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Magma Energy releasesfinancial results for Q2 and operational highlights

Alexander Richter 16 Feb 2010

Magma Energy Corp. reports its financial and operating results for the second quarter ended December 31, 2009.

Magma Energy Corp. reports its financial and operating results for the second quarter ended December 31, 2009. The Company also provided an update on its operations.

Commenting on today’s announcement, Ross Beaty, Chairman and CEO, said, “Magma Energy continued to grow rapidly in the second quarter of fiscal 2010. We completed a private placement in October which raised $20 million net of costs and closed our previously announced acquisition of a 40.94% interest in HS Orka. A further 2.16% interest is expected to close in March, 2010. These transactions add 75 MW to our producing reserves and add 276 MW to our resource base. Magma was also awarded $10 million in US Department of Energy grants for our Soda Lake and McCoy properties. We ended the quarter with a successful flow test at Soda Lake which enabled us to confirm half of our 8 MW net expansion program, and we expect to confirm the balance in early 2010.”

For the second quarter ended December 31, 2009, Magma reported a net loss of $5.25 million or (0.02) per share. The Soda Lake operation earned revenues of $1.41 million, gross profit of $589,000, and net income of $203,000 after deducting non-cash and other related expenses.

Magma’s share of the operating results in Iceland power company HS Orka are for the period December 14 to 31, 2009. The Company’s share of HS Orka’s net loss was $1.93 million, due to a loss in the value of embedded derivatives in certain of its sales contracts. These contracts are indexed to the market price of aluminum, which declined during the month of December after increasing during most of 2009. HS Orka’s financial condition improved significantly during 2009 due to higher aluminum prices and more stable currency conditions.

On a cash basis for the quarter ended December 31, 2009, the Company spent $3.59 million on operating activities and $53.60 million on investing activities, including investments of $48.71 million of payments for the acquisition of HS Orka, $2.46 million to acquire and explore the Company’s portfolio of exploration projects and $2.57 million on the Soda Lake expansion. In October 2009, the Company raised net proceeds of $19.77 million by way of private placement. At December 31, 2009, Magma had cash and cash equivalents of $53.68 million, working capital of $52.34 million, and long-term debt of $48.32 million.”

For the full release, which includes details on operations and activities in Iceland, use link below.

Source: Company release via Marketwatch