February 14, 2011

(All amounts in US dollars unless otherwise stated and all MW according
to the Geothermal Reporting Code.)

VANCOUVER, Feb. 14 /PRNewswire-FirstCall/ – Magma Energy Corp. (TSX: MXY) today reported its financial and operating results for the
second quarter of 2011 ending December  31, 2010.  Highlights of the
quarter were:

  • Completion of Magma’s acquisition of a 98.53% interest in HS Orka.
  • Completion of Soda Lake’s Phase I expansion, resulting in an increase in
    annual net output from approximately 60,000 MWh to 84,000 MWh. Magma is
    now preparing an application for a US Treasury Grant payment of up to
    30% of the eligible project costs.
  • Completion of slim-hole drilling program at Mariposa, Chile. 

Ross Beaty, Chairman and CEO, commented, “In this second quarter of 2011
we boosted our existing production at Soda Lake, made significant
progress on our immediate expansion opportunity in Iceland and
completed our slim-hole drilling program at Mariposa with strong
results. We are in well-advanced discussions with a group of Icelandic
pension funds on the sale of a minority interest in HS Orka, as well as
with potential partners for our Mariposa project in Chile. We are
looking forward to filing our Energy Grant application for Soda Lake
Phase 1 and to continuing Phase 2 of our expansion plans there. At the
end of the quarter Magma’s overall geothermal power production was 190
MW, our geothermal Indicated Resources were 181 MW and Inferred
Resources were 990 MW. We are well-positioned to further advance all of
these assets during 2011.”

Financial Results
(expressed in thousands of dollars, except for MWh and per share

This is the first quarter in which HS Orka’s results have been
consolidated for the full period, therefore the results for this
quarter are not comparable with prior periods. The results for the six
months ended December 31, 2010 include the consolidation of results of
HS Orka since the August 17(th) 2010 date upon which Magma acquired control and are therefore also not
comparable with prior periods. 

  For the Three Months Ended

December 31, 2010


 For the Three Months Ended

December 31,2009


For the Six Months Ended

December 31,



For the Year Ended

June 30, 2010

(audited, except Net

Production and EBITDA)

Net Production (MWh) 351,461 12,240 688,707 62,072
Total revenue 18,751 1,409 26,795 5,056
Gross profit 5,485 337 6,295 625
Expenses 3,440 1,773 6,373 11,031
Other income (expenses) (9,403) (3,527) 9,489 (8,108)
Net income (loss) for the period (9,139) (5,249) 4,217 (16,446)
EBITDA(1) 6,155 (2,988) 13,050 (3,261)
Gain (loss) per share (basic and diluted) (0.03) (0.02) 0.02 (.07)
Total assets 656,222 206,454 656,222 198,703
Total liabilities 427,093 53,095 427,093 56,633
Cash and cash equivalents 20,269 53,681 20,269 25,343

(1) EBITDA is defined by the Company as earnings before interest and other
financing costs, taxes, depreciation and amortization, as well as
before deductions for non-cash charges related to employee
compensation, equity earnings/losses, loss on re-measurement of equity
interest,  gain on bargain purchase and changes to the balance sheet
carrying value of long-term debt. The Company discloses EBITDA as it is
a measure used by analysts and by management to evaluate the Company’s
performance. As EBITDA is a non-GAAP measure, it may not be comparable
to EBITDA calculated by others. In addition, as EBITDA is not a
substitute for net earnings, readers should consider net earnings in
evaluating the Company’s performance.

For the second quarter of fiscal 2011 revenues from energy sales were
$18.8 million and total costs of production were $13.3 million, for a
gross profit of $5.5 million. Approximately 46% of HS Orka’s revenues
are sold under power purchase agreements with prices indexed to the
price of aluminum, resulting in higher revenues as aluminum prices
increase.  The average London Metal Exchange aluminum price for the
three months ended December 31(st), 2010 was $2,368 per tonne versus $2,107 per tonne for the first
quarter of this fiscal year. Our Soda Lake operation contributed
revenues of $1.7 million and accounted for $1.1 million of production
costs, while HS Orka contributed $17.1 million of revenues and
accounted for the remaining $12.2 million of production costs.

