2. Caution Regarding Forward-Looking Statements
These slides and the accompanying oral presentation contain 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,
management’s expectations regarding our growth, results of operations, estimated future revenues, requirements for additional
capital, production costs and revenue, future demand for and prices of electricity, business prospects, opportunities and estimates of
recoverable geothermal energy “resources” or “reserves” or energy generation capacities (at either P90 or based on the Geothermal
Code for Public Reporting) Such forward looking information reflects management’s current beliefs and is based on information
Reporting). forward-looking management s
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. Such factors include, among
others, those discussed in the section of our prospectus entitled “Risk Factors”. These factors should be considered carefully. The
forward-looking information is also based upon what management believes to be reasonable assumptions, including, but not limited
g p g p g
to, assumptions about: the success and timely completion of planned exploration and expansion programs, including expansion and
improvements to operations in Iceland and to our Soda Lake Operation in Nevada; the growth rate in net electricity consumption;
support and demand for non-hydroelectric renewables; government initiatives to support the development of renewable energy
generation; the accuracy of resource and reserve estimation methodology and probabilistic analysis used to estimate the quantity of
potentially recoverable energy; geological, geophysical, geochemical and other conditions at our properties; the reliability of technical
data, including extrapolated temperature gradient, geophysical and geochemical surveys and geothermometer calculations; capital
expenditure estimates; availability of capital to fund exploration development and expansion programs; the differences in financial
exploration,
results reported under IFRS and Canadian GAAP; 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
y p g y, p p p
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.
2
3. Geothermal - What is it?
Geothermal is a proven, global, underexploited, base-load, renewable energy source
Literally heat from the earth, derived from deep natural magma (molten rock)
Requires Heat, Permeability and Water
CAPACITY FACTORS FOR
RENEWABLE POWER
Surface
Solar
1 – 3 km
Wind
Run of River
Drill hole
D ill h l Geothermal
depths
0 25 50 75 100
Percentage
Source: University of Utah – the Energy & Geosciences Institute (EGI) Source: Canadian Geothermal Energy Association
3
4. Magma Energy - Strategy & Value Creation
Magma’s strategy: broad asset portfolio and scale = “discovery returns” and “utility returns”
Reduces drilling risk and high front-end capital risk
Improves margins with lower cost of capital
Better multiples
Portfolio acquisition & discovery highlights:
Nevada: 13.5 MW power plant with 47.5 MW
expansion potential
p p
Iceland: 98.5% interest in HS Orka’s 2 power plants
producing 175 MW with 230 MW expansion potential
Chile: discovery of 320 MW Inferred Resource
Plus a further 21 early stage and 4 advanced stage projects
We are a power company and an energy asset holder
Income growth and sub-surface capital asset growth
Geothermal power can be the lowest cost and cleanest form of
electricity generation
Potentially a great cash generator without incentives
Incentives (USA Europe, Chile) greatly improve margins
(USA, Europe
4
5. Magma Energy Corp - Corporate Summary
Mission: To build a leading pure play geothermal power company
Strong team of explorers, builders and operators
Execution: From 2008 startup, the world’s fastest growing geothermal power company
200 1400
175 PRODUCTION GROWTH
186 1200 GEOTHERMAL RESERVES 1,354
150 & RESOURCES GROWTH
1000
125
800
MW
100 854
1
W
M
MW
75 600
84
50 400
25 11 200
0 199
2008 2009 2010 YTD 0
2008 2009 2010 YTD
Growing financial strength
$60 $25
REVENUE $20
EBITDA
$50
$15
$15
D
Millions USD
$40
$
MILLIONS USD
$10
$30
$5
$20
$‐
$10 ‐$5
$‐
$ ‐$10
$10
2 2 3 2 2 3
Jan ‐ Jun /08 July/08 ‐ Dec/09 Jan ‐ Dec/10 JAN ‐ JUN /08 JULY/08 ‐ DEC/09 JAN ‐ DEC/10
1
