“Slow Volcano Power”

By Travis Johnson, Stock Gumshoe, November 15, 2007

In all the time I’ve put in as your friendly neighborhood Stock Gumshoe, I think this might be the most-forwarded email ad I’ve seen yet. People are clearly intrigued by this teaser for the “slow volcano power” company … either that, or it’s the Gumshoe’s smoldering, soulful and sensuous eyes that make everyone think “volcano!”

I’m guessing it’s the former.

The ad comes in for the new “Energy and Scarcity Investor” newsletter from Agora, edited by Byron King, who says he is an experienced geologist. Don’t know anything else about him, and of course he doesn’t have a track record yet with this newsletter … but he apparently has a 38 cent “volcano power” stock to share with us on November 20th if we’re willing to shell out $1495 for the first year.

Or, if you prefer to do your own research, stick around — we’ll figure out the name of that “slow volcano power” company, and probably a few of the others he teases, too. Just indulge the Gumshoe for a moment. And no, you don’t have to wait until November 20th for my answer. Some of you have seen a few of these stocks mentioned here before — a few people offered solutions in the comments on prior posts, or in the Gumshoe Forum.

So the basic premise, of course, is that “slow volcano power” is geothermal power. Probably all of us have at least heard the term — it’s using the heat of the earth’s core to generate electricity in some way. Mostly, they do this by drilling holes to find hot regions, injecting water or finding superheated ground water, using it to generate steam, and using the steam to turn turbines. That’s a gross simplification, of course, but that’s basically the way it works. Other companies drill for oil, geothermal power companies drill for heat and hot water.

I’m sure there are many challenges to this kind of power generation, otherwise the non-polluting and resource-light model would be in use everywhere. I don’t know all the details, but obviously one of the challenges is finding a place where you don’t have to drill that deep to hit the hot stuff, and a place close enough to civilization that you can efficiently transmit the electricity. Places where hot lava are reasonably close to the surface are also probably right along the edges of tectonic plates and in inhospitable mountains and perhaps subject to earthquakes and other complications. Just guessing on that part. It’s also true that, using well-established geothermal generation, you need a fairly high temperature and the presence of water nearby — though new technologies and techniques are expanding the capability to inject water instead of using existing hot groundwater, and lowering the minimum temperature.

The poster child for geothermal energy is Iceland — I’ve never been there, but I’ve heard tell of the massive heated lakes that are fed by the same kind of geothermal energy that provides most of their electricity. But clearly, not everywhere is like Iceland.

So what geothermal power company have they found for us here? And what do we know about it, other than the fact that it’s priced at about 38 cents?

Well, he first lets us know that he already recommended a “midcap” geothermal company — the biggest pure play in the space — to the readers of the Outstanding Investments newsletter. Just to throw a freebie in there for you, that’s got to be Ormat Technologies (ORA) — a company near $2 billion in market cap that runs its own geothermal plants and builds them for others (including some of the other, smaller companies that get teased later in the letter). That’s pretty much the only geothermal stock on a major exchange, unless you want to get into the power companies who have a small piece of geothermal in their businesses, and, being in that catbird’s seat, it looks awfully expensive at a trailing PE near 90.

But you’re not here to hear more about Ormat … they’re fairly high profile, and you can pretty easily find out everything you want about them.

What’s the little 38 cent one?

Our clues:

It’s 72 miles north of San Francisco — or at least, the “slow volcano” is.

It’s the only pure play on California’s stringent new renewable and non-polluting electricity generation requirements.

And that’s pretty much it.

Not enough for the Gumshoe, you say? Nonsense! says he … this little company is almost undoubtedly …

Western GeoPower (WGP in Canada, WGPWF on the pink sheets).

The “slow underground volcano” north of San Francisco is called the Geysers, and it’s the most active geothermal generation site in the US. By far, I imagine. This company has one plot there for their project, though they haven’t yet even built a plant and they’re at least a few years, on an optimistic construction timetable, from generating any electricity.

Thanks, no doubt, to the heavy volume of promotional emails on this one, the shares have already gone up a bit — to about .45 cents today, up from .38. Perhaps they didn’t really sequester that idea until November 20th after all. And I’ve seen articles about geothermal power investing in the mainstream financial press with some regularity of late, so pretty much everything attached to geothermal is going up.

I’ve actually written a little about this one before, though it was for a somewhat different teaser — that one was back in August.

