Location and Size

The Alum project covers 29 km² (7198 acres) near the Nevada-California border in Esmeralda County, Nevada, approximately midway between Reno and Las Vegas. There is a 55 kV line that runs within a few hundred meters of the lease boundary.

Exploration Activities

Geothermal exploration of the area started with drilling shallow gradient holes across the greater region in the 1970s, and continued in the early 1980s with more local shallow drilling. In total, 46 temperature gradient wells have been drilled to date by Amax Exploration, Phillips Petroleum, and O'Brien Resources. SGP compiled a gravity geophysical survey on the property and completed the permitting process for further exploration and development. The work to date has indicated the presence of a large geothermal reservoir in the area. Chemical geothermometry indicated reservoir temperature up to 225°C (437°F). The maximum recorded bottom-hole temperature recorded from prior exploration was 118° Celsius at a depth of 455 meters.

In July 2009, SGP obtained a positive environmental assessment decision from the Bureau of Land Management (BLM) (a "Finding of No Significant Impact") on its proposed exploration and drilling plan.

In October 2009, SGP was awarded a US$5 million grant on the Alum Project by the US Department of Energy as part of the American Reinvestment and Recovery Act. The funds are to be used for drilling and exploration activities on the project, on a 50:50 cost share basis.

In November 2009, SGP completed drilling the observation well 25-29 at the Alum project, within SGP’s Paymaster district. SGP stopped the well at 1,010 meters. The highest recorded temperature in the well was 126 degrees Celsius at 620 meters depth. The drill hole confirms and constrains the depths to important subsurface horizons and has provided helpful geologic information. SGP also collected a complete suite of downhole geophysical logs from the well. SGP is refining the 3D subsurface model at the Alum project prior to additional drilling.

In November 2009, SGP completed detailed ground-based magnetotelluric (MT) surveys and airborne Z-tipper Electromagnetic (ZTEM) surveys at Alum. Preliminary analysis of the MT datasets reveals the extent and thickness of overlying layers of conductive sediments as well as the inferred locations of zones of potential permeability at both Alum and Silver Peak. Data processing and interpretation of all data sets into 3D subsurface models is ongoing.

SGP is planning additional exploration work including a 2D seismic survey, regional hydrological studies, shallow temperature probe measurements and an airborne thermal infrared remote-sensing survey. Further drilling is planned in January 2010.

Resource Estimate

According to an assessment conducted by GeothermEx in 2004, the potential geothermal reserves at Alum are estimated to have a 90% probability (confidence level) that it can support a plant of at least 33 MW, and a 50% probability of exceeding 68 MW. A 33 MW geothermal power plant can supply enough electricity for 26,400 homes.

Production

The Alum project is targeted for production in 2013 - 2014.