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Magma Energy Corp Announces Third Quarter Results


(All amounts in US dollars unless otherwise stated and all production figures are approximate)

Vancouver, B.C., Canada, May 14, 2010 - Magma Energy Corp. (TSX:MXY) today reported its financial and operating results for the third quarter ended March 31, 2010. The Company also provided an update on its operations. This earnings release should be read in conjunction with the Company's MD&A, unaudited Financial Statements and Notes to Financial Statements for the corresponding period along with the audited consolidated Financial Statements, the related MD&A, and the Annual Information Form for the year ended June 30, 2009. This information is available on the Company's website at and has been posted on SEDAR at

Commenting on today's announcement, Ross Beaty, Chairman and CEO, said "Magma Energy continued to build its global geothermal power business in the third quarter of fiscal 2010. We acquired an additional 5.24% interest in Iceland's HS Orka in March and May which increased Magma's total power generation to 94 MW and our geothermal resources to 827 MW, continued our expansion efforts at our Soda Lake operation in Nevada, and were awarded the 100,000 hectare Pellado exploration concession and the 4,000 hectare Maule exploitation concession in Chile. We began new drilling programs in Chile, Iceland and Nevada and I expect we will continue to increase our geothermal production and our in-ground resources during the balance of 2010."

Corporate Financial Results
(expressed in thousands of dollars, except for per share amounts)


For the Three Months Ended March 31,

For the Three Months Ended March 31,

For the Nine Months Ended March 31,

For the Year Ended
June 30,

Total revenue

$          1,295

$          1,926

$          3,709

$         4,485

Cost of energy production





Gross profit










Other income (expenses)





Income tax recovery (expense)





Income (loss) for the period










Earnings (loss) per share (basic and diluted)





Total assets





Total liabilities





Cash and cash equivalents





Working capital (deficiency)





HS Orka Financial Results
(expressed in thousands of dollars and reconciled with Canadian GAAP)

Summary financial information with respect to the operation of HS Orka, on a 100% basis, is as follows:


For the Three Months
Ended March 31,

For the Year
Ended December 31,

Total revenue



Cost of energy production



Gross profit






Other income (expenses)



Income tax recovery (expense)



Income (loss) for the period*






Total assets



Total liabilities



Cash and cash equivalents



Working capital (deficiency)



*Magma's share of equity income (loss) was $3.6 million for the quarter ended March 31, 2010 and
($1.9 million) for the quarter ended December 31, 2009.

For the third quarter ended March 31, 2010, Magma reported net income of $142,000 ($0.00 per share), including the Company's share of HS Orka's net income of $3.60 million. The Soda Lake operation earned revenues of $1.29 million, gross profit of $417,000 and net income of $72,000 after deducting non-cash and other related expenses.

On a cash basis for the quarter ended March 31, 2010, the Company spent $2.0 million on operating activities and $13.1 million on investing activities, including investments of $7.1 million to acquire an additional interest in HS Orka, $2.8 million to acquire and explore the Company's portfolio of exploration projects and $2.2 million on the Soda Lake expansion. At March 31, 2010, Magma had cash and cash equivalents of $40.5 million, working capital of $31.7 million, and long-term debt with a fair value at quarter end of $51.0 million.

For the quarter ended March 31, 2010, HS Orka generated revenues of $14.17 million, gross profit of $4.46 million, net income from operations of $4.24 million, other income, net of other expenses, of $7.59 million, and income of $9.61 million, net of taxes of $2.21 million. EBITDA for the period was $5.72 million.

On an annualized basis, HS Orka's revenues for the quarter represent a 14% increase over revenues earned in fiscal 2009. Approximately 46% of HS Orka's revenues are sold under purchase power agreements with prices indexed to the price of aluminum, resulting in higher revenues as aluminum prices increase.

HS Orka Operations

The 100 MW Reykjanes and the 75 MW Svartsengi power plants as well as the 150 MW Svartsengi district heating system produced as expected during the quarter. The recent volcanic eruptions in Iceland have had no impact on HS Orka operations.

Three share purchases from Geysir Green Energy and HS Orka's treasury since the end of the second quarter resulted in Magma's ownership rising to 46.18%. The purchases were financed from cash on hand. Efforts to increase ownership in HS Orka are on-going.

HS Orka is the largest privately owned energy company in Iceland supplying 9% of the country's electrical output. Expansion plans for an additional 230 MW are well advanced and construction is progressing at the aluminum smelter where the power is expected be sold. Power contracts are currently being negotiated and the transmission line has been approved. HS Orka has 175 MW of Reserves and 640 MW of Resources as defined by the Geothermal Reporting Code.

Magma's investment in HS Orka and, consequently, in Iceland's energy industry, is a significant part of the Company's strategic plans for growth. To support these plans and Magma's other global projects, Magma opened a new Iceland office during the quarter staffed with an exceptionally experienced team of geothermal experts.

