Nevada Geothermal Power Inc. (TSX.V: NGP, OTCBB: NGLPF) and Ormat Nevada Inc., a wholly-owned subsidiary of Ormat Technologies Inc. (–NYSE-ORA) are pleased to announce that they have signed a letter agreement under which they have agreed to jointly develop, construct, own and operate one or more geothermal power plants at the Crump Geyser Project Area located in Lake County, Oregon. The parties will form a limited liability company, Crump Geothermal Company LLC ("CGC"), for such purpose that will be owned by Nevada Geothermal Power Company, a wholly-owned subsidiary of Nevada Geothermal Power Inc. ("NGP"), and Ormat Nevada Inc., on a 50:50 basis.
The parties plan to start construction and drill at least one development well for the first power plant with an expected generation capacity of up to 30 MW in 2010 and to place the plant in service before the end of 2013 so as to qualify for the Treasury Cash Grant under Section 1603 of the American Recovery and Reinvestment Act (“ARRA”). The parties also intend to apply for a Department of Energy loan guarantee under Section 1705 of the ARRA.
Under the Agreement between NGP and Ormat, NGP will contribute its title and interest in Crump Geyser Project geothermal leases, technical and engineering data, existing permits and the benefit from the on-going Department of Energy (DOE) cost-share grant for exploration in relation to the Crump Geyser area. Ormat will fund 100% of the initial development activities of CGC in the amount of US$15 million and pay NGP US$2.5 million in installments over a three year period.
After the initial development expenses funded by Ormat are expended, the parties will each be responsible for funding their 50% share of costs; however, NGP has the option to borrow under a bridge financing facility from Ormat for all or part of NGP’s share of costs up to US$15 million. Any bridge loans extended to NGP by Ormat will mature on the earlier of CGC obtaining third party non-recourse financing or upon achieving commercial operations, with an additional 90- day extension for any portion of bridge debt to be repaid from proceeds of the Treasury Cash Grant.