Equity | Australia | Utilities

29 November 2010

Produced by: RBS Morgans Limited

Buy
Important: The above recommendation has been made on a 12 month view and may not suit your investment needs or timeframe. The basis it is prepared on is summarised on the last page of this report. PLEASE CONTACT YOUR ADVISER TO DISCUSS THIS GENERAL RECOMMENDATION BEFORE ACTING ON IT.

Geodynamics
Getting back to basics
Progress toward being Australia's largest geothermal energy producer continues. Of particular note is a new leadership team; the redevelopment of a clear progress plan and the attainment of substantial government funding. Long-term value but development journey will continue to be capital demanding and volatile.
Key forecasts
FY09A EBITDA (A$m) Reported net profit (A$m) Normalised net profit (A$m) Normalised EPS (c) Normalised EPS growth (%) Dividend per share (c) Dividend yield (%) Price/net oper. CF (x) ROIC (%)
(1M) (3M) 0.47 0.0 -5.3 3.7 (12M) 0.87 -46.6 -45.3 -45.1

High
A$1.48
Price

Volatility

Target price

FY10A -17.5 -15.3 -14.8 -5.08 -6.26 0.00 0.00 -23.9 -11.2

FY11F -16.0 -50.9 -50.9 -13.8 172.6 0.00 0.00 -9.62 -26.5

FY12F -16.0 -52.8 -52.8 -11.9 -14.0 0.00 0.00 -11.1 -23.3

FY13F -16.0 -57.8 -57.8 -13.0 9.20 0.00 0.00 -12.9 -21.2

-20.8 -15.9 -15.3 -5.42 90.30 0.00 0.00 -10.4 -14.2

A$0.47
Short term (0-60 days)

n/a
GDY101129

Price performance
Price (A$) Absolute (%) Rel market (%) Rel sector (%)
Oct 07 2.4 2.0 1.6 1.2 0.8 0.4 0.0 GDY.AX S&P/ASX200 Oct 08

0.61 -23.8 -22.3 -18.9

Oct 09

Use of %& indicates that the line item has changed by at least 5%. 1. Pre non-recurring items and post preference dividends Accounting standard: ifrs Source: Company data, RBS Morgans forecasts

year to Jun, fully diluted

A year of trial and tribulation Leadership changes and technical challenges were the main themes for FY10. However, we believe that change and subsequent lessons can stimulate progress. GDYs fundamental value proposition remains the fact that, based on our analysis, it is still the largest and hottest defined Australian geothermal resource play. The Habanero 3 well case cracking issue led to improved material selection, but delays in ascertaining the problem obviously led to the delay and revision of its development program. Change is often expensive and creates disappointment in the short term, but is necessary for long-term success. Newly appointed CEO Mr Geoff Ward is now expected to lead GDY from 31 January 2010. The revised program

Market capitalisation

A$136.17m (US$132.37m)
Average (12M) daily turnover

A$0.22m (US$0.20m)
Sector: BBG AP Electricity Part of: ASX/S&P 300 RIC: GDY.AX, GDY AU Priced A$0.47at close 26 Nov 2010. Source: Bloomberg

The immediate focus has been on re-casing and fraccing Jolokia 1 to prove reservoir properties. The two fracture zones were found to be steeply dipping which requires higher injection pressure but offers temperatures 8C higher. Stage 2 is now using the Jolokia 1 rig to explore the Hot Sedimentary Aquifers in Joint Venture with Operator Origin Energy. Stage 3 development then reverts to demonstrating energy extraction by firstly drilling new Habanero wells 4 and 5 and then fraccing the reserve and installing a 1MW generator. Drilling is expected to commence in 2011 with a 12-month drilling and casing sequence. Investment view Buy retained, A$1.48 target price With its quality resources, technical expertise, A$50.1m in cash reserves and strategic partners (Origin and Tata), we believe that GDY is best placed in the sector to develop a large-scale project. We set our target price to A$1.48 85% of our reserve-based valuation to account for development risks. We maintain our Buy rating, recognising that GDY is a high-risk, capital-intensive investment with potentially significant upside. Upcoming catalysts relate to further progress on Habanero. Key risks are inability to overcome well design issues, ongoing drilling issues and further delays in the pilot plant.