Independently verified MW
2
2008 and 2009 actuals (2009 reflects Magma’s equity portion in HS Orka)
5 3
2010 is an estimate and reflects Magma's equity portion in HS Orka
6. North American Primary Geothermal Companies
700
DEVELOPERS
600
500
400
MW
300
200
100
0 2
1 1 1 1 1
SGP Raser Ram Power U.S. Geo NGP Cal Energy MAGMA Ormat
Operating Development through 2013
1
Data from Jacob Securities Inc
2
Geothermal Reporting Code verified MW
6
7. Magma Energy Corp - Global Project Pipeline
INDICATED &
AREA PROVED
STAGE PROPERTY INFERRED
RESERVES
(HA) RESOURCES
Operations Soda Lake, Nevada (100%) (1) 2,881 41 20
HS Orka Iceland (98.53%) (2)
Orka, (98 53%) ( ) 31,067
31 067 630 173
Advanced Chile (2) (3) 104,000 320
USA (4) (4) 18,491 170
Early Stage Argentina (2) 39,057
Peru (7) 7,900
USA (12) 38,016
(1) Reporting Code Estimate GeothermEx
(2) Reporting Code Estimate Mannvit Engineering, acquisition
expected to close July ‘10
241,413 1,161 MW 193 MW
(3)
Reporting Codes Estimate SKM
(4)
Independent estimate P90 Geo Hills Associates
Plant
Property
7
8. Advanced Development - Mariposa, Chile
320 MW Inferred Resource discovered MP-02 DRILL SITE
by Magma in 2009
50 MW Phase 1 exploitation p
p plan
approved in April 2010
$15M resource confirmation program
underway to drill additional slim holes
>$100/MWh power rates and drilling
incentives available
<25 km from 2 transmission lines under
development MP-02 MP-01
8
9. Production - Soda Lake, Nevada
13.5 MW with facility nameplate capacity of 23 MW
Currently operating at 60% capacity
Phase 1 expansion to 23 MW - currently underway
New production well recently connected to the plant
Converting non-commercial well drilled 2009 into an injector
Target blended PPA rate of $85/MWh to reflect expanded capacity
and market conditions
Average cost of acquisition and expansion ~ $1.5 Million/MW
$1 5
Projected EBITDA ~ $6.5 Million
Phase 2 expansion - achieve reservoir capacity 61 MW
Additional 14 MW expected by 2013
9
10. HS Orka Acquisition - Overview
Magma acquiring 98.5% of HS Orka PROPERTY RESERVES RESOURCES
3 separate deals (2009 - 2010) PROVED INDICATED INFERRED COMMENT
Cost for HS Orka: SVARTSENGI 75 MW No further expansions planned thus far
45 MW of steam behind pipe in 3 production
$135.7 million cash REYKJANES 100 MW
100 MW 90 MW
90 MW
wells and sea outflow canal; 50 MW Fuji
; j
turbine arrived June 2010; further production
$ 95 million vendor bonds1 drilling underway
$2.4 M/MW2 for 175 MW in production ELDVÖRP 50 MW Steam behind pipe from 1 production well
$0.52 M/MW2 for 175 MW Reserves and
4 MW of steam behind pipe from 2 production
KRÝSUVÍK 500 MW wells that are candidates for stimulation; 9 slim
640 MW Resources wells; 19 temperature gradient wells
1
TOTAL MW 175 MW 640 MW
Bonds indexed to price of aluminum with an average
coupon rate of 2.4% and 2016 maturity
2
Includes $186.7 million HS Orka non-recourse long
term debt* Delivery of 50 MW turbine units ‐ June 2010
* Basket of foreign currency with an average
coupon rate of 2.8% and maturities ranging
from 2016-2031
Magma gains:
Large producing asset base creates
strong income statement & balance sheet
Significant expansion potential
World class geothermal team
Iceland’s largest private energy
company (9% of country’s power
supply)
l )
10
11. HS Orka Expansion Highlights
Potential to expand from 175 MW to 405 MW
PPA discussions with Nordural and Others on-going
CapEx for full 230 MW expansion is ~$560 M; will be staged
50 MW phase expansion commenced; significant equity already invested
Next 30 MW phase requires no additional drilling
~46% of HS Orka’s revenue currently indexed to aluminum price
Future PPA’s with smelters and/or other power off-takers will impact HS Orka’s on-going sensitivity
to aluminum prices
CONCEPTUAL PRODUCTION GROWTH Assumptions:
Economic model based on London Metal
Exchange (LME) forward aluminum prices
Exchange rate 125 ISK/USD
Expansion financed with 40% equity and
60% debt at a 6% interest rate
Capital costs $2.2 - $2.5 M/MW
CCurrent PPA P i i
t Pricing
11
12. HS Orka Financial Highlights 1
1 HISTORICAL DAILY LME ALUMINUM PRICES
ACTUAL
BALANCE SHEET HIGHLIGHTS $3,500
2009 2010 - Q1 $3,000
$ / tonne
CURRENT ASSETS 16.0 49.2 $2,500
