The Fundamental WorryThe market has serious doubts that geothermal works. And perhaps it should. The margins at Alterrra's geothermal projects are crummy. Nevada Geothermal's Blue Mountain, which is supposed produce 49.5 MW of power, is also crummy:
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For the nine months ended March 31, 2011 Blue Mountain produced $18 million in revenue, which looks okay but subtract from that $9 million for "direct cost of energy production" and $4 million in "operating expenses" and this 49.5 MW project only produced $5.8 million dollars of income in 9 months. That's god-awful.
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If operating results from the SJT expansions look anything like those of Blue Mountain (if the 72MW only produces, say $10 or $15 million in real income) then RPG is headed straight to bankruptcy. There's still a lot of risk even at these stock price levels.