Analysts
Roger Leaning
Australia +61 7 3334 4554 roger.leaning@rbsmorgans.com

Nick Harris
Australia +61 7 3334 4557 nick.harris@rbsmorgans.com

RBS Morgans Limited (A.B.N. 49 010 669 726) AFSL235410 A Participant of ASX Group www.rbsmorgans.com

Important disclosures regarding companies that are the subject of this report and an explanation of recommendations and volatility can be found at the end of this document.

RBS Morgans Limited is Lead Manager to the share purchase plan and will receive fees in this regard.

Summary of GDY business basics:

230,000PJ of inferred resources which management estimates can provide >6,500 MW of base load over 40 years (assuming 25% recovery rate and 15% conversion efficiency); Long-term goal of sub-A$100 per MW hour power delivered to the grid; and Extremely high temperature reserve: 278C at 4,900m, 252C at 4,350m and 130-150C at 2,200m.

The trials and tribulations over the last 18 months:

Proof of concept independently verified with long-term closed loop test between Habanero 1 and 3 (depth of 4,300m); Habanero 3 well incident investigated. Hydrogen embrittlement of steel casing (a chemical reaction caused by dissolved gases in the reservoir fluid reacting with the casing material) caused casing failure. GDY learnt from this experience that the wrong grade of steel was selected, and is in the process of resolving the problems prior to large-scale rollout; Secured A$107m in funding (A$10m + A$7m + A$90m) in 2009. The A$90m will be used to commercialise GDYs Cooper Basin demonstration plant. The balance is for the demonstration of geothermal potential in Hunter Valley, NSW; Wells drilled at Jolokia (depth of 5,000m) and Savina; Leadership changes, with Dr Jack Hamilton assuming the temporary role of position of Managing Director (from Gerry Grove White). From 31 January 2011 Mr Geoff Ward will become the new Chief Executive Officer of Geodynamics. Keith Spence also assumed the role of Chairman Elect following the resignation of Martin Albrecht at the November AGM; Jolokia 1 cement plug re-drilled GDY rnn seven-inch casing in the well and frac stimulated it in late 2010; Well bore imaging completed in September 2010 positively confirmed fractures and temperatures (about 278C at 4,900km depth) in Jolokia 1; Fraccing of Jololoa 1 in November indicated different characteristics to Habanero. The two zones fraced at 4,400m and 4,700m depths were found to have fractures which are initially steeply dipping and which therefore require higher pressure to inject. However the nature of these fractures also means that the temperatures in Jolokia at 4,900m are around 278C which is 8C higher than at the same depth in Habanero, so can logically be expected to produce higher yields. GDYs next priority is to utilise Rig 100 for a Hot Sedimentary Aquifer Shallow well exploration program at the Innamincka Shallows. This Joint Venture exploration program with be undertaken with Origin Energy as the Operator. Habanero drilling two more wells (Habanero 4 and 5) to commission a 1MW pilot plant. Habanero 4 drilling is planned is planned for early 2011 with a 1 MWe looped continuing to Habanero 5 expected to be commissioned in early 2012. GDY will then make the final investment decision (FID) on a 25MW commercial demonstration plant; In November 2010 GDY announced plans for a Share Purchase Plan and Options in order to raise capital to provide working capital to continue the work program that leads GDY to the 25 MWe commercial demonstration plant, including the commissioning of a 1 MWe pilot plant to deliver the first power using EGS technology in Australia. The GDY Board is also considering placing up to 60m shares and 60m attaching options to professional, sophisticated and institutional investors. Early 2015 planning 25MW commercial feasibility program (CFP) in the Cooper Basin (commercial demonstration).

