Magma Energy ups its stake in Icelandic geothermal company

Canadian geothermal power company Magma Energy (TSX:MXY) said today it signed an agreement to acquire 32.32 percent of Iceland-based geothermal company HS Orka from Reykjavik Energy and two other HS Orka shareholders.

Magma had been previously selected as the preferred bidder. Under the agreement, Magma's wholly owned subsidiary is expected to purchase the stake for ISK 3.7 billion ($29.5 million) and an ISK 8.7 billion ($68.8 million) bond, which would be secured through the shares Magma acquires in the transaction.

"The transaction provides HS Orka with a strong financial partner and provides Magma with exposure to Iceland's substantial geothermal resources," said Magma’s CEO Ross Beaty, in a news release.

Subject to closing conditions, the transaction is expected to be completed in late September.

With today's announcement, Magma said it could hold a 43.1 percent direct interest in HS Orka and an option to invest $15 million in HS Orka's expansion plans. This would include an agreement Magma entered into in July to acquire a 10.78 percent stake in HS Orka, with the option to acquire an additional 5 percent that would increase Magma's stake up to 48.1 percent (see Intel and Braemar: A match made in cleantech heaven?).

Magma has one power plant in Nevada and a portfolio of exploration properties throughout the western United States, Chile, Argentina and Peru.

In June, Magma raised C$100 million ($87 million) from investors in an initial public offering on the Toronto Stock Exchange (see Magma Energy heats up geothermal with $87M IPO).

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