Magma Energy Enters into Underwriting Agreement and Files Amended Preliminary
Prospectus

/ALL AMOUNTS IN CANADIAN DOLLARS. NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, July 14 /CNW/ - Magma Energy Corp. (TSX: MXY) announced today that in connection with its previously announced public offering, it has entered into an underwriting agreement and has filed an amended and restated preliminary prospectus with the securities regulatory authorities in each of the provinces of Canada, other than Quebec with respect to the issuance of 35,714,286 common shares of Magma at a price of $1.12 per share, for gross proceeds of $40,000,000. Closing is scheduled to take place on July 27, 2010.

In addition, Magma has granted to the underwriters an option to purchase up to an additional 5,257,142 common shares on the same terms as set out above to cover over-allotments, if any.

Raymond James Ltd. is 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 previously announced 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.

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