Geodynamics | News Highlights | 29 November 2010

Milestones and priorities Table 1 : Proposed development program

Timeline September 2010 Late-CY10 Late-CY10 Commencing late 2010 Project Jolokia 1 Jolokia 1 Jolokia 1 Hutton shallow wells Commentary Well bore imaging in Jolokia 1 positively confirmed fractures and 278C at 4,900m depth. Re-casing Jolokia 1 with seven-inch TN95 casing. Lesson learnt from Haberno 3 is that 9 5/8 casing and materials are not suitable. Frac and stimulate Jolokia 1 completed with fraccing demonstrating steeply dipping fractures but higher temperatures. Review options for shallow drilling within the Hutton area (sedimentary aquifers). Drilling times and risk are much lower given depths are about 2,500m. This is still at the speculative stage, but has the potential to result in commercial grade production in a faster time frame and using existing (and proven) technologies for commercialisation. GDY is now redeploying Rig 100 (from Jolokia 1) for a Hot Sedimentary Aquifer Shallow well exploration program at the Innamincka Shallows. This Joint Venture exploration program with be undertaken with Origin Energy as the Operator. The project is expected to diversify GDYs geothermal resource base and if successful has the potential to allow GDY to begin producing electricity early than originally expected. Drill and frac Habanero 4. Case with seven-inch TN95 - lesson learnt from Habanero 3. Should be partially funded by an insurance claim on Habanero 3 and from the Renewable Energy Demonstration Program (REDP) grant. Drill and frac Habanero 5. Case with seven-inch TN95 lesson learnt from Habanero 3. Should be partially funded by an insurance claim on Habanero 3 and from the REDP grant. Test flow rates between Habanero 4 and 5. Commission 1MW pilot plant connecting Habanero 4 and 5. Pilot plan will utilise the existing 1MW plant that was originally intended for use on Jolokia. Drilling of Jolokia 2 and demonstrate commercial flows at Jolokia 1. FID on 25MW proof of concept plant.

Commencing early-CY11

Habareno 4

Commencing late-CY11 Early-CY12 Early-CY12 CY12 1QCY13

Source: RBS Morgans estimates

Habareno 5 Habareno Habareno Jolokia Habareno

Recent Geodynamics business highlights

In November, GDY was awarded a Federal Government A$90m REDP grant to develop the Cooper Basin Commercial Demonstration Plant. Funding will be staged over the life of the 25 MW geothermal power plant project (until late-2015). In mid-December, GDY was awarded A$7m in funding under the Federal Governments Round Two Geothermal Drilling Program (for the development of GDYs Hunter Valley program). The company was also awarded A$10m in funding in late 2009 from the NSW Climate Change Funds Renewable Energy Development Program. Awarded a new operating contract for the Joint Ventures 100% owned drilling rig Weatherford Drilling Internationals Australian subsidiary in mid-December 2009. This is initially a two-year contract with the option to extend if agreed by both parties. The new Research and Development legislation has been re-tabled in parliament. If this passes as expected companies such as GDY with a revenue less than A$20m are entitled to receive a 45% cash back rebate on R&D spend. The bulk of GDYs expenditure is still R&D. The legislation is expected to be retrospective and to come in to effective from 1 July 2010 so GDY should be able to make a claim following the release of its FY11 results, lodge its tax return by October and receive a refund by the end of CY11.

Balance sheet and capex

As of 30 September 2010, GDY had A$50.1m in cash reserves;. GDYs FY10 cash burn was about A$50m, and we expect this to increase towards A$75m as its drilling program recommences. We expect GDY to receive A$45m in funding in FY11 (detailed below) which, when combined with A$50.1m in cash reserves and our cash burn estimate of A$75m, should allow it to fund one more year of exploration.

Geodynamics | News Highlights | 29 November 2010

Funding grants and capital raising

1. A$90m REDP grant to develop the Cooper Basin Commercial Demonstration Plant. Funding is tiered and will begin when drilling of Habanero 4 commences, with final payment expected once a 25MW geothermal power plant is commissioned in the Cooper Basin in late CY15. We expect GDY to receive A$22.5m per year over four years. 2. A$7m in round-two funding from the Geothermal Drilling Program. Funding (1:1) has been granted for the development of GDYs Hunter Valley geothermal project. Drilling of a 2km deep well in the Bulga tenement was scheduled to commence in CY10. We expect these funds to be received in FY11.

3. A$10m in funding from the NSW Climate Change Funds REDP.

To develop the Hunter Valley geothermal project as detailed above. We expect these funds to be received in FY11.

4. Capital raising.

As of 30 September 2010, GDY had A$50.1m in cash. As announced to the market, GDY will pursue a share purchase plan (SPP) to fund ongoing work. We forecast (assumed) A$75m in capital raising at 50cps towards end-CY10.

