MAGMA ENERGY COMPLETES PURCHASE OF 98.5% OF ICELANDIC GEOTHERMAL COMPANY HS
ORKA

(all amounts in USD unless stated otherwise)

VANCOUVER, Sept. 3 /CNW/ - Magma Energy Corp. (TSX: MXY) announces that its wholly-owned subsidiary, Magma Energy Sweden A.B., today has closed the final portion of a previously announced agreement to acquire further shares of Iceland geothermal company HS Orka hf. Magma Sweden now holds a 98.53% interest in HS Orka.

In today's transaction, Magma Sweden acquired 14.32% of HS Orka's outstanding shares from Geysir Green Energy ehf by assuming a bond with the municipality of Reykjanesbaer with a principal value of ISK 6.3 billion repayable in 2016 with interest at 3.5% per annum. The principal amount is indexed based on movements in aluminum prices on the London Metal Exchange. The adjustment is equal to one half the relative difference between the actual price (capped at $3,250/tonne) and a reference price of $1,500/tonne.

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 and prospects for closing our acquisition of a further interest in HS Orka. 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, including, but not limited to, risks that: conditions to closing Magma Sweden's acquisition of a further interest in HS Orka may not be met; the government of Iceland may take actions to invalidate or wind-down Magma Sweden's acquisition of a further interest in HS Orka; the government of Iceland may take steps to invalidate or wind-down the prior privatization of Hitaveita Sudurnesja (now HS Orka); the government of Iceland may pass legislation or constitutional amendments to nationalize or restrict private or foreign ownership in Iceland's energy sector; 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.

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