CANADA BUYS IN ON ICELAND GEOTHERMAL

Magma sinks cash into Iceland geothermal producer
Susan Taylor (w/ Frank McGurty), July 23, 2009 (Reuters)

"Canada's Magma Energy Corp…will boost its geothermal production power with an investment of up to $40 million in Iceland's HS Orka, a producer poised for expansion…

"Magma, which generated C$100 million ($91.7 million) in its IPO July 7…will buy the minority interest in privately-held HS Orka from Geysir Green Energy…Magma will first buy an 8.62 percent stake for about $20 million, payable at deal closing, and a 2.16 percent holding for about $5 million, due by March 31, 2010. It has an option to acquire another 5 percent share by investing $15 million into HS Orka."

Iceland is rich with geothermal assets. (click to enlarge)

"The geothermal sector is attracting increasing interest…There are 9,000 MW worldwide…[but] utilities, especially in North American, know that a cap and trade system is coming...[an example was] a bid by TransAlta Corp, Canada's biggest publicly traded electricity producer, for Canadian Hydro Developers…

"Iceland's largest privately owned energy company, HS Orka has installed geothermal power capacity of 175 MW of electricity from its Svartsengi and Reykjanes power plants. It plans to expand production to 425 MW by 2015…The company also generates 150 MW of thermal energy for district heating…Much of its geothermal power is sold in U.S. dollar contracts to a large aluminum smelter…with expansion capacity earmarked for a new aluminum smelter under construction."

Iceland gets more than a quarter of its power from geothermal and uses it in every sector of its economic life. (click to enlarge)

"Magma…is currently a small producer of geothermal energy, with one plant in Soda Lake, Nevada. It has four advanced-stage exploration properties in the western United States, Chile, Argentina and Peru…[It] plans to use the C$100 million from its IPO to double capacity at Soda Lake from 8 MW to 16 MW, advance its exploration properties and make acquisitions…

"Geothermal power comes from hot water and steam produced deep below the earth's surface. They are piped up to the surface and used to drive turbines that generate electricity…"