Details of the announced capital raising

GDY announced a capital raising in November 2010. GDY has launched a Share Purchase Plan (SPP) allowing existing shareholders to purchase up to A$15,000 worth of shares based on a 15 November 2010 record date. The SPP shares are priced at the lower of A$0.50 per share or a 10% discount to the volume weighted average price of all the Companys shares sold on the ASX during the five trading days between 13 December and 17 December 2010 (inclusive). In addition GDY has also launched options excisable at A$0.55 and expiring 31 March 2012. GDY shareholders will receive one option for every share they are issued under the SPP. The option record date is 17 December 2010. There are currently 293m GDY shares on issue. The GDY Board estimates that if 100% of the maximum amount of the SPP is subscriber for this will add 88m new shares and 88m SPP related options. If there is a 30% SPP take-up this would equate to 26.4m new shares and 26.4m new options, and if there is a 50% SPP take-up this would equate to 44m new shares and 44m new options.

Geodynamics | News Highlights | 29 November 2010

Table 2 : Project summary

Project Exploration Details RBS Morgans cost estimates and commentary

Drilling of Habanero 4 and 5 We estimate drilling and case costs of A$20-30m per well. We expect this to be funded via existing cash reserves, capital raising as already flagged to the market and the possibility of an insurance payout related to the Habenero 3 casing failure. Our forecasts do not assume an insurance payout.

Demonstration

1MW Pilot plant

We expect GDY to reuse the 1MW plant purchased for Habanero 3. Contractor and ancillary costs will be the majority of the outlay. We estimate about A$10m in costs.

Pilot

25MW plant run off Habanero 4 & 5 wells

This is likely to be funded via the A$90m Renewable Energy Demonstration Program. Funding will commence once drilling of Habanero 4 commences. We expect GDYs cost to commercialise at about A$125m.

Source: Company data, RBS Morgans estimates

Valuation Methodology Table 3 : GDY valuation

GDY power station PJ required/year Power station lifespan Total gas equivalent reserves required Value of 1PJ gas equivalent un-contracted (A$) Total value for GDY reserves required (A$) Shares on issue (m) Per share valuation (A$) Discount applied to reserve-based valuation to account for development risks Price target (A$)
Source: Company data, RBS Morgans forecasts

500MW 38.5PJ 20 years 770PJ 1.0m 770m 443.4 1.74 15% 1.48

We have assumed no value or cost for the Hutton shallow well and other projects, nor for a geothermal resource over and above a 500MW power plant.

