(All amounts in CDN dollars and all MW according to the Geothermal Reporting Code)
VANCOUVER, July 9 /CNW/ - Magma Energy Corp. (TSX: MXY) announces that on July 5, 2010, the Company entered into a credit agreement (the "Credit Agreement") with Mr. Ross Beaty, the Company's Chairman and Chief Executive Officer, pursuant to which the Company is able to borrow up to $10,000,000 to pay amounts coming due by the Company to Geysir Green Energy ehf respecting the acquisition of shares of HS Orka hf, and to fund general working capital requirements of the Company. Any advances under the Credit Agreement are repayable on the earlier of twelve months from the date of the initial advance, a change of control of the Company or on a default by the Company. Interest at the rate of 8% per annum, compounded daily, is payable monthly commencing on July 30, 2010. In addition, a standby fee in the amount of 1% of the credit facility and a drawdown fee in the amount of 1.5% of the amount advanced is payable in cash. As of the date of this news release, the principal amount of the Credit Facility has been advanced to the Company to be used in connection with the acquisition of shares of HS Orka hf.
About Magma Energy Corp.
Magma Energy Corp. is a global geothermal power company which operates, develops, explores and acquires geothermal energy projects. We have an extensive portfolio of properties throughout the western United States, Iceland and Latin America, including one operating power plant in Nevada and a significant interest in two in Iceland.
About HS Orka
HS Orka is the largest privately owned energy company in Iceland producing 9% of the country's power needs. Installed geothermal power capacity is 175 MW from the Svartsengi and Reykjanes power plants. 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 405 MW by 2016. HS Orka's 75 MW Svartsengi plant began production in 1977 and its 100 MW Reykjanes plant began production in 2006. Much of the power is sold under US dollar contracts to a large aluminum smelter that is one of the world's lowest cost aluminum producers.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This news release contains certain "forward-looking information" within the meaning of Canadian securities laws, which may include, but is not limited to, statements with respect to future events or future performance, prospects for closing our acquisition of a further interest in HS Orka, plans to expand our and HS Orka's geothermal power production, management's expectations regarding our growth,, business prospects and opportunities and geothermal energy generation capacities. Such forward-looking information reflects management's current beliefs and is based on information currently available to management.
A number of known and unknown risks, uncertainties and other factors, may cause our actual results or performance to materially differ from any future results or performance expressed or implied by the forward-looking information. The forward-looking information is based upon what management believes to be reasonable assumptions, including, but not limited to, assumptions about: conditions to closing our acquisition of a further interest in HS Orka being met, the success and timely completion of planned exploration and expansion programs, the growth rate in net electricity consumption; support and demand for non-hydroelectric renewables; government initiatives to support the development of renewable energy generation; the accuracy of reserve estimation methodology and analysis used to estimate the quantity of potentially recoverable thermal energy; geological, geophysical, geochemical and other conditions at our properties; the reliability of technical data, including extrapolated temperature gradient, geophysical and geochemical surveys and geothermometer calculations; capital expenditure estimates; availability of capital to fund development and expansion programs; and general economic conditions. Forward-looking information and statements are also based upon the assumption that none of the identified risk factors that could cause actual results to differ materially from the forward-looking information and statements will occur.
There can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance on forward-looking information. Other than as required by applicable securities laws, we assume no obligation to update or revise such forward-looking information to reflect new events or circumstances.
SOURCE MAGMA ENERGY CORP.
For further information: For further information: Alison Thompson, Vice President, Corporate Relations, Magma Energy Corp., Phone: 604.646.1882, Email: firstname.lastname@example.org