Vancouver-based Magma Energy Corp. (TSX:MXY) plans to raise $40 million in a prospectus offering of shares marketed by a syndicate of underwriters led by Raymond James Ltd.
The company plans to use the net proceeds of the offering for its acquisition of 52.35% of the outstanding shares of HS Orka hf from Geysir Green Energy, as well as for working capital and general corporate purposes.
It plans to issue 35.7 million shares at $1.12 per share. The offering is expected to close around July 27, 2010.
Magma currently owns approximately 46% of HS Orka, a geothermal plant in Iceland that currently produces 175 megawatts of power and 150 megawatts of thermal energy for district heating. Near term expansion plans would increase its power production to 405 megawatts by 2015.
The proposed financing would fund Magma’s plan to increase its stake in HS Orka to 98.53%. The remaining 1.5% stake is held by four Icelandic municipalities.
The transaction will increase Magma’s geothermal power production to 186 megawatts with geothermal reserves of 193 megawatts and indicated and inferred geothermal resources of 1,161 megawatts.
Magma is targeting to produce at least 500 megawatts of geothermal power and hold at least 2,000 megawatts of geothermal reserves and resources by 2016.
Magma’s share price range during the past week: between $1.12 and $1.17; 52-week high: $2.10; 52-week low: $1.