REYKJAVIK, Iceland, Aug. 18 (UPI) -- Magma Energy Corp. announced it is now the preferred bidder to acquire up to 32.32 percent of Iceland's largest energy company HS Orka through an auction by Reykjavik Energy, the capital's energy authority, on behalf of itself and two other HS Orka shareholders.
The Vancouver-based Canadian group said it is negotiating details of the terms for its acquisition, which will give Magma a significant entry into Iceland's energy sector and geothermal energy markets worldwide. The talks are expected to result in a conclusive accord by September, Magma said.
Magma's acquisition is set to be the largest foreign investment in Iceland since the collapse of its banking sector in 2008. The company already has the Soda Lake power generation plant in Nevada and various exploration properties throughout the western United States, Argentina, Chile and Peru.
In an earlier statement on the acquisition bid, Magma announced on July 23 it had signed an agreement to acquire 10.78 percent share of HS Orka, with a further option to acquire about 5 percent more. The previously announced agreement is also due to close in September.
If both transactions conclude as expected, Magma would hold 43.1 of HS Orka and still have the option to acquire a further 5 percent -- a total of 48.1 percent.
HS Orka is the largest privately owned energy company in Iceland with installed geothermal power capacity of 175 megawatts. It plans to increase geothermal power production to 425 megawatt by 2015.
Magma Chief Executive Officer Ross Beaty said once Magma completes its Iceland acquisitions the company's direct and indirect installed gross geothermal power production will increase to 86.4 megawatts and to 206.5 megawatts after completion of HS Orka's expansion and Magma's current 12 megawatt expansion at the Soda Lake operation in Nevada.
"It gives Magma exposure to the large and well-developed Icelandic geothermal industry, enabling synergies with Magma's large international portfolio of geothermal assets," said Beaty.
Magma was advised on the transaction by Glacier Partners Corp., a corporate advisory boutique focused on the geothermal energy sector.
As the talks progressed in July, Glacier Partners CEO Magnus Bjarnason said Magma's acquisition was "a milestone for Iceland" as it recognized the country's "leadership in geothermal energy development."
The investment represents "not only the first strategic investment in Iceland since its banking system fell, but also the opportunity for Glacier Partners to serve as a catalyst for additional geothermal investment opportunities in Iceland and the U.S."
Charles Arrigo, a director with Glacier Partners, cited Iceland's pioneering role in "effectively harvesting this energy source to supply 23 percent of the country's electricity supply and powers its large aluminum industry."
Environmental campaigners, including singer-songwriter Bjork, have protested expansion of geothermal energy use in Iceland and warned that increased aluminum smelting is using up energy that should be conserved for future generations.
