THE BOURSE WHISPERER: Hillgrove Resources (ASX: HGO) recently sought proposals from the private sector to develop, own and operate a Pumped Hydro Energy Storage (PHES) project at the company’s Kanmantoo mine site in South Australia.
As a result, Hillgrove has entered into binding agreements to sell the right to develop, own and operate the PHES project to AGL Energy Limited for $31 million.
Hillgrove Resources said the $31 million will be payable over an estimated 18 to 36 month period with staged payments based on the achievement of the following PHES project milestones.
The PHES project is expected to have generating capacity of 250MW and eight hours of storage, making it the largest storage capacity in South Australia.
The project received the thumbs up from the SA government with the Minister for Energy and Mining, Dan van Holst Pellekaan saying it fell into line with its policy of matching storage capacity with renewable energy resources.
“We are delighted to work with AGL on the delivery of this project which will transform a former mining site into one of the lowest cost electricity storage projects in Australia, at a time when synchronous generation and bulk storage is critically needed,” Hillgrove Resources managing director Steven McClare said in the company’s announcement to the Australian Securities Exchange.
“Although the progression of the PHES will prevent long term mining of the portion of the underground exploration target directly beneath the existing pit, the Board determined the AGL PHES offer represented a lower risk and higher value proposition to shareholders.”