South Crofty Holdings Ltd.: Major Development in Establishing Canada's First Geothermal Energy Company

- South Crofty Holdings Inc. is pleased to announce a significant advance in establishing Canada's first geothermal energy company for the commercial production of electricity. This publicly listed renewable energy company will be created by way of a reverse take-over of SFH and a vend-in of 100% of the significant Meager Creek geothermal project from Crew Development Corp.

GeothermEx, world experts in geothermal energy projects, have determined that the project has a potential to deliver at least 100 MW of clean, reliable electric power making a substantial contribution to the sustainable energy requirements of the economy. For each 100 MWhr of clean, electric power produced, 263,000 pounds of greenhouse gases (carbon dioxide) can be saved.

As GeothermEx had indicated in its report that the most likely electrical power capacity is at least 192 MW, a revised model of 150 MW was completed and announced on May 16, 2001. This model is based on the same debt to equity ratio and pricing structure as the 100 MW proposal, with the third 50 MW plant coming on line in 2008. A further reassessment of the economies of a 200 MW facility may be undertaken on completion of the proposed confirmation well program.

There is a strong interest in investing in clean, environmentally positive energy companies by institutional investors such as ethical funds, energy funds and natural resource funds. As a result, SFH anticipates a strong investment interest by these funds to invest in NPGP.

Following completion and testing of the geophysical ground survey, upon receipt of the permits, anticipated soon, a three slim-hole testing program would commence. This program is funded and is designed to provide important information about the flow of the super-heated water from the inside of the mountain to the surface, the source of which will be the target deep production size wells to be drilled next year. Expressions of interest have been received to provide funding for this next stage of project development.

This program is designed to provide important information about the flow of the super-heated water from the inside of the mountain to the surface. In geothermal electric projects, super heated water is drawn from a series of wells to the surface, where it drives steam turbines and generates electrical power. This process has been successfully used in the United States and other countries on the Pacific Rim of fire and around the world, where it is an important addition to grid-connected renewable energy. Geothermal electric power is the second-largest source of grid-connected renewable energy in United States and saves 22 million tons of carbon dioxide (CO2) emissions per year.