PTR MINERALS LTD — Interim / Quarterly Report 2011

Oct 28, 2010

CLEAN ENERGY FOR FUTURE GENERATIONS

Quarterly Report 30 September 2010

Quarter one highlights Paralana

› Work commenced to prepare Paralana 2 well for perforation and injectivity testing

Spain

› Highly prospective target site agreed with partner Enel for drilling on Tenerife post reporting period

Corporate

• › $2.7 million farm-in variation with Beach Energy to fund next stage of Paralana works
• › As at 30 September, the Company held $1.8 million in cash
• › $62.8 million Commonwealth Government Grant Funding Deed signed for Paralana Project

Review of Operations

Petratherm continued to work on its forward plans during the quarter with a renegotiation of the comany's farm-in agreement with Beach Energy contributing to ongoing work on the site.

The JV variation deal with Beach Energy brings forward $2.7 million in free carry funding for Petratherm's equity share of costs for the Paralana Project.

The Paralana fracture stimulation work program is planned to commence in November 2010 to create a network of micro-fractures and initial underground reservoir.

Work also continued during the quarter on advancing Petratherm's Spanish interests with data for the Tenerife geothermal project assessed and a highly prospective target area was agreed post the reporting period.

In Madrid, Petratherm España is advancing its 8MW Madrid Geothermal District Heating Project (GDH) under the Cooperative Agreement with the Spanish and Madrid regional governments.

Post the reporting period, Petratherm announced the project is now nearing completion of the feasibility phase.

Petratherm España is also holding Joint Venture discussions with a major European utility company.

Quarterly exploration and evaluation expenditure amounted to $3.37 million.

Of that expenditure $2.98 million was funded by our Joint Venture partners (Beach Energy and TRUenergy) under the Paralana JV.

The company had ongoing administration costs of $0.56 million during the quarter.

At the end of the quarter, the company held $1.79 million in cash.

Competent Persons Statement

The information in this report relating to geothermal exploration results and geothermal resources is based on information compiled by P.W. Reid, a full time Petratherm employee. Mr Reid has sufficient experience in the style of geothermal play under consideration to qualify as a Competent Person under the Australian Code for Reporting of Exploration Results, Geothermal Resources and Geothermal Reserves (2008) edition. Mr Reid consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Corporate and Regulatory

Change to Government to give boost to industry

The new federal political landscape involving cooperation between Labor, the Greens and two independents is expected to result in a renewed emphasis on the renewable energy sector.

The first sign of this is the recent statement by Prime Minister Julia Gillard that a "price on carbon", whether a tax or a trading scheme, is now back on the political agenda.

While the planned consultation process will take time, the carbon discussions via a Climate Change Committee is an important boost to the geothermal sector because it will underpin the needed long-term framework for investment.

Variation to Paralana farm-in

Petratherm announced a $2.7 million farm-in variation deal with Beach Energy to fund Petratherm's share of project costs for the next stage of work at Paralana. Beach Energy and TRUenergy Geothermal will continue to contribute their share of project costs at 21% and 10% respectively.

The farm-in variation terms are: 1. Beach Energy to bring forward $2.7 million in free carry funding for Petratherm's share of project costs.

1. Petratherm to bring forward the assignment of Beach's 21% interest as tenant in common of the Paralana geothermal exploration licences.

2. Beach Energy no longer required to pay the first $5 million toward the Paralana 3 well, but will be required to contribute to its equity share of project costs at 21% of total costs.

3. TRUenergy Geothermal's earnin requirement to pay the first $3 million toward Petratherm's equity share of project costs for the Paralana 3 well reduced to $2.5 million to ensure TRUenergy's joint venture interests are unaffected by changes in point 3 above.

Our Projects

Paralana

Some delays have been experienced in completing the initial fracture stimulation work at the Paralana 2 well.

Initial work showed an apparent blockage in the well during September but subsequent wire-line tests performed post the reporting period during October found no blockages in the well.

The operations, performed over three days and using various size tools, including a 6 inch gauge ring within the 7 inch cased well, confirmed that there were no blockages, with wire-line operations reaching depths of 3,688 metres (target depth of perforation) without obstruction.

The wire-line operations have confirmed the integrity of the Paralana 2 well.

Work is now continuing to design a fracture stimulation program to commence at the Paralana geothermal energy project during the next few months.

