A company going public within a year is getting a $15 million Provincial Growth Fund loan

Regional Economic Development Minister Shane Jones has earmarked $15 million from the PGF to Geo40. Photo / Warren Buckland

A company considering listing on the Australian stock market within the next 12 months has received a $15 million loan from the Provincial Growth Fund.

Some $5m of that loan will convert into shares in geothermal company Geo40 after an upcoming initial public offering (IPO).

A spokesman for the Provincial Growth Fund (PGF) said an IPO is "anticipated to take place in November 2019".

Geo40's chief executive John Lea confirmed to the Herald the company was planning an IPO "within the next 12 months".

But he said the company was weighing up whether it would list on the Australian ASX sharemarket or the Kiwi NZX.

"We are looking at an ASX listing because there is ability to access greater amounts of capital."

Lea said the company was also tossing up a dual listing.

Despite this, Regional Economic Development Minister Shane Jones has earmarked $15m to the company from the PGF.

Some $10m has been provided in a loan to the company which will have to be paid back.

But the remaining $5m has been allocated as a convertible loan – a loan that converts into shares once the company has floated on the stock exchange.

In other words, the Government will have $5m of Geo40 shares after the IPO.

Geo40 extracts silica from underground fluids used to generate geothermal electricity and exports it to be used in products such as paint, concrete and paper.

The company has turned the heads of many investors in the past, including Anvil Mining boss Bill Turner, Independence Group chief executive Peter Bradford and Sir Stephen Tindall's K1W1 investment firm.

In 2017, Geo40 raised $11m through Australian-based fund management company Euroz.

In total Lea said the company has 260 backers who have helped raise $23m for the company.

But he said the extra funding from the PGF would mean the company gets to stay in New Zealand.

"If we weren't able to get this funding, we would be looking at taking the project offshore," he said.

"I'm really pleased that this project is actually keeping us in New Zealand."

National's Economic Development spokesman Todd McClay said today's announcement amounts to "lazy use of taxpayer funding".

"In a rush to spend his slush fund, Shane Jones is again throwing all accountability out the window."

McClay added that it is becoming increasingly difficult to figure out how these PGF loans work.

"Are they interest-free? What rates are they being offered at? What kind of deal is the taxpayer getting? More transparency is needed around this."

In a press release announcing the $15m PGF loan to Geo40, Jones said the technology the company has developed was a world first.

"There's been a lot of overseas interest in both the technology and the product."

The PGF funding would be put towards a new plant and will, according to Jones, create up to 70 jobs.

The new plant will be seven times bigger, with PGF funding going towards the plant's commissioning and construction. The extraction process could also be extended to other geothermal plants.