Magma Energy Corp. is buying a minority stake in Iceland's geothermal producer HS Orka as part of its concerted effort to expand its geothermal power portfolio across the Western Hemisphere.
The Vancouver-based company already has the Soda Lake power generation plant in Nevada and various exploration properties throughout the western United States, Chile, Argentina and Peru.
Magma said it reached agreement with Geysir Green Energy to acquire a minority interest in HS Orka, the largest privately owned energy company in Iceland.
Magma will purchase an 8.62 percent shareholding in HS Orka for $20 million, payable at closing, and a 2.16 percent shareholding in HS Orka for $5 million, payable in March 2010.
Magma will also have the option to acquire another 5 percent shareholding in HS Orka by making a capital infusion of $15 million.
Currently Geysir Green Energy holds the majority stake in HS Orka. Geysir also has a 100 percent interest in geothermal drilling company Iceland Drilling and significant geothermal assets elsewhere in the world.
Magma Chief Executive Officer Ross Beaty said, "This transaction will increase Magma's direct and indirect installed gross geothermal power production to 26 MW immediately and up to 91 MW after HS Orka's planned expansions and Magma's current 12 MW expansion at its existing Soda Lake operation in Nevada."
In addition, he said, the deal 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."
Magma was advised on the transaction by Glacier Partners, an investment advisory firm specializing in the geothermal and seafood industries.
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