3 List of report and data submissions during current licence reporting year

Description of Report/Data Date Due Date Submitted Compliant / Non-compliant

Annual Report GELs 491,492 & 493 11/07/2010 12/05/2011 Non-compliant

Incidents Pursuant to Regulation 33(2) (f), as no regulated activities were undertaken no incidents occurred. Threat Prevention Pursuant to Regulation 33(2) (g), no foreseeable threats identified. Future Work Program Pursuant to Regulation 33(2) (h) under the Act, no further work will be carried out as the GELs have been surrendered (surrender date 9th April 2010).

GEOTHERMAL RESOURCES LIMITED Annual ReportLicence Year 11 Introduction2 Permit Summary3 Regulated Activities4 Compliance IssuesLicence and Regulatory ComplianceReport and Data SubmissionsIncidentsThreat PreventionFuture Work Program

5 Expenditure Statement

GEOTHERMAL RESOURCES LIMITED

ABN 45 115 281 144

Annual Report

Licence Year 1

For the Period:

12 May 2009 to 11 May 2010

GELs 491, 492 & 493

11th May 2011

CONTENTSPage No.

1 INTRODUCTION ……………………………………………………………………... 3

2 PERMIT SUMMARY …………………………………………………………………. 4

3 REGULATED ACTIVITIES ………………………………………………………….. 8

4 COMPLIANCE ISSUES ……………………………………………………………... 9

5 EXPENDITURE STATEMENT …………………………………………………….. 11

APPENDIX 1

EXPENDITURE STATEMENT ……………………………………… 12

LIST of TABLES

Table 1.

Current work commitments by licence year ……………………………. 4

Table 2.

Final work program and work completed ……………………………….. 4

Table 3.

List of reports and data submission ……………………………………. 10

LIST of FIGURES

Figure 1.

Yalkalpo GEL boundaries (with Seismic line 84-SPL) ………………… 5

Figure 2.

Seismic line 84-SPL (reinterpreted) …………………………………… 6

Figure 3.

Oblique view of GELs and intersecting seismic lines ………………… 6

Figure 4.

Fabris et al. (2009) top of Basement surface superimposed on Fig 3.. 7

1 Introduction

Geothermal Exploration Licences (GELs) 491, 492 & 493 were granted on 12th May, 2009. The licences are located in the Yalkalpo Sub-Basin of the Arrowie Basin, South Australia. This report details the work conducted during Licence Year 1 of the licence (12/05/2009 – 11/05/2010 inclusive), in accordance with Regulation 33 of the Petroleum Act 2000. The licence was surrendered on the 9th April 2010; in consequence the reporting period is 12/05/2009 to 9/04/2010 inclusive.

2 Permit Summary

For the duration of the licence year, the licensee for Geothermal Exploration Licences (GELs) 491, 492 & 493 was:

· Geothermal Resources Limited 100%

The current work commitments associated with GELs 491, 492 & 493 can be seen in Table 1.

Table 1Current work commitments by licence year

Licence Year

Licence dates

Minimum Work Program

Year 1

12/05/2009 – 11/05/2010

· Review of available geophysical and drilling data for the area.

·

Licence Year 1 concluded on 11/05/2010. However, the licence was surrendered on 9/04/2010 ie. before the end of Licence Year 2. The following table displays the minimum work program and the actual work completed up until the end of the current licence period.

Table 2Final work program and work completed (until surrender date) by licence year

Licence Year

Minimum Work Program

Actual Work

Year 1

· Review of available geophysical and drilling data for the area.

· Cover depth and bedrock lithology obtained from open file geophysical and drilling data.

· Location of Basement/buried granite bodies obtained via 3D modelling of reinterpreted seismic line data.

· Temperature modelling.

Details on work completed:

· GELs 491, 492 & 493 were not active for the full year ( 12/05/2009 – 11/05/2010 ) as they were surrendered on 9/04/2010.

· Re-interpretation of seismic survey line data

· Geothermal Resources has a data base of all 2D SEG-Y files for the Yalkalpo Sub Basin in South Australia.

· This data was loaded and re-interpreted, line by line, using the software program Eureka–3D.

· New surfaces for top of Basement were generated.

· This work indicated shallow/inadequate depths to Basement (see Figures 1, 2, 3 & 4).

Figure 1Yalkalpo GEL boundaries (with Seismic line 84-SPL)

GEL boundaries marked in white.

The 3 northern GELs correspond to GELs 191 to 193.

Seismic line trace of 84-SPL marked in green.

Greatest depth to Basement of ~1100m at N end of line (using sonic velocity of 2800ms-1).

Figure 2Seismic line 84-SPL (reinterpreted)

Top of Basement marked by green line – greatest depth of ~1100m, at right (ie. North). Cambrian carbonate rich sediments indicated by high amplitude reflections (see above green line).

Figure 3Oblique view of GELs and intersecting seismic lines

GEL boundaries marked in white.

Top of Basement marked by green line.

Note: depth to Basement decreases to South and to West.

Figure 4Fabris et al. (2009) top of Basement surface superimposed on Fig 3

Note:

· Confirmation of depth to Basement

· Excellent agreement on N-S seismic line

· Initially good agreement on the ~E-W seismic line (Fabris et al. interpret Basement to be even shallower to West).

· Temperature and thermal resource modelling

· Temperature data from Yalkalpo 2 was modelled together with data from Geothermal Resources’ data base. This indicated appropriate temperature gradients; but, the relatively shallow depths to basement indicated by the reinterpretation of the seismic data dictated that the temperatures required for economical geothermal power generation would not be obtained.

· In view of the above the GELs were surrendered.

·

3 Regulated Activities

Pursuant to Regulation 33(2)(a) under the Act, the following regulated activities were undertaken:

No regulated activities were undertaken in the licence reporting period.

4 Compliance Issues

Licence and Regulatory Compliance

Licence Non-Compliance

Geothermal Resources was compliant with all licence requirements, other than the late submission of the annual report. This non-compliance arose through the company surrendering the GELs part way through Year 1 of the licence and removing the GELs from the report data base. This issue will be avoided in the future by not removing a GEL from our data base when it is surrendered. (A detailed report was submitted with the application for the surrender of these GELs on the 9th April 2010.)

Regulatory Non-Compliance

Geothermal Resources was compliant with all regulatory requirements.

Report and Data Submissions

Table 3List of report and data submissions during current licence reporting year

Description of Report/Data

Date Due

Date Submitted

Compliant / Non-compliant

Annual Report GELs 491,492 & 493

11/07/2010

12/05/2011

Non-compliant

Incidents

Pursuant to Regulation 33(2) (f), as no regulated activities were undertaken no incidents occurred.

Threat Prevention

Pursuant to Regulation 33(2) (g), no foreseeable threats identified.

Future Work Program

Pursuant to Regulation 33(2) (h) under the Act, no further work will be carried out as the GELs have been surrendered (surrender date 9th April 2010).

5 Expenditure Statement

Pursuant to Regulation 33(3) under the Act, the expenditure on GELs 491, 492 & 493 for the first year of the licence was $97,478.

Please refer to Appendix 1 for the expenditure statement for the current reporting period.

APPENDIX 1

Expenditure Statement

Technical evaluation and analysis$ 58,707

Operating and administration expenses$ 38,771

TOTAL$ 97,478

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