The forward program of hydraulic stimulation is designed to link the accessible well part to the encountered over-pressured zone during drilling.

The planned two stage fracture stimulation program is as follows:

Stage 1 - Perforation and injectivity test – perforation of the steel casing at the bottom of the Paralana 2 well and injection of a small volume of water to confirm fracture initiation and propagation.

Stage 2 - Fracture stimulation inject larger volume of water at higher rates. The volumes and rates to be dependent on the microseismic response measured by the installed micro-seismic array.

Spain

Petratherm and Enel Green Power have continued to work closely together to identify drill targets for the Tenerife Geothermal Project.

A prospective geothermal target has now been selected on the active volcanic island, based on findings from a large magneto-telluric survey conducted late in 2009.

Petratherm España is undergoing the drilling approval process in preparation for a planned geothermal test well scheduled for the 2nd quarter of 2011.

The Tenerife Regional Government has expressed support for the drilling program and potential future exploitation of geothermal energy, following a recent presentation by Petratherm España and Enel Green Power.

Several tenders to undertake the contract drilling works have been received and negotiations are underway to secure a drilling contractor.

Madrid

Petratherm España is advancing its 8MW Madrid Geothermal District Heating project (GDH) under the Cooperative Agreement with the Spanish and Madrid regional governments.

Through that Agreement a sum of €98,000 (AUD $140,000) is being provided by the Spanish government to assist the feasibility stage, now nearing completion.

The Madrid GDH project has been highlighted as one of six renewable energy projects of interest within the Madrid Regional Government's Renewable Energy Cluster. The project is planned to be the first geothermal district heating application in the Madrid region and seeks to provide a foundation to expand such applications across Petratherm España's large tenement holdings north of the city.

Petratherm España is concurrently engaged in discussions with a major European Utility to assess joint venture arrangements.

The preferred engineering design incorporates the innovative use of heat pumps to maximize the use of the geothermal source and a grid design to allow cascading supply of heat to users (from highest heat requirements first).

Discussions with all parties are continuing with a resolution expected prior to the end of this calendar year.

Discussions are also progressing with the Madrid Regional Government in respect to obtaining all necessary permits and approvals to allow the project to proceed.

Heliotherm

Petratherm's wholly owned subsidiary Heliotherm Limited was advised that its recent grant application under Round 2 of the Federal Government's Australian Solar Institute (ASI) program was unsuccessful.

The grant application, made in conjunction with the University of Adelaide, had previously been shortlisted through a competitive process in which only one-third of applicants were invited to submit to the ASI's Round 2 grant process.

Petratherm and the University of Adelaide intend to explore other grant programs, including, but not limited to, the new Australian Centre for Renewable Energy grant programs for renewable energy technologies. The project has been awarded $1.5 million in SA Government grants.

Corporate information

Corporate office

Level 1, 129 Greenhill Road Unley, South Australia 5061 t. +61 8 8274 5000 f. +61 8 8272 8141 e. admin@petratherm.com.au www.petratherm.com.au ABN 17 106 806 884

Board of directors

Derek Carter – Chair Terry Kallis – Managing director Richard Hillis – Non executive director Richard Bonython – Non executive director Simon O'Loughlin – Non executive director Lewis Owens-Non executive director Company secretary Donald Stephens HLB Mann Judd (SA) Pty Ltd

Stock exchange listing

Australian Stock Exchange (ASX code PTR)

Share registry

Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide, South Australia 5000

Legal advisors

O'Loughlins Lawyers Level 2, 99 Frome Street Adelaide, South Australia 5000

Auditors

Grant Thornton South Australian Partnership 67 Greenhill Road Wayville, South Australia 5034

Inside the Petratherm team

Managing director

Terry Kallis

Exploration manager Peter Reid

Business development manager Jonathan Teubner

Project manager – Paralana Paul Jepsen

Project geologist Mathieu Messeiller

Business accountant Paul Smith

Public & investor relations Belinda Willis

Office Manager Elena McRae

Spanish team

Manager – Spain Raul Hidalgo

Upcoming events

Industry events

For further information on forthcoming events in the geothermal sector visit the PIRSA website at http://geothermal.pir. sa.gov.au/news/events

Website

Petratherm's website delivers regular information updates to shareholders and stakeholders.

www.petratherm.com.au

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