Magma Energy Purchases of a Further Interest in Icelandic Geothermal Energy Producer

According to the press release, “Magma Energy Corp. (TSX: MXY) announces that its wholly-owned subsidiary, Magma Energy Sweden A.B., today has closed a portion of a previously announced agreement to acquire further shares of Iceland geothermal company HS Orka hf. Magma Sweden now holds an 84.21% interest in HS Orka. The acquisition was originally announced in a press release dated May 17, 2010.

In today’s transaction, Magma Sweden acquired 38.03% of HS Orka’s outstanding shares from Geysir Green Energy ehf in consideration for:

• payment today of 3,871,195,513 Icelandic Króner (“ISK”) (approximately US $32.3 million);
• issuance today of 24,808,569 subscription receipts of Magma Energy Corp.; and
• payment on November 30, 2010 of approximately 3,062,612,586 ISK (approximately US $25.6 million), subject to certain interest adjustments.

Each subscription receipt will convert into one common share of Magma Energy Corp. on December 18, 2010 for payment of no additional consideration. Magma Energy Corp. has the right at its sole option to repurchase the subscription receipts, in whole or in part, at prices ranging from 135.90 ISK to 142.24 ISK per subscription receipt at certain times between September 4, and December 11, 2010. The maximum aggregate cost to repurchase all of the subscription receipts will be approximately US $29.5 million.

Magma Sweden’s previously announced agreement to acquire Geysir’s remaining 14.32% interest in HS Orka has not yet closed and remains subject to certain outstanding closing conditions, which are expected to be met in the near term.”

Source: Press Release