And I’d point you to the Stock Gumshoe Forum, where this stock and some other geothermal names have been bandied about quite a bit. Interest among the Gumshoe faithful perked up after US Geothermal (which is the “Slow Volcano Dynamo #1” supplemental pick from the teaser, with the 10.8 square miles of land in southern Idaho) shares took off to the top of the Gumshoe tracking spreadsheet. US Geothermal is quite a ways ahead of Western GeoPower in terms of actually getting their plant built, but they don’t have the advantage of being near a major city in California.

Finally, there are lots of interested investors in the geothermal space — there was an excellent article by Tom Konrad that went up on Seeking Alpha a few weeks ago that summarizes most of the key points about geothermal electricity generation, and what investors might want to consider before jumping in.

Other ones that were teased, just to throw in a couple quickies for those who are interested in geothermal power? The Latin American geothermal play is likely Polaris Geothermal (PGTHF), the one with 15 sites in Nevada is probably Sierra Geothermal (SRAGF), and the other Nevada one likely Nevada Geothermal Power (NGLPF).

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The only other small geothermal company I’ve ever looked at is Raser Technologies (RZ) which is trying to license its technology for lower-temperature geothermal and buy up rights to sites that had previously been considered not efficient enough. And the other one that gets a lot of press is Calpine, which is coming out of bankruptcy probably later this year and runs most of the sites in the Geysers (they’ve estimated that shareholders might get up to $1.94/share when they get out of bankruptcy, which is more than the shares are trading for now, but the agreement is still in dispute by bondholders and there’s certainly no guarantee that common shareholders will get anything when they finish reorganizing and get a new ticker symbol. Investing in companies undergoing bankruptcy reorganization is extremely risky and is an easy way to lose all your money, in my opinion, but I might be interested in the “new” Calpine when they exit bankruptcy)

I’ve been a little interested, but don’t own any shares of any of these companies.


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Anonymous
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Anonymous
November 15, 2007 2:15 am

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steve-the-professor
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steve-the-professor
November 15, 2007 4:29 pm

Here’s the complete solution to the “Slow Volacano Power” as well as the “Navy Insider…” teases — all 5 are identified, except I could not identify the South American firm. Here they are:
The ‘SLOW VOLCANO” and “Navy Insider…” teasers of 20071112:

Candidates: Price 11-13-07
NTAH — Nevada $1.12
ORA — Ormat with Holdings in Nicaragua & Nevada $50.72
UGTH — Raft River in Idaho $3.65
WGPWF — Geysers & Western Canada $0.4565
SRAGF — Sierra Geothermal Power $0.6065
NGLPF — Nevada Geothermal Power $1.10
PGTHF — Polaris Geothermal $1.16

1) Western “Slow Volcano” Dynamo #1: Likely to be “UGTH” at $3.65 on 11-13-07
This unheard-of company controls 10.8 square miles of choice “slow volcano” land in southern Idaho. An independent firm estimates that this field can produce enough electricity to sell power to 110,000 households. What’s more, this company got lucky. This site started as a U.S. Department of Energy “slow volcano” power installation. So the government did all of the grunt work, proving the “slow volcano” resource could crank out a good deal of juice. Then this company stepped in and took over. This company could get a big hit soon, though, because they just started generating electricity. If Wall Street takes notice, the $4 stock will move fast…so make sure you get your free copy of Profit from the Gov’t-forced Boom in Renewable Energy with “Slow Volcano” Power. Right away.
From the firm’s website: “U.S. Geothermal is a renewable energy development company that is operating a geothermal power project at Raft River, Idaho and developing Neal Hot Springs in eastern Oregon. U.S. Geothermal holds, through ownership or lease, geothermal rights of lands that comprise the Raft River Neal Hot Springs projects.”
#1): From “Penny Sleuth” — “…Navy Insider…” “MI Investing Advantage” Company #1 — Just Signed a 20-year Energy Deal on Sept. 26: In 2002, this company acquired the rights to a former Department of Energy production field. It immediately began its testing… and the early numbers are just started to come in… A third-party consulting firm estimated that this company could be sitting on enough energy to eventually power 110,000 Idaho residents, year after year. On Sept. 26, 2007, it signed an exclusive 20-year deal with an Idaho energy provider to sell its energy back to the citizens of Idaho. Since the beginning of the year, shares of this company would have shown you a 263% gain. (True: from $1 to $2.65) Investors have already turned a $5,000 investment into $13,150. Now it’s in the process of bringing a second location online. The numbers aren’t complete yet, but the company has said that its initial tests “indicate the potential for prolific production…”

