News
Dec 14, 2009Magma Energy Completes Purchase, Totaling 815 MW at HS Orka’s Properties
VANCOUVER, BRITISH COLUMBIA—(Marketwire)—12/14/09—(All amounts in US dollars unless otherwise stated and all production figures are approximate)
Magma Energy Corp. (TSX: MXY) Magma Energy Corp. announces that it has closed a previously announced agreement to acquire 32.32% of Iceland geothermal company HS Orka for 3.7 billion ISK (approximately $29.5 million) and three bonds totaling approximately $70 million repayable in a single installment in 7 years with interest at 1.52% per annum. Magma now holds a 40.94% direct interest in HS Orka and an option to acquire an additional stake in HS Orka by making a capital infusion of $15 million into HS Orka prior to November, 2011. A further agreement to purchase a 2.16% stake in HS Orka is expected to close in March, 2010.
Magma has received an independent report on HS Orka’s properties by Mannvit Engineering, a large Icelandic engineering firm specializing in geothermal energy engineering. The report estimates the following reserves and resources on HS Orka’s properties (100% basis): a Proven Reserve of 175 MW, an Indicated Resource of 140 MW and an Inferred Resource of 500 MW. The reserve and resource estimates have been prepared in accordance with the Code for Geothermal Resources and Reserves Reporting (the “Code”) 1st Edition: 2008, published by the Australian Geothermal Energy Association. The report was prepared by Mannvit Engineering’s Arnar Hjartarson and Dr. Johann Gardar Einarsson, who are responsible for its content and are “Competent Persons” under the Code.
Magma’s CEO Ross Beaty said, “I am really pleased we have completed this transaction, which will boost Magma’s direct and indirect geothermal power production to 86 MW and its geothermal resources to approximately 600 MW. We will now focus on helping HS Orka expand its power production by 230 MW by 2015. This will boost Magma’s attributable geothermal power production to 186 MW and provide a more robust tax and employment base for the Icelandic economy.”
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 HS Orka
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 405 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 Iceland’s Geothermal Industry
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. Over 50% of Iceland’s total energy consumption is provided by geothermal through electricity and direct use.
