Djibouti is an African nation on the Eastern coast of the continent bordered largely by Ethiopia and Somalia to the southeast and it is regarded as a low sovereign risk country due to its significant allied military presence and position as a strategic nation for the UN. Despite its relatively small size of circa 800,000 people, it has a strong GDP fuelled by a number of infrastructure and property developments being undertaken in the country. Its major trade partner is Ethiopia, which essentially uses Djibouti as its access point to the sea, given its status as a landlocked country.
Geologically, the country is the ‘mouthpiece’ of the East African Rift, which extends some 1800km south through a number of countries such as Ethiopia, Kenya, Uganda, Tanzania etc. This position as a major apex of the rift, has created very active volcanic settings, and therefore created an extremely prospective exploration destination for Geothermal Exploration Companies.
On 22nd October 2010, Earth Heat announced a Joint Venture with the Djibouti Ministry of Energy and Natural Resources and Electricite de Djibouti (the local electricity company) in relation to the Fiale Geothermal Project, located in the Lake Assal region of Djibouti.
Lake Assal is a region that has come under intense focus of geothermal power players for its documented volcanic activities as recently as the 1980s. The region is widely considered as one of the most strategic geothermal opportunities within Africa’s Rift Valley. The Fiale Project is a 150 MW project and electrical off take negotiations are currently underway. With the Fiale Project, Earth heat is in an enviable position, as an instant sales market exists for the electricity produced on site.
On the 16th March 2011, Drake and Scull International (‘DSI’) signed a Memorandum of Understanding (‘MOU’) with the Company, agreeing to jointly evaluate opportunities to develop projects in Africa and the Middle East. This strategic relationship has many benefits, particularly given it expands DSI’s ability to access and exploit new projects through Earth Heat, and gives those projects access to significant skills and resources to execute on every component of a planned investment.
The Company’s are operating under the terms of the MOU and continuing to evaluate strategic opportunities in the region.