U.S. Geothermal has acquired from Goldman Sachs the majority of their cash flow interest in and ownership of the Raft River geothermal project. U.S. Geothermal will receive 95% of the cash flow from the project on a going forward basis, along with all increased cash flow from any project improvements. The purchase price was $5.1 million for the 95% interest, with an option to purchase the balance of Goldman's interest for Fair Market Value at the end of 2017.
Dennis Gilles, CEO of U.S. Geothermal. stated:
"This agreement with Goldman Sachs is a strong positive for our company. It unlocks the ability to consider capital upgrades that should increase output from the facility and potentially reach its design capacity of 13 megawatts. It strengthens our commitment to becoming the North American leader in geothermal energy."
The purchase price consisted of a $3.5 million cash payment plus a promissory note of $1.6 million that bears interest at 8%. Under the promissory note agreement, $1 million of the note may be satisfied with shares of U.S. Geothermal common stock priced at the 10 day weighted average closing price of the common stock at time of conversion if not otherwise paid in cash by March 31, 2016. U.S. Geothermal will file a resale registration statement covering the shares to be issued in satisfaction of the promissory note.
The Raft River Geothermal Power Plant is located in Southeast Idaho and has a designed capacity of 13 megawatts net. The project is currently operating at approximately 9.4 megawatts. Power from the facility is sold under a firm price, 25 year contract with Idaho Power Company which allows for the full 13 megawatt output. Reservoir modeling indicates that the geothermal reservoir can support the full 13 megawatt contract. Plans are under consideration to drill for additional production to increase plant output to its full contract limit.