PTR MINERALS LTD — Interim / Quarterly Report 2005

Jan 27, 2005

PETRATHERM LTD

A.C.N. 106 806 884 247 Greenhill Road, Dulwich 5065 ph (08) 8366 6055 fax (08) 8366 6056

REPORT FOR THE QUARTER ENDING 31 DECEMBER 2004

Email: admin@petratherm.com.au Website: www.petratherm.com.au

SUMMARY

1. CORPORATE

The Company held \$3,178,000 cash reserves at 31 December 2004.

2. EXPLORATION

• During the quarter preparations were concluded for the first hot rock $\bullet$ geothermal evaluation hole in the Paralana licence area, GEL 178. Drilling commenced on this licence in mid-January.
• Down hole temperature measurements of recent drilling by mineral explorers has demonstrated elevated shallow temperatures, consistent with the presence of a significant thermal anomaly in the vicinity of the Paralana drill site.
• Preparations underway for Callabonna drilling program, with a likely ٠ start date around mid 2005, subject to rig availability.
• During the quarter geological and geophysical studies identified a $\bullet$ number of potentially favourable terrains for hot rock power generation in areas close to regional mining centres in various areas of Australia. These areas are located beyond the South Australian Heat Flow Anomaly, the current focus of Petratherm's activity. Further work, and the passage of enabling legislation in various states, may lead to applications for geothermal prospecting licences being lodged.

REVIEW OF OPERATIONS

CORPORATE

An application for a Commonwealth Government R&D Start Grant was lodged to fund the development of a Hot Dry Rock site analysis evaluation system as an ancillary tool to the company's exploration effort. This system was considered by the Start Grant Board to demonstrate insufficient commercial application and to be of low technical risk and thus did not meet all the required criteria for approval. This in no way reflects on the commercial aspects of geothermal energy or the company's projects. The rejection of the application has no impact on Petratherm's immediate work, or plans to evaluate the hot rock energy potential of the three areas noted in the prospectus.

In the mean time the Company has been active, holding talks with government and industry representatives relating to funding further down the project work lines.

CASH

The Company held \$3,178,000 in cash at the end of the Quarter.

EXPLORATION

Mt Painter Projects - Paralana (GEL's 156, 178, 180) and Callabonna (GEL 157, GELA 179)

A number of favourable geothermal sites have been located in both the Paralana and Callabonna Project areas. This work was based on interpretation of newly acquired gravity and well bore temperature data, together with existing aeromagnetic, geological and seismic data.

The Paralana area is to be the site of the first geothermal evaluation well (Fig 1). The well, Paralana 1, will be spudded in mid-January. Well design preparations are also underway to test the Callabonna target (GEL 157) which is planned to occur mid 2005.

Paralana 1 will be drilled through the artesian aquifer which is estimated to be located at 500 metres, and into the underlying rock sequence. A total depth of around 600 metres is projected for the first phase of drilling.

On completion, the hole will be cased with PVC piping and back cemented to isolate the artesian flow. Once the hole has been secured, down-hole temperature gradient and rock physical property measurements will be undertaken to assess the geothermal potential. Projections of the temperature gradient will be made to the target depth of around 3.5 kilometres. If encouraging, the hole will be deepened at a later date, using a larger capacity drilling rig, to about 1500 metres to gain further temperature, rock physical property and stress measurements to confirm the subsurface model established in the first phase of drilling.

Petratherm's modelled target depth for a significant economic, geothermal resource is 3.5 km. If there is a significant geothermal resource at Paralana the initial two step evaluation drilling (Paralana 1) program will identify and quantify this potential resource prior to the commitment of higher cost, deep drilling into the thermal resource

Ferguson Hill (GEL 158)

In early December, down hole temperature logging was undertaken of the Prominent Hill ore body (RIO body) along with a reconnaissance trip to the Ferguson Hill Area. Due to their similar geological settings, data from the Prominent Hill ore body is currently being used to model the potential heat outputs of the inferred Ferguson Hill target.

Generative Program

Ongoing generative research is underway to identify potential new geothermal areas within Australia. The Company believes that Queensland, which will shortly have geothermal licensing legislation in place (mostly likely March 2005), has several highly prospective areas for Hot Rock Energy.

Figure 1 - Paralana 1 Locality Map.

٦

Appendix 5B

Mining Exploration Entity Quarterly Report Introduced 17796. Origin: Appendix 8. Amended 17797, 17798.

