Canadian company Magma Energy Corp. has signed an agreement with Geysir Green Energy ehf (GGE) to purchase all of GGE's stake in Iceland geothermal company HS Orka hf, increasing Magma's stake to 98.53%.

HS Orka currently produces 175 megawatts (MW) of geothermal power and 150 MW of thermal energy for district heating, and has near-term expansion plans that would increase its power production to 405 MW by 2015.

The transaction will increase Magma's geothermal power production to 186 MW, its geothermal reserves to 193 MW and its indicated and inferred geothermal resources to 1,161 MW. The remaining 1.5% stake in HS Orka is held by four Icelandic municipalities.

"I am really pleased with this landmark acquisition, which brings Magma such long term core assets as large scale low cost geothermal power production, enormous in-ground geothermal resources that will enable additional future production growth, and a wonderful team of Icelandic geothermal experts who can help us grow both in Iceland and internationally," said Ross Beaty, Magma's chairman and CEO.

The agreement provides that Magma's wholly owned subsidiary will purchase GGE's remaining interest in HS Orka for US $84.5 million and by assuming a bond issued by GGE with a face value of $36 million.