(Source: MARKETWIRE)Geysir Green Energy (Geysir), the Iceland-based geothermal company, and the Canadian geothermal company Magma Energy Corporation (Magma) today announced an agreement whereby Magma will acquire a 10.8 percent share in the Icelandic geothermal power company HS Orka from Geysir. Under the same agreement, Magma will receive an option to acquire about 5 percent of new shares in HS Orka by making a capital infusion of US$15 million into the business by late 2011. This cash infusion will accelerate HS Orka's project development.

The companies also announced a partnership agreement whereby they will work together on selected geothermal projects in Iceland and internationally.

In today's transaction, Geysir sold Magma a 10.8 percent share in HS Orka for just over ISK 3 billion (approximately US$25 million). Magma will hold an option to purchase up to ISK 2 billion (approximately US$15 million) of new shares in HS Orka.

After Magma's acquisition of the shares from Geysir and purchase of new shares in HS Orka, Magma's consolidated share will be 16 percent, leaving Geysir with 52 percent.

Magma Energy is a geothermal energy company with a goal of becoming a global leader in its field. Magma owns and operates a geothermal power plant in Nevada (the United States), and is involved in multiple geothermal projects in the United States and South America. Magma's investment in HS Orka and partnership with Geysir strengthen its operations as it gains access to the experience and expert geothermal knowledge within those companies.

Geysir has a strong position in the geothermal industry in Iceland as well as in Germany, China, the United States and the Philippines. The company aims to strengthen its Icelandic energy operations and utilize its knowledge and expertise internationally wherever opportunities arise.

It is estimated that the energy needs of the world's population will double over the next 50 years, and that the ratio of sustainable energy production will grow at the expense of traditional energy sources.

Comments:

Asgeir Margeirsson, CEO, Geysir Green Energy, said that this agreement is an important step for the Geysir group of companies. The agreement empowers HS Orka to push forward in developing a 100 MW extension to its geothermal power plant. "Much of the power is sold under U.S. dollar contracts to a large aluminum smelter that is currently under construction in Southwest Iceland. HS Orka has a very strong business plan, much of which is related to the supply of green electricity to the significant Icelandic aluminum smelter industry. We are very happy to see that Magma has endorsed the HS Orka business plan in such a significant manner."

Ross J.