Magma Energy Announces Closing of Public Offering of Common Shares and
Exercise of Over-Allotment Option

/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

(All amounts in Canadian dollars.)

VANCOUVER, July 27 /CNW/ - Magma Energy Corp. (TSX: MXY) (the "Company") has closed its previously announced public offering of common shares (the "Offering"). Pursuant to the Offering, the Company today issued 40,334,628 common shares at a price of $1.12 per common share, including 4,620,342 common shares issued upon partial exercise of the underwriters' over-allotment option, for aggregate gross proceeds of $45,174,783 and total proceeds, net of underwriting fees, of $43,305,629.

The Company expects to use the net proceeds from the Offering in connection with its previously announced acquisition of common shares of HS Orka hf, with the remainder (if any) to be used for working capital requirements and other general corporate purposes.

Raymond James Ltd. acted as the lead underwriter for the offering. The other members of the syndicate are National Bank Financial Inc., Cormark Securities Inc., Dundee Securities Corporation, Jacob Securities Inc., Mackie Research Capital Corporation, Salman Partners Inc., Wellington West Capital Markets Inc. and Canaccord Genuity Corp.

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.

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 the closing of the prospectus offering. 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 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.

The Shares offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

For further information: Alison Thompson, Vice President, Corporate Relations, Magma Energy Corp., Phone: [phone], Email: [email protected]