Magma Energy: Q1 results
Magma Energy Corp. reported its financial and operating results for the first quarter ended September 30, 2009. The Company also provided an update on its operations. This earnings release should be read in conjunction with the Company's MD&A, Financial Statements and Notes to Financial Statements for the corresponding period, which are available on the Company's website at www.magmaenergycorp.com and have been posted on SEDAR at www.sedar.com.
Commenting on today's announcement, Ross Beaty, Chairman and CEO, said: "Magma Energy grew very quickly in the first quarter of fiscal 2010. We completed our initial public offering on July 7, which raised $88 million net of costs. We also added seven new geothermal exploration properties in Nevada, announced discovery of a 140 megawatt ("MW") geothermal resource on our Maule property, Chile, and entered into agreements in Iceland that, when completed, will result in Magma becoming a 43% owner of Iceland's largest private geothermal power company. These transactions will all help us achieve our mission of becoming one of the world's pre-eminent geothermal power producing companies."
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* Expenses incurred during the respective three month periods are not reflective of expenses that will be incurred in the future and comparisons of revenues and expenses between these periods are not meaningful due to the timing and nature of the Company's activities since effective commencement of operations in February, 2008.
For the first quarter ended September 30, 2009, Magma reported a net loss of $2,665,589 or ($0.01) per share. Revenues from energy sales were $1,005,021 and gross profit from the Soda Lake plant operations was $164,816. Net loss from plant operations was $155,837, after deducting amortization, accretion and depletion expenses.
On a cash basis for the quarter ended September 30, 2009, the Company spent $2,252,906 on operating activities and $9,336,638 on investing activities, including investments of $3,993,553
to acquire and explore the Company's portfolio of exploration projects and $4,849,059 on the Soda Lake expansion and other equipment purchases. At September 30, 2009, Magma had cash and cash equivalents of $89,766,570 and working capital of $88,116,120. Subsequent to the quarter end, the Company completed a private placement and raised net proceeds of $20 million. The Company had no long-term debt at quarter-end and an undrawn credit facility of C$20 million.
Soda Lake Operation
Magma's Soda Lake operation produced as expected during the quarter with occasional interruptions due to the Phase 1 expansion program now underway that is designed to double production from 11 MW gross (8 MW net) to 23 MW gross (16 MW net). This program includes an optimization review of all wells drilled to date and the production/injection strategy, and power plant upgrades and refurbishment. A comprehensive reservoir model is now being prepared which will assist in Phase 2 planning that is intended to expand Soda Lake production beyond Phase 1 output. Construction awards were issued for improvements to the cooling tower, well-field piping, electrical system and power generating equipment and this work is on track for completion by the end of March 2010.
During the first quarter Magma announced two transactions involving its purchase, for a total of $55 million in cash and issuance of a $70.6 million bond, of 43% of Iceland's largest private geothermal company HS Orka. The transactions are expected to close during the second quarter. HS Orka produces 175 MW of geothermal power and has expansion plans to increase this to 425 MW by 2015. Magma's net interest in HS Orka's power production and expansions will be 75 MW and 183 MW respectively. In addition, Magma will have further opportunities for geothermal production growth in Iceland and access to a strong team of geothermal specialists for its international asset growth. In order to finance the initial purchase of shares in HS Orka without utilizing funds raised in its initial public offering, Magma raised $20 million in new equity in a late October private placement.
Magma announced in July the discovery of a major 140 MW geothermal resource at its Maule property, Chile, and applied for an exploitation licence for a 50 MW power plant. Approval of this licence and additional exploration rights is pending. Road construction and drill tendering is now underway that will enable additional drill testing in January of this promising project.
In the USA, our exploration portfolio was further increased in July with acquisition of seven new properties in Nevada at a BLM auction. This increases Magma's land position to 131,500 acres in the US and 430,600 acres in Latin America, one of the largest holdings of any geothermal company globally. We are now permitting our planned geophysical, geological and drilling work at these properties to enable rapid testing of their geothermal potential. Magma was recently awarded $10 million in funding from the Department of Energy for our McCoy and Soda Lake properties, which will allow us to test and develop some innovative exploration and drilling techniques that may have application to all our properties, and which will allow us to extend our exploration funds to other projects.
Magma also undertook early stage exploration activities during the quarter at its other Latin American properties and, in early October, won two geothermal concessions in Nicaragua in joint venture with Ram Power.
In the forthcoming quarter Magma Energy expects to complete its acquisition of interests in HS Orka. This will increase its geothermal power production to 86 MW and its geothermal resources to substantially over 500 MW, an increase of 75 MW of production (680% growth) and more than 300 MW of resources (150% growth) since the end of June. Further growth is expected in subsequent quarters from successful exploration efforts and from our Soda Lake expansion program.
Magma's Chairman and CEO, Ross Beaty, concluded: "Magma's discovery of a world class geothermal resource at Maule in Chile, our acquisition of an interest in HS Orka in Iceland and our addition of the new properties in Nevada are all consistent with our mission to grow quickly into an industry-leading geothermal power company and to create shareholder wealth through successful exploration, operations and acquisition. I look forward to continuing progress on our mission as we develop our existing assets further and acquire new ones, while maintaining our strong financial condition."
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 (the Soda Lake Operation in Nevada), and an extensive portfolio of exploration properties throughout the western United States and Latin America.
Magma Energy will host a conference call to discuss financial and operating results on Monday, November 16, 2009 at 11:30 am ET (8:30 am PT). North American participants dial 1-877-240-9772 and International participants dial 1-416-340-8527. The call will also be broadcast live on the Internet at http://www.investorcalendar.com/IC/CEPage.asp?ID=151818. Listeners may also gain access by logging on at www.magmaenergycorp.com. 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 3361863.
For further information please contact:
Alison Thompson, Vice President, Corporate Relations
Magma Energy Corp.