Soda Lake Operation

The Soda Lake operation produced as expected during the quarter with interruptions due to the Phase 1 expansion program, which is designed to boost production from 11 MW to 23 MW, and a half-day interruption on February 22 due to a fire that damaged one of the operation's ten turbine units. Damage from the fire will be covered by insurance subject to a $500,000 deductable.

As part of the field optimization program, well 45A-33 was successfully connected to the plant in late April 2010 and commissioning is underway. This is the first new well that has been connected to the plant in over 17 years and represents one of the hottest pumped wells in the world with one of the industry's deepest setting depths at over 2,000 feet. The new well, along with additional improvements resulting from recent plant refurbishments are expected to add several MW to the facility's output and will increase Soda Lake's revenues and profitability in the future. Current production at Soda Lake is 13.5 MW, up from 11 MW in the previous quarter. Deep well 41B-33, which was drilled in 2009, will be used as an injection well. Magma expects to confirm the remaining Soda Lake capacity increase to 23 MW after mid-year 2010. To date, $14 million has been expended of the original $18.2 million Phase 1 budget.

During the quarter, a Geothermal Reporting Code estimate was prepared for Soda Lake with GeothermEx acting as the Qualified Person. The recent field optimization study resulted in a comprehensive data set that was used for the reservoir estimate. Proved Reserves of 20 MW and Indicated Resources of 41 MW have now been established for the property. This compares with a previous P90 estimate of the geothermal reservoir's gross generation capacity of 29 MW.

Exploration Activities

In January 2010, Magma was awarded an exploration permit for the 100,000 hectare Pellado property. Subsequent to the quarter end, Magma received a 50 MW exploitation permit for the 4,000 hectare Laguna de Maule property which adjoins the Pellado property. The exploitation permit will allow Magma to proceed directly to construction of a Phase 1 operating plant once a drilling program, infrastructure, permitting and other work have been completed. The two properties comprise the Mariposa Geothermal Resource ("Mariposa") that is estimated to contain an Inferred Resource of 320 MW of electrical generation capacity, as defined by the Geothermal Reporting Code. Mariposa is located within 25 kilometers of two hydro power plants and associated transmission lines that are in development. Road construction for all-season access began in September 2009 and drilling of the first of four slim holes commenced in March 2010. The 2010 slim hole program, plus related work, is expected to be completed by December at a cost of $15 million.

During the quarter, Magma commenced a drilling program on the Desert Queen property in Nevada. To date, four temperature gradient holes have been drilled and the results are presently being evaluated. A drilling program on the McCoy property in Nevada is currently planned. In May, the Company added geothermal holdings to its Desert Queen and Granite Springs properties.

In Peru, Magma acquired the mining rights to the San Pedro and Crucero properties consisting of 1,600 hectares. Exploration programs on all of Magma's Peruvian properties will commence upon the award of geothermal rights, which are pending. In April, Magma's joint venture with Ram Power on two Nicaraguan concessions was terminated.

Mr. Beaty concluded, "Magma is rapidly building itself into a large global geothermal power company, with its active programs in Nevada, Chile and Iceland. We have an outstanding team of geothermal experts, a healthy balance sheet and an excellent property portfolio which should deliver continuing good results during the rest of 2010."

About Magma Energy Corp.

Magma Energy Corp. is a geothermal power company which operates, develops, explores and acquires geothermal energy projects. We have an extensive portfolio of properties throughout the western United States, Iceland and Latin America, including one operating power plant in Nevada and an interest in two other operating power plants in Iceland.

Magma Energy will host a conference call to discuss financial and operating results on Monday, May 17, 2010 at 10:00 am ET (7:00 am PT). North American participants dial 1-877-240-9772, International participants dial 1-416-340-8527, and Switzerland and United Kingdom participants dial 00-800-9559-6849. For participants from the UAE, please contact for instructions. The call will also be broadcast live on the Internet at Listeners may also gain access by logging on at The call will be available for replay for one week after the call by dialing 1-416-695-5800/1-800-408-3053 (for International and North American callers) and entering replay pin number 5174721.

For further information please contact:
Alison Thompson, Vice President, Corporate Relations
Magma Energy Corp.
Phone: 604.646.1882

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, management's expectations regarding our growth, results of operations, revenues, requirements for capital, future demand for and prices of electricity, business prospects and opportunities, exploration and development, geothermal resources, recoverable geothermal energy or energy generation capacities. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.
In addition, it is worthy of note that the financial results of HS Orka represent the first operating year of the company in its present form. As such, future results could differ materially from those reported or anticipated. Accordingly, prospective investors should not place undue reliance on the current reported financial results. 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.

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 is based upon what management believes to be reasonable assumptions, including, but not limited to, assumptions about: 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 exploration, 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.

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