EBITDA for the quarter was $6.2 million compared to an EBITDA loss for
the same period last year of $3.0 million. The net loss for the quarter
was $9.1 million or $0.03 per share, against a loss of $5.2 million
($0.02/share) for the same period last year. The increase in the net
loss for the quarter of $3.9 million compared to the same quarter last
year was primarily related to losses from changes to the fair value of
debt and derivatives of $6.9 million, increased interest and other
financing costs of $3.8 million and increased general and
administrative expenses of $1.5 million. These were offset by increased
gross profit of $5.1 million, foreign exchange gains of $0.1 million
instead of the $2.3 million loss of the same period last year, reduced
equity losses of $1.3 million, and increased interest income of $0.5

On a cash basis for the quarter ended December 31, 2010, the Company
spent: $33.1 million on investing activities, including net investments
of $26.7 million for the final payment related to the acquisition of
the additional interest in HS Orka; $4.6 million to acquire and explore
the Company’s portfolio of exploration projects, primarily drilling at
the Mariposa property in Chile; and $1.3 million on the Soda Lake and
HS Orka expansions.  During the quarter, Magma issued 24,808,569 common
shares to Geysir Green Energy (“GGE”) to complete its obligations for
the acquisition of its 98.53% interest in HS Orka, pursuant to the
conversion of a subscription receipt as part of the consideration paid
by Magma to GGE. At December 31, 2010, Magma had cash and cash
equivalents of $20.3 million, working capital of $7.4 million
(including $28.3 million in restricted cash), and long-term
non-recourse debt of $284.0 million. 

HS Orka Operations

The Svartsengi 75 MW power plant and associated 150 MW district heating
system, as well as the 100 MW Reykjanes power plant produced as
expected during the quarter.  Production at Svartsengi was 117,079 MWh
while the Reykjanes power plant produced 214,248 MWh.  A two-phase
expansion of the Reykjanes plant’s output to 180 MW from 100 MW is
planned, pending permitting and new Power Purchase Agreements with one
or more power purchasers.  For Phase I, the 50 MW Fuji Electric turbine
has been installed and a Draft Conditional Permit for the expansion has
been received. $38.6 million out of a budget of $131 million has been
spent on the project and the remaining cost for the expansion is
expected to be funded mainly from HS Orka’s cash on hand and debt

Soda Lake Operation

Soda Lake’s output for the quarter was 20,134 MWh, significantly higher
than any other comparable period due to the completion of the Phase 1
productivity improvements, comprising two new production wells, a
steam/mixing well system, plant refurbishments and the drilling of an
injection well. The estimated net gain is 4 MW (24,000 MWh/year).  
Approximately $21 million has been spent on Phase 1, and the Company is
now applying for the US Treasury Grant for up to 30% of the eligible
project costs.  During the quarter, Magma began work on the Phase 2
expansion with further temperature gradient well drilling and seismic
data analysis.

Exploration Activities

Exploration work during the quarter consisted mainly of completing
slim-hole drilling and analysis at the Mariposa reservoir in Chile,
following which plans for large diameter exploration wells are being
developed and partners are actively being sought. In Peru we have
applied for a total of 27 geothermal concessions and are anticipating
the awarding of the concessions shortly. Magma continued environmental
and geosciences work at our 12 US properties, of note with a draft
Environmental Assessment being submitted for McCoy for a planned Phase
1 drilling program later in 2011.


Mr. Beaty concluded, “We remain focused upon expanding our production at
HS Orka and Soda Lake, advancing our Mariposa project in Chile to
large-diameter drilling and commencing detailed exploration of our
Peruvian and U.S. properties concessions. We will bolster our ability
to finance these activities through partnerships, supporting grant and
loan programs and appropriate debt facilities, and we will continue to
seek opportunities to expand our global asset portfolio. Finally, I
welcome John Carson to the Company as Executive Vice President. He is a
seasoned renewable energy financial executive and adds great depth to
our senior management team.”

About Magma Energy Corp.

Magma Energy Corp. is a 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 two in Iceland. 

Magma Energy will host a conference call to discuss financial and
operating results on Tuesday, February 15, 2011 at 11:30 am ET (8:30 am
PT).  North American participants dial 1-888-231-8191 and International
participants dial 1-647-427-7450.  The call will also be broadcast live
on the Internet at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3371940.  The call will be available for replay for one week after the call by
dialing 1-800-642-1687 / 1-416-849-0833 (for North American and
International callers) and entering replay pin number 3728 8429.

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, management’s expectations regarding our growth, results of
operations, revenues, requirements for capital, future demand for and
prices of electricity, business prospects and opportunities,
exploration and development, geothermal resources, recoverable
geothermal energy or energy generation capacities. Such forward-looking
information reflects management’s current beliefs and is based on
information currently available to management. 

In addition, it is worthy of note that the financial results of HS Orka
represent the first operating year of the company in its present form. 
As such, future results could differ materially from those reported or
anticipated.  Accordingly, prospective investors should not place undue
reliance on the current reported financial results.  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.

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: 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
exploration, 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.

Source: newswire

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