REO
Reservoir Capital Corp.
 July 14, 2010
Pre-Feasibility Studies Completed for the Brodarevo Hydroelectric Projects in Serbia

 Vancouver, British Columbia (TSX Venture: REO) - Reservoir Capital Corp. ("Reservoir" or the "Company") is pleased to report that Energoprojekt Hidroinzenjering Co. Ltd. ("EHC") has completed Pre-Feasibility Studies for the Company's Brodarevo 1 and Brodarevo 2 hydroelectric projects on the River Lim in southwest Serbia.

EHC has recommended a capacity increase from the original application case of 48 megawatts ("MW") to 58.4 MW, with a corresponding increase in output from 189 gigawatt hours per year ("GWh/year") to 232 GWh/year. The study has also defined dam sites, provided recommendations for the design of the hydroelectric power plants and calculated preliminary cost estimates for their construction, as summarized in the table below:

License Project Site Water Level (m.a.s.l.) Gross Head (m) Discharge
(Qins)
(m3/s)
Capacity (MW) Output (GWh/year) Construction Cost (m) *
Brodarevo 1 Junakovina 519 19.73 150.00 26.0 102.33 71.099
Brodarevo 2 Lucice 488 24.70 150.00 32.4 130.59 68.830
Total         58.4 232.84 139.929
* includes contingencies of 10% on the civil works, moving sections of the road, anticipated expropriation costs and transmission grid connection.


Miljana Vidovic, CEO & President, commented "We are very pleased to have reached this milestone and encouraged that the Pre-Feasibility work has increased the capacity and overall potential of the project."

The estimated construction costs are budgeted into three areas: €46.3 million for construction works; €51.2 million for equipment purchases; and €42.4 million for other investments related to the hydroelectric power plant. €33.7 million of the €42.4 million that is anticipated to go into other investments is related to deviation of 7.31 km of the state road M21, on the section Prijepolje -- Bijelo Polje. The Company is currently working with local authorities towards being issued the permits required for the relocation of parts of the road along the River Lim, acquisition of surface rights affected by the project and construction of the hydroelectric installations.

The Italian and Serbian governments have signed a bilateral agreement whereby Serbia may export green energy into Italy and be issued green certificates (the cost of which are paid by consumers not government) for each kilowatt hour of electricity sold. The market price for electricity in Italy is presently approximately 5.5 Euro cents per kilowatt hour ("€cent/kWh") and the green certificates 8.5 €cent/kWh, implying a combined price for renewable energy of approximately 14 €cent/kWh. The electricity price and the green certificate price fell during the recent global recession, but management expects these prices to recover in the coming years with increased economic activity. From the Pre-Feasibility Studies EHC has determined that the breakeven price of electricity for the Brodarevo project is 7.65 €cent/kWh over a 25-year exploitation period using a discount rate of 8%. The Company continues discussions with various groups with the intent of securing certification and indicative agreements for the transmission and sale of electricity into the Italian market.

The EHC report also determined that the planned construction of Brodarevo 1 & 2 would bring the following benefits: generation of "green" electricity, extremely low disturbance of hydrology regime of the river, mitigation of the flood flow consequences, increased protection of low waters in dry seasons, development and economic effects such as: foreign capital flow during the construction period, positive impact to national currency stabilisation, possibility of engaging local construction companies, social and economic stabilisation of the region, economic development of the region in terms of employment, and improvement of the living standard of the population living in a broader vicinity of the hydropower facility.

About Reservoir

Reservoir is a renewable energy company, engaged in development of a 58.4 MW hydroelectric project at Brodarevo in southwest Serbia. Reservoir also holds four geothermal exploration licenses and a portfolio of precious and base metal exploration properties in Serbia. Reservoir's common shares trade on the TSX Venture Exchange (symbol "REO") and on the Frankfurt and Berlin Exchanges (symbol "ROC").

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For further information on Reservoir Capital Corp. please consult the Company's website www.reservoircapitalcorp.com or contact: Miles Thompson, Chairman, at +1 604 662-8448, or Chris MacIntyre, VP Corporate Development, at +1 416 346-7660.

Investor Relations: Julia Maxwell, +1 (604) 662-8448

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
 
 

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