Geothermal Powerhouses Geysir Green Energy and Magma Energy Join Forces

REYKJAVIK, ICELAND--(Marketwire - July 24, 2009) - Geysir Green Energy (Geysir), the Iceland-based geothermal company, and the Canadian geothermal company Magma Energy Corporation (Magma) today announced an agreement whereby Magma will acquire a 10.8 percent share in the Icelandic geothermal power company HS Orka from Geysir. Under the same agreement, Magma will receive an option to acquire about 5 percent of new shares in HS Orka by making a capital infusion of US$15 million into the business by late 2011. This cash infusion will accelerate HS Orka's project development.

The companies also announced a partnership agreement whereby they will work together on selected geothermal projects in Iceland and internationally.

In today's transaction, Geysir sold Magma a 10.8 percent share in HS Orka for just over ISK 3 billion (approximately US$25 million). Magma will hold an option to purchase up to ISK 2 billion (approximately US$15 million) of new shares in HS Orka.

After Magma's acquisition of the shares from Geysir and purchase of new shares in HS Orka, Magma's consolidated share will be 16 percent, leaving Geysir with 52 percent.

Magma Energy is a geothermal energy company with a goal of becoming a global leader in its field. Magma owns and operates a geothermal power plant in Nevada (the United States), and is involved in multiple geothermal projects in the United States and South America. Magma's investment in HS Orka and partnership with Geysir strengthen its operations as it gains access to the experience and expert geothermal knowledge within those companies.

Geysir has a strong position in the geothermal industry in Iceland as well as in Germany, China, the United States and the Philippines. The company aims to strengthen its Icelandic energy operations and utilize its knowledge and expertise internationally wherever opportunities arise.

It is estimated that the energy needs of the world's population will double over the next 50 years, and that the ratio of sustainable energy production will grow at the expense of traditional energy sources.

Comments:

Ásgeir Margeirsson, CEO, Geysir Green Energy, said that this agreement is an important step for the Geysir group of companies. The agreement empowers HS Orka to push forward in developing a 100 MW extension to its geothermal power plant. "Much of the power is sold under U.S. dollar contracts to a large aluminum smelter that is currently under construction in Southwest Iceland. HS Orka has a very strong business plan, much of which is related to the supply of green electricity to the significant Icelandic aluminum smelter industry. We are very happy to see that Magma has endorsed the HS Orka business plan in such a significant manner."

Ross J. Beaty, founder, Chairman and CEO of Magma Energy, emphasized that Magma is an energy company, not an investment company, and that all investments are long-term. "Having seen for myself the amount of specialization, knowledge and opportunities that exist for developing geothermal energy in Iceland, collaborating with Geysir and HS Orka is absolutely the right move for us at this juncture. This will most certainly strengthen Iceland's energy sector both technically and financially."

About Geysir Green Energy

Geysir Green Energy (http://www.geysirgreenenergy.com), a leading geothermal energy company in the renewable industry, participates in exploration, development, construction and operation of geothermal resources worldwide. Geysir seeks leading market opportunities in the harnessing of geothermal energy and has invested around US$650 million in geothermal businesses and projects around the world.

Building on its extensive experience from the Icelandic geothermal arena, Geysir's objective is to help develop sustainable energy production over the coming decades.

Geysir's main assets, after the Magma transaction, are a 55 percent share in HS Orka (which will be 52 percent if Magma executes its option to buy new shares and infuse US$15 million into the business) and a 100 percent ownership of Iceland Drilling Ltd. Geysir has worked successfully at developing geothermal heating utility projects in China and is undertaking geothermal power projects in Germany, the United States and the Philippines.

Enex, a subsidiary of Geysir, completed the construction of a 9.3 MW geothermal binary power plant in El Salvador in 2009. The plant became the first geothermal power plant completely designed and constructed abroad by an Icelandic company.

Geysir is a founding shareholder of Keilir, an educational institution at the university level that provides hands-on courses in mechatronics and geothermal science in Iceland.

About Magma Energy

Magma Energy (http://www.magmaenergycorp.com), a Canadian geothermal energy company, is actively engaged in operating, developing, exploring and acquiring geothermal energy projects, and aims to become a global leader in its field.

The company currently owns and operates a geothermal power plant at Soda Lake in Nevada (the United States), and is involved in multiple geothermal exploration and development projects in Argentina, Chile, Peru and the Western United States. Magma, which is listed on the Toronto Stock Exchange under the ticker symbol MXY, has exceptional financial capacity for development of its projects.

Magma's founder and CEO, Ross Beaty, is a geologist and mining entrepreneur with more than 37 years of experience in the international minerals industry. Beaty founded and currently serves as chairman of Pan American Silver Corp., one of the world's leading silver producers. Beaty has also founded and divested a number of other public mineral resource companies since 1985 including Regalito Copper Corp., Northern Peru Copper and Global Copper Corp.

Magma was advised by Glacier Partners, a specialized advisory firm, and its affiliate Capacent Glacier. The two companies focus on geothermal energy globally and on mainstream corporate finance work in Iceland. Reykjavík Law Firm acted as legal counsel to Magma, and Mannvit Engineering provided a third-party evaluation of HS Orka's operations.

About HS Orka

HS Orka is a leading provider of geothermal electricity and heating in Iceland. The company operates two geothermal plants, sells electricity and hot water, and is developing several new geothermal power projects.

The capacity of the Svartsengi and Reykjanes geothermal plants is 175 MW electric and 150 MW for space heating.

The electrical supply is partly sold to industrial users under power purchase agreements denominated in U.S. dollars. HS Orka is adding 100 MW to existing facilities in Reykjanes, which is scheduled to go online by 2012, and is developing an additional 150 MW in other areas.

Photos are available on http://www.geysirgreenenergy.com/media-and-events/photo-gallery/

Contact Information: Further information: Ásgeir Margeirsson CEO Geysir Green Energy Tel. +354 665-2055