Upcoming geothermal firm Geodynamics Ltd (ASX: GDY) said on Friday that it is close to realising an operating heat exchanger which should affirm the geological model being utilised by the company on its joint venture Innamincka project in South Australia.

The company said that its joint venture with Origin Energy (ASX: ORG) has already started operations at Jolokia 1 in the Cooper Basin, where works are underway to complete the well, fracture the granite and establish a geothermal reservoir.

Geodynamics said that its Rig 100 has gained re-entry breakthrough on Jolokia 1 and already drilled through the cement plug set in September 2008 as it added that the well has been cleaned and the company is currently making regular logging to check the well's condition where a simulation program is scheduled to run from late July to August.

The company said that following the simulation runs, it is set to drill two more wells on Habanero, where it would also commission the Pilot Plant which carries a one megawatt capacity.

Geodynamics said that the procedural undertakings would be made to place the company in a better position to decide on final investment plans for the development of the 25 megawatt Commercial Demonstration Plant.

As of 1056 AEST on Friday, Geodynamics stocks were trading at 54 cents, gaining 4.5 cents or 9.09 percent while Origin Energy shares were trading at $15.67, improving by 16 cents from the previous trading day.