Magma Energy: Purchase completed
Magma Energy Corp. announces that it has closed an agreement to acquire from Geysir Green Energy an 8.6% stake in HS Orka, a large producing geothermal company in Iceland, for 2.5 billion Icelandic Kronur ("ISK") (approximately $20 million). The agreement provides that Magma will purchase a further 2.16% share in HS Orka for 625 million ISK (approximately $5 million) payable by March 31, 2010. Magma also holds an option to acquire an additional stake in HS Orka by making a capital infusion of $15 million into HS Orka at any time in the next two years. A previously announced agreement to purchase a 32% stake in HS Orka is expected to close in late November.
HS Orka is the largest privately owned energy company in Iceland. Installed geothermal power capacity is 175 megawatts ("MW") from the Svartsengi and Reykjanes power plants. 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. HS Orka's 75 MW Svartsengi plant began production in 1978 and its 100 MW Reykjanes plant began production in 2006. Much of the power is sold under US dollar contracts to a large aluminum smelter that is one of the world's lowest cost aluminum producers. The expansion plans of HS Orka will provide power to a new aluminum smelter that is currently under construction.
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.
About Iceland's Geothermal Industry and Geysir Green 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 businesses, including Iceland's large aluminum industry.
Geysir Green Energy is a private geothermal development company with a majority stake in HS Orka, a 100% interest in geothermal drilling company, Iceland Drilling, and significant geothermal assets elsewhere in the world.
For further information please contact:
Alison Thompson, Vice President, Corporate Relations
Magma Energy Corp.