Geodynamics | News Highlights | 29 November 2010

GDY financial summary

Year to 30 Jun (A$m) Income statement Divisional sales Total revenue EBITDA Associate income Depreciation EBITA Amortisation/impairment EBIT EBIT(incl associate profit) Net interest expense Pre-tax profit Income tax expense After-tax profit Minority interests NPAT Significant items NPAT post abnormals Cash flow statement EBITDA Change in working capital Net interest (pd)/rec Taxes paid Other oper cash items Cash flow from ops (1) Capex (2) Disposals/(acquisitions) Other investing cash flow Cash flow from invest (3) Incr/(decr) in equity Incr/(decr) in debt Ordinary dividend paid Preferred dividends (4) Other financing cash flow Cash flow from fin (5) Forex and disc ops (6) Inc/(decr) cash (1+3+5+6) Equity FCF (1+2+4) Balance sheet Cash & deposits Trade debtors Inventory Investments Goodwill Other intangible assets Fixed assets Other assets Total assets Short-term borrowings Trade payables Long-term borrowings Provisions Other liabilities Total liabilities Share capital Other reserves Retained earnings Other equity Total equity Minority interest Total shareholders' equity Total liabilities & SE AIFRS 2009A 0.0 0.0 -20.8 0.0 -1.0 -21.8 0.0 -21.8 -21.8 6.5 -15.3 0.0 -15.3 0.0 -15.3 -0.6 -15.9 2009A -20.8 14.7 -6.5 0.0 0.0 -12.7 -45.6 0.0 28.9 -16.6 44.3 0.0 0.0 0.0 0.0 44.3 0.0 15.1 -58.2 2009A 115.0 22.7 1.5 2.9 0.0 0.0 69.9 90.3 302.4 0.0 11.3 0.0 0.0 8.3 19.6 319.7 2.0 -38.9 0.0 282.8 282.8 302.4 AIFRS 2010A 0.0 0.0 -17.5 0.0 -1.3 -18.9 0.0 -18.9 -18.9 4.1 -14.8 0.0 -14.8 0.0 -14.8 -0.5 -15.3 2010A -17.5 8.6 3.3 0.0 0.0 -5.6 -12.3 0.0 -25.8 -38.1 0.1 0.0 0.0 0.0 0.0 0.1 0.0 -43.7 -18.0 2010A 71.3 13.3 0.7 0.0 0.0 0.0 79.5 122.4 287.1 0.0 7.3 0.0 0.0 10.0 17.3 319.9 3.6 -53.7 0.0 269.9 269.9 287.1 AIFRS 2011F 0.0 0.0 -16.0 0.0 -36.6 -52.6 0.0 -52.6 -52.6 1.8 -50.9 0.0 -50.9 0.0 -50.9 0.0 -50.9 2011F -16.0 0.0 -1.8 0.0 0.0 -17.8 -75.0 0.0 0.0 -75.0 75.0 0.0 0.0 0.0 0.0 75.0 0.0 -17.8 -92.8 2011F 53.6 13.3 0.7 0.0 0.0 0.0 117.9 122.4 307.8 0.0 7.3 0.0 0.0 10.0 17.3 394.9 3.6 -108.0 0.0 290.5 290.5 307.8 AIFRS 2012F 0.0 0.0 -16.0 0.0 -39.3 -55.3 0.0 -55.3 -55.3 2.5 -52.8 0.0 -52.8 0.0 -52.8 0.0 -52.8 2012F -16.0 0.0 -2.5 0.0 0.0 -18.5 -75.0 0.0 0.0 -75.0 0.0 50.0 0.0 0.0 0.0 50.0 0.0 -43.5 -93.5 2012F 10.1 13.3 0.7 0.0 0.0 0.0 153.6 122.4 300.0 0.0 7.3 50.0 0.0 10.0 67.3 394.9 3.6 -165.8 0.0 232.7 232.7 300.0 AIFRS 2013F 0.0 0.0 -16.0 0.0 -41.8 -57.8 0.0 -57.8 -57.8 0.0 -57.8 0.0 -57.8 0.0 -57.8 0.0 -57.8 2013F -16.0 0.0 0.0 0.0 0.0 -16.0 -75.0 0.0 0.0 -75.0 0.0 100.0 0.0 0.0 0.0 100.0 0.0 9.0 -91.0 2013F 19.1 13.3 0.7 0.0 0.0 0.0 186.8 122.4 342.2 0.0 7.3 150.0 0.0 9.9 167.3 394.9 3.6 -223.6 0.0 174.9 174.9 342.2 Closing price (A$) Valuation metrics Preferred methodology DCF valuation inputs 0.47 Reserve Based Price target (A$) Val'n (A$) $ 1.48 1.74

GDY Power station PJ required / year Life of Power Station Total Gas equivalent reserves required Value of 1PJ gas equivalent uncontracted Total value for GDY reserves required A$ Shares on issue (m) Per Share Valuation Premium / (discount) applied to price target Price Target Multiples Enterprise value (A$m) EV/Sales (x) EV/EBITDA (x) EV/EBIT (x) PE (pre-goodwill) (x) PEG (pre-goodwill) (x) At target price EV/EBITDA (x) PE (pre-goodwill) (x) Per share data No. shares EPS (cps) EPS (normalised) (c) Dividend per share (c) Dividend payout ratio (%) Dividend yield (%) Growth ratios Sales growth Operating cost growth EBITDA growth EBITA growth EBIT growth NPAT growth Pre-goodwill NPAT growth Pre-goodwill EPS growth Normalised EPS growth Operating performance Asset turnover (%) EBITDA margin (%) EBIT margin (%) Net profit margin (%) Return on net assets (%) Net debt (A$m) Net debt/equity (%) Net interest/EBIT cover (x) ROIC (%) Internal liquidity Current ratio (x) Receivables turnover (x) Payables turnover (x) 2010A 72.2 -4.1 -3.8 -9.6 2011F 89.9 -5.6 -1.7 -3.5 2012F 183.4 -11.5 -3.3 -4.1

500MW 38.5PJ 20 years 770 A$1m 770,000,000 443.4 $ $ 1.74 -15% 1.48 2013F 274.4 -17.2 -4.7 -3.8

