Magma Energy Corp. (TSX:MXY) announce Monday it will acquire an additional 32.32% of Iceland geothermal company HS Orka.
On July 23, Magma announced that it had signed an agreement to acquire a 10.78% shareholding in HS Orka, which agreement included an option to acquire approximately a 5% additional shareholding in HS Orka. That agreement remains scheduled to close in September.
If both transactions conclude, Magma would hold a 43.1% direct interest in HS Orka and an option to acquire a further 5% stake for a total of 48.1%.
HS Orka is the largest privately owned energy company in Iceland with installed geothermal power capacity of 175 megawatts (MW). In addition, HS Orka generates 150 MW of thermal energy for district heating. Expansions are planned that will increase HS Orka’s geothermal power production to 425 MW by 2015. Much of the new capacity is expected to be sold to a new aluminum smelting facility.
Magma said in a statement it was selected as the preferred bidder for HS Orka through an auction process carried out by Reykjavik Energy on behalf of itself and two other HS Orka shareholders. Magma and RE are now negotiating detailed terms of Magma’s acquisition and expect to conclude negotiations during August with a closing aniticipated in September.
Ross Beaty, Magma’s CEO, said, "Upon completion of the acquisitions, Magma’s direct and indirect installed gross geothermal power production will increase to 86.4 MW immediately and up to 206.5 MW after completion of HS Orka’s planned expansion and Magma’s current 12 MW expansion at its Soda Lake operation in Nevada. In addition, it gives Magma exposure to the large and well developed Icelandic geothermal industry, enabling synergies with Magma’s large international portfolio of geothermal assets".
Magma raised C$100 million ($91.7 million) in its initial public offering (IPO), which closed July 7. The company currently has one operating power generation plant (the Soda Lake Operation in Nevada), and a portfolio of exploration properties throughout the western United States, Chile, Argentina and Peru.
Orkuveita Reykjavikur (Reykjavik Energy) is an Icelandic partnership owned principally by Reykjavik, Iceland’s capital city, and produces and distributes electricity and geothermal water for heating and cold water for consumption.
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