DOWNER EDI LIMITED — Capital/Financing Update 2008

May 28, 2008

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29 MAY 2008

ASX ANNOUNCEMENT

Signing of Letter of Intent with MB Century - Limestone Coast Project

The Directors of Panax Geothermal Ltd (“Panax”) are pleased to announce the signing earlier today of a Letter of Intent (“LOI”) with MB Century (“Century”) in relation to the drilling of an appraisal well on Panax’s Limestone Coast Geothermal Project in South Australia.

Under the terms of the LOI, Panax has agreed, subject to completion of final contract documents, to appoint Century to the position of Drilling Contractor for the management and supply of all drilling and associated services relating to the drilling of the first appraisal well on the Limestone Coast Project.

Panax, in conjunction with a number of other geothermal industry participants, have been in discussion for some time with Century in relation to the procuring of a contract drilling rig suitable for the drilling of an initial appraisal well for the Limestone Coast Geothermal Project, and for use on other geothermal projects within Australia.

The rig to be utilised will be more than capable of drilling to the depth and specifications required on the Limestone Coast Project.

Well Design and Drilling Management

A preliminary well design for the Limestone Coast appraisal well has been completed for Panax by AGR Asia Pacific. Negotiations are currently in place between Panax and AGR Asia Pacific regarding a comprehensive Project Management Agreement for the drilling of the appraisal well, including project management, procurement, permitting, and drilling management services.

About MB Century

MB Century is the largest provider of medium to heavy land drilling services in the Asia Pacific.

Panax Geothermal Ltd ABN 89 122 203 196

Level 5, 11 Finchley Street PO Box 2142 Milton QLD 4064

Ph: 07 3512 7000 Fx: 07 3512 7099 www.panaxgeothermal.com.au

MB Century is 51% owned by MB Holdings LLC, a leading drilling and petroleum services company based in the Middle East. The residual 49% is owned by Downer EDI Ltd.

MB Century’s New Zealand business has been involved in geothermal drilling activities for clients such as Contact Energy since 1949 and its Indonesian and Philippine operations have been drilling geothermal wells since the early 1980’s. The MB Century Group has drilled over 1,000 geothermal wells in the region, has 100% of the New Zealand geothermal well testing market and all of Chevron’s geothermal well testing work in the Philippines and Indonesia.

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Bertus de Graaf Managing Director

For further information:

Dr Bertus de Graaf Mr Kerry Parker Managing Director Executive Director Chief Executive Officer Chief Financial Officer bdegraaf@panaxgeothermal.com.au kparker@panaxgeothermal.com.au 61 7 3512 7000 61 7 3512 7000

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The Panax Limestone Coast Geothermal Project (2,600km[2] ) has an estimated generating potential of 1,500MWe of clean base-load power. The project has an excellent position with respect to the existing transmission grid.

Note : Generating potential provides a probabilistic estimate of the ultimate power capacity of a reservoir on the basis of the information that is available when the estimate is made. The use of the word “potential” reflects the relatively higher level of uncertainty before drill and flow testing has taken place.

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ABOUT PANAX GEOTHERMAL LTD

The long term vision of Panax is to become a major participant in the geothermal industry, both nationally and internationally. The scope of our geothermal interests will be broad, including both conventional geothermal resources (volcanic related) as well as enhanced geothermal systems (EGS) such as hot fractured rock (HFR) geothermal systems. Panax’s key asset is the advanced and ready to drill-test Limestone Coast Geothermal Project in South Australia, which has an estimated generating potential of approximately 1,500 MWe, (i.e. the equivalent of two coal fired power stations or enough power for more than one million homes).

The nature of our business is the identification and exploration of prospective geothermal resources and to convert these into geothermal reserves for the production of commercial geothermal energy. Geothermal power generation is not dependent on new technology (i.e. no new technology risk). The risks of our endeavours are directly related to the conversion of geothermal resources to economic geothermal reserves, i.e. the economic extraction and utilisation of geothermal energy. In that sense it is very similar to risks associated with mineral or oil/gas exploration.

The Company will not only focus on clean power generation but will also embrace direct use of geothermal heat for use in e.g. industry, district heating (or cooling), and desalination.

The rationale for focusing on geothermal energy is directly linked to the threat of global warming as caused by CO[2] emissions from the continued use of fossil fuels. National and international momentum is building for a ‘climate change pact’ and this foreshadows that clean energy generation is the key to our future.

Geothermal energy is one of the very few sustainable sources of energy which can replace base load power from fossil fuelled power stations. Compared to other sustainable energy options, geothermal resources are still not valued according to their commercial potential for the long term generation of clean base-load power. This is the opportunity which Panax aims to turn to good account.

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