2010A -20.6 -29.1 2010A 290.6 -5.3 -5.1 0.0 0.0 0.0 2010A n.m -15.9% -15.9% -13.4% -13.4% -3.5% -3.5% -6.3% -6.3% 2010A n.m n.m n.m n.m -7.0 -71.3 -26.4 n.m -11.2 2010A 5.8 0.0 1.9

2011F -23.7 -10.7 2011F 367.3 -13.8 -13.8 0.0 0.0 0.0 2011F n.m -8.8% n/a 178.6% 178.6% 244.4% 244.4% 172.6% 172.6% 2011F n.m n.m n.m n.m -18.1 -53.6 -18.4 n.m -26.5 2011F 4.6 0.0 2.2

2012F -29.5 -12.4 2012F 443.4 -11.9 -11.9 0.0 0.0 0.0 2012F n.m 0.0% 0.0% 5.1% 5.1% 3.8% 3.8% -14.0% -14.0% 2012F n.m n.m n.m n.m -23.8 39.9 17.2 n.m -23.3 2012F 1.6 0.0 2.2

2013F -35.2 -11.4 2013F 444.5 -13.0 -13.0 0.0 0.0 0.0 2013F n.m 0.0% 0.0% 4.5% 4.5% 9.5% 9.5% 9.2% 9.2% 2013F n.m n.m n.m n.m -33.0 130.9 74.8 n.m -21.2 2013F 2.2 0.0 2.2

Source: Company data, RBS Morgans forecasts

Geodynamics | News Highlights | 29 November 2010

RESEARCH TEAM ROGER LEANING CHRIS BROWN NIK BURNS ALEX CLARKE FIONA BUCHANAN NICK HARRIS MICHAEL KNOX JAMES LAWRENCE JOSEPHINE LITTLE BELINDA MOORE Executive Director - Research Senior Analyst Senior Analyst Analyst Director - Research Senior Analyst Executive Director - Economic Strategy Analyst Associate Director - Research Director - Research SCOTT MURDOCH SCOTT POWER TOM SARTOR TAMARA STRETCH TANYA SOLOMON REBECCA SULLIVAN VIOLETA TODOROVA MARCEL VON PFYFFER JAMES WILSON Analyst Director - Research Associate Director - Research Associate Director - Research Associate Director - Research Research/Special Projects Technical Analyst Director Strategy Senior Analyst

BRISBANE BRISBANE EDWARD STREET BUNDABERG BURLEIGH HEADS CAIRNS CALOUNDRA CAPALABA CHERMSIDE EMERALD GLADSTONE GOLD COAST IPSWICH MACKAY MILTON NOOSA REDCLIFFE ROCKHAMPTON SPRING HILL SPRINGWOOD STANTHORPE SUNSHINE COAST TOOWOOMBA TOWNSVILLE YEPPOON SYDNEY ARMIDALE BALLINA BALMAIN

(07) 3334 4888 (07) 3121 5677 (07) 4153 1050 (07) 5520 8788 (07) 4052 9222 (07) 5491 5422 (07) 3245 5466 (07) 3350 9000 (07) 4988 2777 (07) 4972 8000 (07) 5592 5777 (07) 3202 3995 (07) 4957 3033 (07) 3114 8600 (07) 5449 9511 (07) 3897 3999 (07) 4922 5855 (07) 3833 9333 (07) 3808 7588 (07) 4681 6702 (07) 5479 2757 (07) 4639 1277 (07) 4771 4577 (07) 4939 3021 (02) 8215 5000 (02) 6770 3300 (02) 6686 4144 (02) 8755 3333

RBS MORGANS LIMITED OFFICES CHATSWOOD COFFS HARBOUR GOSFORD HURSTVILLE MERIMBULA NEUTRAL BAY NEWCASTLE NEWPORT ORANGE PARRAMATTA PORT MACQUARIE REYNOLDS EQUITIES SCONE WOLLONGONG MELBOURNE BERWICK BRIGHTON CAMBERWELL GEELONG MELBOURNE FARRER HOUSE TRARALGON WARRNAMBOOL CANBERRA ADELAIDE NORWOOD PERTH DARWIN HOBART DISCLAIMER - RBS MORGANS LIMITED

