Geo40 has raised $13m for the development its Ohaaki Northern Plant. Photo / Supplied
Taupo-based Geo40, which says it has the indirect backing of Microsoft's Bill Gates and some of the world's wealthiest philanthropists, has raised $13m for the development its Ohaaki Northern Plant to produce silica on a commercial scale.
Chief executive John Worth said an NZX-listing for the company, which extracts silica from geothermal water for use in highly specialised manufacturing processes, was possible given the support shown in the private capital raising.
The company says it also developed a process to extract lithium from geothermal water, thereby offering an environmentally sustainable supply of the metal at a time when demand is strong as more and more vehicles convert to battery power.
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Combined with the $15m debt/equity contribution by New Zealand's Provincial Growth Fund, the capital raising completes the funding required for the development of the $20m Ohaaki Northern Plant, forecast for completion in November.
Geo40 last year mentioned the possibility of an NZX listing and Worth said that possibility remained.
"The message there is that we have been very fortunate, with the support of (investment firm) Jarden, to be able to continue to attract private capital, which has been good for the company," he told the Herald.
"As we grow, a listing may certainly be relevant. We will just have to watch this space as to when," Worth said.
While the company's core business is the extraction and sale of high-quality, sustainable, nano-particle colloidal silica, it is moving ahead in parallel to commercialise lithium extraction and has started research into caesium and antimony extraction, he said.
Investors in the latest capital raise included Swedish partner-company Baseload Capital, itself 22 per cent owned by Breakthrough Energy Ventures, the climate-change investment fund of Bill Gates, Jeff Bezos, Jack Ma and other billionaire philanthropists.
Geo40 executives had presented to Breakthrough Energy in Sweden early this year.
Breakthrough Energy recently led a $20m investment in California-based lithium-technology company, Lilac Solutions.
Worth said Geo40 had succeeded in extracting battery-grade lithium from geothermal brine.
"In recent months, testing has been successfully conducted at pilot scale and peer-review work has confirmed that the Company's technology is very relevant to geothermal brines such as those in the Central North Island, New Zealand and at many overseas geothermal hot-spots," Worth said.
Baseload's investment followed the support shown by the Provincial Growth Fund, which provided $15m by way of a $5m convertible note and $10m of debt to support the construction of Geo40's first commercial $20m silica-extraction Plant near Taupo.
The project is a collaboration with iwi Ngati Tahu and Contact Energy and remains on schedule for commissioning later this year.
The Provincial Growth Fund, which recently converted its $5m convertible note to equity, has joined long-standing New Zealand startup investors including Sir Stephen Tindall's K1W1 fund.
Other investors who participated in the Jarden-led raise include Brendan Lindsay of Lindsay Investments and Efu Investment.
The raise included a number of Swedish investors associated with Geo40's strategic partnership with heat-recovery specialist Climeon AG of Stockholm.
Worth said the company is working on a second strategic alignment with a new shareholder, significant global venture capitalist and lithium resource investor Dr Hans Albrecht.
He expects Geo40 to become profitable by mid-2021.
Worth said Geo40 had run a tiny lithium extraction plant for testing purposes early this year.
"We were thinking of putting it on hold because of Covid-19 but we are now giving it a bit of a shove," he said.
Direct lithium extraction, or DLE, has come into sharper focus as more and more vehicles convert to lithium-ion batteries.
Mined lithium comes from the hard rock, spodumene, and extracting it comes at a cost to the environment.
Worth said Geo40's "mission" was to find an environmentally friendly way of sourcing lithium.
Geo40 was formed in 2010 and originally traded as Environmetals.
It has previously trialled its technology at Contact's Wairakei field, at the Norske Skog and Mercury plants at Kawerau, and at Kakkonda in Japan.
New Zealand gets about 17 per cent of its electricity from its geothermal fields.