2) Western “Slow Volcano” Dynamo #2: Might be “NGLPF” Nevada Geothermal Power. At $1.10 on 11-13-07
Your second “slow volcano” pure play operates mainly in power-starved and growing Nevada. This company has a combined approach of generating power from proven “slow volcanoes” and acquiring potentially productive fields. Their existing project has a minimum potential to power 30,000 homes. But the higher estimate states that the field could sell power to as many as 47,000 homes. But the company’s unproven fields show potential, too. They’ve bought the rights to 3 more fields in Nevada and Oregon. Just one of these sites at one time shot superheated steam out of the ground 147 feet into the air. Independent estimates state that this field should produce enough juice to power 50,000 households.
From the firm’s website: “Nevada Geothermal Power Inc. is developing renewable geothermal energy projects in Nevada where additional electrical generation capacity is needed to meet existing demand for power. Nevada Geothermal plans to develop an initial 30 megawatt geothermal power plant at Blue Mountain, subject to further resource drilling and feasibility studies. Nevada Geothermal Power is committed to the geothermal industry and currently owns a 100% leasehold interest in four properties: Blue Mountain, Pumpernickel, Black Warrior, which are ideally situated in Nevada and Crump Geyser, Oregon. Nevada Geothermal Power is positioned to establish the commercial viability of the Blue Mountain Power project helping to meet the legislated renewable energy quotas for Nevada and California.”
From “Penny Sleuth” — “…Navy Insider…” #2): “MI Investing Advantage” Company #2 — Currently Sitting at Just $1.35 per Share (Likely to have been on Oct. 29, ’07): This company just inked an initial 20-year deal with the state of Nevada to provide energy to 24,000 homes. It owns a 100% stake in a known hot spot area in north-central Nevada with heat reserves close enough to the surface for easy extraction. Even the U.S. Department of Energy is excited about the potential of the land that this company possess — so excited that it’s just awarded a $1.25 million grant to begin extraction. Investors who owned this stock have seen a 117% gain since Jan. 1. With just a small $5,000 investment at the beginning of the year, you’d be sitting on $5,850 in pure profits. Based on the numbers, I expect it to grow at least that amount in the next 10 months. And best of all, you can still load up on shares of this company for just $1.35 per share…(True)

3) Western “Slow Volcano” Dynamo #3: Likely Sierra Geothermal “SRAGF”
Your third “slow volcano” play holds interest in 15 geothermal projects in Nevada. (=Sierra Geothermal in Google search)
The initial estimates on the amount of power these fields can churn out amounts to between 120 and 245 megawatts. That’s enough to power 120,000 to 245,000 homes. So you can see the massive potential of this tiny company…
From “Penny Sleuth” — “…Navy Insider…” #3): “MI Investing Advantage” Company #3 — Owns More Than 70,000 Acres of “Hot Spots”: This must be “Sierra Geothermal” of Vancouver, B.C., ticker (CA:SRA $C0.58 TSX Venture) SRAGF $0.6065 on 11-13-07. This company has 4 hot spot projects currently in development and 11 more waiting for test drilling to begin. In total, it has an interest in 70,000 acres of hot spots in California and Nevada. On Oct. 22, the company announced that drilling had begun at its exploration well known only as “Well 56-4.” (This is definitely Sierra Geothermal) It believes that “Well 56-4” alone could have enough heat inside to power 24,000 homes. If all of its other wells produce the same amount, there’s no telling how high this stock can go. Another alternative energy company has shot up over 33% in one day. This one could go up even further when it announces the results of its other heat wells

4) Western “Slow Volcano” Dynamo #4:
This little “slow volcano” company operates in western South America, not the Western United States. Take a look at the following map to see the hottest “slow volcano” regions across the globe, colored in red:

5) Western “Slow Volcano” Dynamo #5: Cerrtainly is Polaris Geothermal (CA:GEO) “PGTHF” at $1.16 on 11-13-07 This company operates in Western Latin America. They focus on Nicaragua. The project they’ve nearly completed has an estimated power generation potential of up to 277 megawatts — or enough to provide 277,000 homes with electricity.
From “Penny Sleuth” — “…Navy Insider…” #4): “MI Investing Advantage” Company #4 — Powering 277,000 People in Latin America: Polaris Geothermal (a Yukon firm) ticker (CA:GEO) PGTHF at $1.16 USD on 11-13-2007. Like the first two companies I’ve told you about, this company has recently agreed to a 20-year deal to sell its power. But instead of selling it to the U.S., it’s providing the power to Latin America. A recent press release by the company shows that it expect its main energy hot spot to produce enough energy for as many as 277,000 people in Latin America. It wouldn’t surprise me if this $1.10 stock shot up 628%, just as Amen Properties, a similar energy provider, did just a few years back.
From the firm’s website: “POLARIS GEOTHERMAL OVERVIEW: Polaris Geothermal Inc. is a renewable energy company currently focused on the development of geothermal energy projects in Latin America. Polaris is currently developing the initial project on its San Jacinto-Tizate geothermal concession near Leon, Nicaragua, located 90 km due northwest of the capital, Managua. The Company has a controlling interest in the project, which will produce 66 Megawatts (MW) upon completion in 2009. The San Jacinto-Tizate site has 10 MW of production on stream since 2005. Polaris has assembled a world-class team including Sinclair Knight Merz Ltd. (SKM), one of the world’s leading geothermal science and engineering companies, to develop the US$183 million project. Polaris has entered into a 20 year 66 MW Power Purchase Agreement with the Spanish utility, Union Fenosa, for the sale of power at a price of US$0.0595 per kilowatt hour (kWh)….”

From “Penny Sleuth” — “…Navy Insider…” #5): “MI Investing Advantage” Company #5 — Up 48% (True) Since Aug. 22: Clearly this is “WGPWF” ($0.45 on 11/13/07) Western Geopower Corp With 2 major hot spot projects in the works, this company is an industry leader. It has 100% of the rights to a 1,017-acre hot spot located 75 miles north of San Francisco, called the Geysers. The Geysers is the largest active energy-producing field in the entire world. Its second location, located in British Columbia, is estimated to have the potential to supply power to over 80,000 households in western Canada. News is already getting out on this company. Since Aug. 22, this stock has shot up 48%.(True) With increased drilling and extraction planned, this is my favorite stock to buy right now…

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Anonymous
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Anonymous
November 15, 2007 5:02 pm

Here’s a wild guess but food for thought. I wonder if it could be what is referred to as “the bankers close”. I would have to find and review some notes I took over year ago, but basically it’s a currency maneuver that balances out the banks in London and Germany… and it happens every day when the banks close. It is early morning here in the US. more info when I dig it up.

Anonymous
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Anonymous
November 15, 2007 5:47 pm

The Geysers geothermal area north of the San Francisco Bay Area is in the Mayacamas mountains, not the Sierra Nevada.

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Federico.Rampaldi
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Federico.Rampaldi
November 15, 2007 6:45 pm

Mr. Anonymous,
In trying to duplicate the code for the 5200 that we all can get…. I dont find in my pc the sign used after TOT [X] looks like an inverted B or a #3 to the right with a small t attached,any idea how to reproduce such symbol?
Also i know is Louis but what i got was from Kramer is he on this too?…Thanks ,Life can be a lot of fun. F

Anonymous
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Anonymous
November 16, 2007 9:54 pm

Ever since I have found and used the Stock Gumshoe website and has literally saved ne thousands of dollar that I would have paid to some one else. The money I have saved, I have invested very wisely. I want to thank Stock Gumshoe for everything.

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Anonymous
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Anonymous
November 19, 2007 7:49 pm

To the first poster, about the teaser on the Secret Banking Pass Code – if you read through his promo, he tells you what this strategy is – investing in companies just prior to them being taken over. He sells info on how to determine from large transfers of money (his ‘secret pass code’) which companies are about to be taken over, and you invest several weeks before everyone else knows about it. He also gives you recommendations in his newsletter, which is between $300-$400 for a year.

Anonymous
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Anonymous
December 15, 2007 9:39 pm

“Secret Pass Code” is just watching the option activity, to see what stocks are likely to be taken over.

His current list is:
VOLC
CNB
GENZ
MSTR
UPL
WBD
AA

Jolly Roger
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Jolly Roger
January 9, 2008 9:09 am