NR to 48%

VANCOUVER, B.C., CANADA, AUGUST 17, 2009 -- Magma Energy Corp. (TSX:MXY) announces that it has been selected as the preferred bidder to acquire up to 32.32% of Iceland geothermal company HS Orka through an auction process carried out by Reykjavik Energy ("RE") on behalf of itself and two other HS Orka shareholders. Magma and RE are now negotiating detailed terms of Magma's acquisition and expect to conclude negotiations during August with a closing aniticipated in September. On July 23, 2009, Magma announced that it had signed an agreement to acquire a 10.78% shareholding in HS Orka, which agreement included an option to acquire approximately a 5% additional shareholding in HS Orka. The previously announced agreement remains scheduled to close in September. If both transactions conclude, Magma would hold a 43.1% direct interest in HS Orka and an option to acquire a further 5% stake for a total of 48.1%.

HS Orka is the largest privately owned energy company in Iceland with installed geothermal power capacity of 175 megawatts ("MW"). 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 425 MW by 2015