Magma Energy heats up geothermal with $87M IPO

Canadian geothermal power company Magma Energy has raised C$100 million ($87 million) from investors in an initial public offering.

The company has one operating power plant in Nevada, four advanced-stage exploration properties and 14 early-stage exploration properties in the western United States and South America. Magma sold 66.667 million shares at C$1.50 each, in a reportedly oversubscribed deal.

The company plans to make an announcement to this effect today, CEO Ross Beaty, who is the founder and chairman of silver mining business Pan American Silver, told the Cleantech Group. Magma Energy’s shares are expected to begin trading under the ticker symbol MXY.TO on the Toronto Stock Exchange as of July 7. According to a preliminary prospectus filed June 1, the company had hoped to raise about $50 million.

In May, Welland, Ontario-based CRS Electronics (TSXV:LED), which engineers, designs and manufactures LED lighting, also went public on the Toronto Stock Exchange Venture Exchange. Cleantech companies have been turning to the Toronto Stock Exchange and TSX Venture Exchange given the lack of U.S. exit options (see IPO drought? Cleantech companies flood Canadian markets).

A study from the U.S. Geological Survey suggests geothermal’s untapped potential could generate 529.9 gigawatts of electricity in the United States (see New USGS study pumps geothermal). About 9 GW could come from conventional, identified geothermal systems, the study said. More than 30 GW could come from conventional undiscovered geothermal resources, and the remainder could come from unconventional geothermal systems with high temperatures but low permeability of rock formations.

There have been few national resource estimates in more than 30 years on the potential for geothermal in the U.S. Among them is a report from the Massachusetts Institute of Technology (see MIT report says geothermal power not to be ignored). Even in the most promising areas, drilling must reach depths of 5,000 feet or more in the west, and much deeper in the eastern United States, according to the report.

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