(02) 8116 1700 (02) 6651 5700 (02) 4325 0884 (02) 9570 5755 (02) 6495 2869 (02) 8969 7500 (02) 4926 4044 (02) 9998 4200 (02) 6361 9166 (02) 9615 4500 (02) 6583 1735 (02) 9373 4452 (02) 6544 3144 (02) 4227 3022 (03) 9947 4111 (03) 9796 2676 (03) 9519 3555 (03) 9813 2945 (03) 5222 5128 (03) 8644 5488 (03) 5176 6055 (03) 5559 1500 (02) 6232 4999 (08) 8464 5000 (08) 8461 2800 (08) 6462 1999 (08) 8981 9555 (03) 6236 9000

This report was prepared as a private communication to clients and was not intended for public circulation or publication or for the use of any third party, without the approval of RBS Morgans Limited (RBS Morgans). While this report is based on information from sources which RBS Morgans considers reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect RBS Morgans judgment at this date and are subject to change. RBS Morgans has no obligation to provide revised assessments in the event of changed circumstances. RBS Morgans, its directors and employees do not accept any liability for the results of any actions taken or not taken on the basis of information in this report, or for any negligent misstatements, errors or omissions. This report is made without consideration of any specific clients investment objectives, financial situation or needs. 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RBS Morgans affiliates may provide or have provided banking services or corporate finance to the companies referred to in the report. The knowledge of affiliates concerning such services may not be reflected in this report. The Directors of RBS Morgans advise that they and persons associated with them may have an interest in the above securities and that they may earn brokerage, commissions, fees and other benefits and advantages, whether pecuniary or not and whether direct or indirect, in connection with the making of a recommendation or a dealing by a client in these securities, and which may reasonably be expected to be capable of having an influence in the making of any recommendation, and that some or all of our Authorised Representatives may be remunerated wholly or partly by way of commission. RECOMMENDATION STRUCTURE Absolute performance, long-term (fundamental) recommendation: The recommendation is based on implied upside/downside for the stock from the target price. A Buy/Sell implies upside/downside of 10% or more and a Hold less than 10%. The target price is the level the stock should currently trade at if the market accepted the analysts view of the stock, provided the necessary catalysts are in place to effect the change in perception. If it is felt that the catalysts are not fully in place to effect a re-rating of the stock to its warranted value the target price will differ from fair value. Given the volatility of share prices and our pre-disposition not to change recommendations frequently, these performance parameters should be interpreted flexibly. Performance in this context only reflects capital appreciation and the horizon is 12 months. For listed property trusts (LPTs) the recommendation is based upon the target price plus the dividend yield, ie total return. A Buy implies a total return of 10% or more; a Hold 5-10%; and a Sell less than 5%. Absolute performance, short-term (trading) recommendation: The Trading Buy/Sell recommendation implies upside/downside of 3% or more. The trading recommendation time horizon is 0-60 days. Each stock has been assigned a Volatility Rating to assist in assessing the risk of the security. The rating measures the volatility of the security's daily closing price data over the previous year relative to other stocks included in either the S&P/ASX200 Index (large caps) or the Small Ordinaries Index (small caps) of which it is a member. This rating is a quantitative (objective) measure provided as an additional resource and is independent of the qualitative research process undertaken by our research analysts. A rating of Low indicates very little movement in price over the previous year (Coefficient of Variation < 4 for small caps or < 5 for large caps). A Moderate rating implies average price movement over the previous year (Coefficient of Variation of 9 - 21 for small caps or 7.25 - 15 for large caps). A High rating implies significant price movement over the past year (Coefficient of Variation greater than 25 for small caps or 35 for large caps). REGULATORY DISCLOSURES RBS Morgans Limited has been engaged by Geodynamics as Lead Manager to the Share Purchase Plan and will receive fees in this regard. From this fee, RBS Morgans will pay Licensed Financial Advisors a stamping fee of 1.5% on the value of successful applications under the SPP as claimed by that organization. PRIVACY Personal information held by RBS Morgans Limited may have been used to enable you to receive this publication. If you do not wish your personal information to be used for this purpose in the future please advise us, including your account details to your local RBS Morgans Limited office or to Reply Paid 202, GPO Box 202 Brisbane Qld 4001.

Geodynamics | Disclosures Appendix | 29 November 2010