Name of Entity

PETRATHERM LTD

ACN or ARBN 106 806 884

Quarter Ended ("Current Quarter") 31^ST DECEMBER 2004

Consolidated Statement of Cash Flows

			Current Quarter	Year to Date (6
	Cash Flows Related to Operating Activities			months)
			\$A'000	\$A'000
1.1	Receipts from product sales and related debtors
1.2	Payments for	(a) exploration and evaluation	(130)	(135)
	(b) development (c) production
	(d) administration
1.3	Dividends received		(56)	(176)
1.4	Interest and other items of a similar nature received
1.5			37	77
1.6	Interest and other costs of finance paid Income taxes paid
1.7	Other (Joint Venture Repayments)
	Net Operating Cash Flows		(149)	(234)
	Cash Flows Related to Investing Activities
1.8	Payment for purchases of:	(a) prospects
		(b) equity investments
		(c) other fixed assets		(9)
1.9	Proceeds from sale of:	(a)prospects
		(b) equity investments
1.10	Loans to other entities	(c)other fixed assets	(3)	(3)
1.11	Loans from other entities (net)			(102)
1.12	Other (provide details if material)
	Net Investing Cash Flows		(3)	(114)
1.13	Total operating and investing cash flows (carried		(152)	(348)
	forward)

1.14 1.15 1.16 1.17 1.18	Cash Flows Related to Financing Activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid		4,000
1.19	Other (Share issue expenses)		(474)
	Net Financing Cash Flows	0	3,526
1.20 1.21	Net Increase (Decrease) in Cash Held Cash at beginning of quarter/year to date Exchange rate adjustments to 1.20	(152) 3,330	3,178 $\theta$
1.22	Cash at End of Quarter	3,178	3,178

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current Quarter \$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	41
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions Represents payments of salaries and directors fees and superannuation

Non-Cash Financing and Investing Activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

Ni1

$2.2$ Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Nil

Financing Facilities Available
Add notes as necessary for an understanding of the position.

		Amount Available \$A'000	Amount Used \$A'000
3.1	Loan facilities	$\blacksquare$
3.2	Credit standby arrangements

Estimated Cash Outflows for Next Quarter

		SA'000
4.1	Exploration and evaluation	52
4.2	Development
	Total	52

'n

Reconciliation of Cash

Reconciliation of cash at the end of the quarter (as shown) in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current Quarter SA'000	Previous Quarter \$A'000
5.1	Cash on hand and at bank	3,178	3,335
5.2	Deposits at call
5.3	Bank overdraft		(5)
5.4	Other (provide details)
	Total: Cash at End of Quarter (item 1.22)	3,178	3,330

Changes in Interests in Mining Tenements

		Tenement Reference	Nature of Interest (see note2)	Interest at Beginning of Quarter	Interest at End of Quarter
6.1	Interests in mining tenements relinquished, reduced or lapsed
6.2	Interests in mining tenements acquired or increased

Issued and Quoted Securities at End of Current Quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total Number	Number Quoted	Issue Price per	Amount paid-up
				Security (see	per Security (see
7.1	Preference +securities			note 3) (cents)	note 3) (cents)
7.2	(description) Changes during quarter (a) Increases through issues
	(b) Decreases through returns of capital, buy- backs, redemptions
7.3	+ Ordinary Securities	35,000,001	20,000,000
7.4	Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions
7.5	+ Convertible Debt
7.6	Securities (description) Changes during quarter
	(a) Increases through issues
	(b) Decreases through securities matured, converted
7.7	Options (description			Exercise Price	Expiry Date
	and conversion factor)	7,500,000 2,600,000 2,000,000 650,000 40,000 50,000		20 cents 20 cents 20 cents 20 cents 32 cents 32 cents	24/03/09 04/04/09 26/07/09 27/07/09 23/09/09 15/12/09
7.8	Issued during quarter	50,000		Exercise Price 32 cents	Expiry Date 15/12/09
7.9	Exercised during quarter
7.10	Expired during quarter
7.11	Debentures (totals only)
7.12	Unsecured Notes
	(totals only)

Compliance Statement

$\mathbf{I}$ This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4).

$\overline{2}$ This statement does /does not* (delete one) give a true and fair view of the matters disclosed.

Sign here: ...................................... (Secretary)

Print name: DONALD STEPHENS

Notes

The quarterly report provides a basis for informing the market how the entity's activities have been $\mathbf{I}$ financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

$\overline{2}$ The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lansed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and $6.2.$

Issued and quoted securities The issue price and amount paid up is not required in item 7.1 and 7.3 $\overline{3}$ for fully paid securities.

$\overline{4}$ The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

$5.$ Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

$= 1.25$