VANCOUVER, B.C., CANADA, AUGUST 17, 2009 -- Magma Energy Corp. (TSX:MXY) announces that it has been selected as the preferred bidder to acquire up to 32.32% of Iceland geothermal company HS Orka through an auction process carried out by Reykjavik Energy ("RE") on behalf of itself and two other HS Orka shareholders. Magma and RE are now negotiating detailed terms of Magma's acquisition and expect to conclude negotiations during August with a closing aniticipated in September. On July 23, 2009, Magma announced that it had signed an agreement to acquire a 10.78% shareholding in HS Orka, which agreement included an option to acquire approximately a 5% additional shareholding in HS Orka. The previously announced agreement remains scheduled to close in September. If both transactions conclude, Magma would hold a 43.1% direct interest in HS Orka and an option to acquire a further 5% stake for a total of 48.1%.
HS Orka is the largest privately owned energy company in Iceland with installed geothermal power capacity of 175 megawatts ("MW"). In addition, HS Orka generates 150 MW of thermal energy for district heating. Expansions are planned that will increase HS Orka's geothermal power production to 425 MW by 2015.
Ross Beaty, Magma's Chief Executive Officer, said, "Upon completion of the acquisitions, Magma's direct and indirect installed gross geothermal power production will increase to 86.4 MW immediately and up to 206.5 MW after completion of HS Orka's planned expansion and Magma's current 12 MW expansion at its Soda Lake operation in Nevada. In addition, it gives Magma exposure to the large and well developed Icelandic geothermal industry, enabling synergies with Magma's large international portfolio of geothermal assets".
Magma was advised on the transaction by Glacier Partners, an investment advisory firm specializing in the geothermal and seafood industries.
About Magma Energy Corp.
Magma Energy Corp. is a geothermal power company which is actively engaged in operating, developing, exploring and acquiring geothermal energy projects. We currently have one operating power generation plant in Nevada known as Soda Lake and an extensive international portfolio of exploration properties throughout the western United States, Chile, Argentina and Peru.
About Iceland's Geothermal Industry and Reykjavik Energy
Iceland has one of the world's largest and best developed geothermal industries, supported by substantial geothermal resources and a highly skilled domestic workforce. Geothermal energy accounts for 23% of Iceland's electricity demand and powers many of Iceland's homes and commercial enterprises, including Iceland's large aluminum industry.
Orkuveita Reykjavikur (Reykjavik Energy) is an Icelandic partnership owned principally by Reykjavik, Iceland's capital city, and produces and distributes electricity and geothermal water for heating and cold water for consumption.
Contact: Lyle Braaten, Secretary and General Counsel
Magma Energy Corp.
Cautionary Note regarding Forward-Looking Statements and Information
This news release contains certain "forward-looking information" within the meaning of Canadian securities laws, which may include, but is not limited to, statements with respect to future events or future performance, prospects for closing our acquisition of an interest in HS Orka including required consents and third party negotiations, our plans to expand our operations and HS Orka's plans to expand their geothermal power production, management's expectations regarding our growth, business prospects and opportunities and geothermal energy generation capacities. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.
A number of known and unknown risks, uncertainties and other factors, may cause our actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. The forward-looking information can be identified by terms such as plans, planned, anticipated, expects and is based upon what management believes to be reasonable assumptions, including, but not limited to, assumptions about: reaching agreement on the terms of the acquisition, conditions to closing our acquisition of an interest in HS Orka being met and consents being received, the success and timely completion of planned exploration and expansion programs, the growth rate in net electricity consumption; support and demand for non-hydroelectric renewables; government initiatives to support the development of renewable energy generation; the accuracy of reserve estimation methodology and analysis used to estimate the quantity of potentially recoverable thermal energy; geological, geophysical, geochemical and other conditions at our properties; the reliability of technical data, including extrapolated temperature gradient, geophysical and geochemical surveys and geothermometer calculations; capital expenditure estimates; availability of capital to fund development and expansion programs; and general economic conditions. Forward-looking information and statements are also based upon the assumption that none of the identified risk factors that could cause actual results to differ materially from the forward-looking information and statements will occur.
There can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance on forward-looking information. Other than as required by applicable securities laws, we assume no obligation to update or revise such forward-looking information to reflect new events or circumstances.