Magma Energy’s spending US$ 25 million in Icelandic transaction

Alexander Richter 24 Jul 2009

Magma Energy Corp. spending US$ 25 million on the acquisition of a minority stake in HS Orka from Icelandic Geysir Green Energy.

While reported already on earlier today, the Canadian Press provided a few more details on the deal.

As part of the transaction of Magma Energy Corp. in which the company acquires a minority interest in Icelandic geothermal power company HS Orka from Geysir Green Energy, Magma says “it will buy an initial 8.62 per cent stake in HS Orka for 2.5 billion Icelandic kroner, or US$20 million, and another 2.16 per cent for US$5 million by next March 31.

In a related development, Magma also has an option to acquire another five per cent stake in HS Orka by investing US$15 million into the Icelandic company.

If that happens the Vancouver company would own nearly 16 per cent of HS Orka.

HS Orka is the largest privately owned energy company in Iceland, with installed geothermal power capacity of 175 megawatts from the Svartsengi and Reykjanes power plants.

Ross Beaty, Magma’s chief executive, said the deal will boost the company’s gross geothermal power production to 26 megawatts immediately and up to 91 megawatts after planned expansions by HS Orka and the Canadian company.

“In addition, it gives Magma exposure to the large and well developed Icelandic geothermal industry, enabling synergies with Magma’s other geothermal assets internationally and other opportunities for growth within Iceland’s geothermal community,” he said.

Source: The Canadian Press