$2,000
NON-CURRENT ASSETS 320.5 308.7 $1,500
TOTAL ASSETS 336.5 357.9 $1,000
CURRENT LIABILITIES 43.1 29.9
LONG-TERM DEBT 190.2 186.7
TOTAL LIABILITIES 223.8 217.7
TOTAL SHAREHOLDERS’ EQUITY 112.7
112 7 140.2
140 2
TOTAL LIABILITIES & SHAREHOLDERS’
336.5 357.9
EQUITY
1
ACTUAL
INCOME STATEMENT HIGHLIGHTS 2009 2010 - Q1 20102
ALUMINUM PRICE (USD/TONNE) 1,699 2,194 2,296
MW IN OPERATION 175 175 175
NET GENERATION (GWH/YEAR) 1,358 328.1 1,363
OPERATING REVENUE 49.81 14.50 63.75
COSTS (31.29) (8.78) (33.11)
EBITDA 18.52 5.72 30.64
EXPANSION INVESTMENT 9.89 5.07 27.67
EXISTING LONG TERM DEBT 190.21 186.66 164.70
All values in US $ millions
1
As reported under IFRS
2
2010 is an estimate
12
13. Near-Term Milestones
LOCATION MILESTONE TARGET DATE
Desert Queen, Nevada
, Temperature Gradient Drilling Results
p g
Reykjanes, Iceland 80 MW Expansion Program Begins
Mariposa, Chile
p , Slim Hole Drilling Results
g On-Going
g
Peru Exploration Results On-Going
HS Orka, Iceland Acquire Controlling Interest (98.5%) Q3
Q-3
Reykjanes, Iceland PPA Negotiations with Nordural and Others Q-3
Soda Lake, Nevada Phase 1 Expansion Resource Confirmed Q3
Q-3
Soda Lake, Nevada New PPA with NV Energy Q-3
Soda Lake, Nevada
Lake Phase 1 Expansion Complete; 23 MW Online Q-4
13
15. Ownership, Capital Structure & Coverage
Magma’s largest shareholders CAPITAL STRUCTURE: AS OF MAR 31/10
(1)
ISSUED & OUTSTANDING 248,577,974
Ross Beaty / Sitka Foundation - 45.38%
OPTIONS 2,776,667
(Sitka is a private environmental foundation)
WARRANTS 0
Institutional shareholders - 34.58% FULLY DILUTED 251,354,641
Retail shareholders - 15.48% LONG TERM DEBT (2) US $ 51.1 M
AltaGas Income Trust - 4.56% CASH US $ 40.5 M
SHAREHOLDERS’ EQU
O S QUITY US $ 156.5 M
(1) 100M shares held by Ross Beaty/Sitka Foundation
restricted sale until 2013
(2) Bond has a face value of US $70.2 M
ANALYST COVERAGE CONTACT
Cormark S
C k Securities
iti MacMurray Whale
M M Wh l mwhale@cormark.com
h l @ k
Dundee Capital Markets Ian Tharp itharp@dundeesecurities.com
Jacob Securities John McIlveen jmcilveen@jacobsecurities.com
Mackie Research Capital Matthew Gowing mgowing@mackieresearch.com
National Bank Financial Jeremy Mersereau jeremy.mersereau@nbfinancial.com
Pritchard C it l P t
P it h d Capital Partners Veny Aleksandrov
V Al k d valeksandrov@pritchardcapital.com
l k d @ it h d it l
Raymond James Securities Steven Li steven.li@raymondjames.ca
Salman Partners Mike Plaster mplaster@salmanpartners.com
Thomas Weisel Partners Dilip Warrier dwarrier@tweisel.com
Wellington West Capital Sean Peasgood speasgood@wwcm.com
INDEX COVERAGE
Ardour Global Alternative
Olushola Ashiru oashiru@ardourcapital.com
Energy Index
15
16. World Class Management Team
Ross Beaty – Chairman & CEO
Geologist and resource company entrepreneur with 38 years experience in the international minerals industry. Founder
and chair of Magma Energy Corp and Pan American Silver Corp. (TSX: PAA, NASDAQ: PAAS) and several other
resource companies that were successfully built and divested including Northern Peru for $455 Million and Global Copper
Corp for $415 Million
MAGMA ENERGY CORP MAGMA ENERGY GLOBAL OPERATIONS
Lyle Braaten: Secretary & General Counsel Dick Benoit: USA
Lawyer. Extensive experience negotiating commercial Exploration Manager
agreements and implementing large infrastructure projects Over 35 years experience in the geothermal industry both
nationally and internationally
Annette Cusworth: Chief Financial Officer Mark Kumataka: USA
Certified General Accountant with over 20 years experience Chief Engineer
in the public and private sectors Professional Engineer with over 30 years experience in
geothermal resource management in U.S. & Latin America
Dr.
Dr Catherine Hickson: VP Exploration & Chief Geologist Ásgeir Margeirsson: ICELAND
World renowned volcanologist with over 25 years experience President & CEO
in Canadian and international geosciences An extensive career in geothermal power development both
within Iceland and internationally
Alison Thompson: VP Corporate Relations Monte Morrison: USA
Masters of Chemical Engineering and Queen’s MBA; Country Manager & VP Operations
Extensive experience in the energy industry; Chair of Professional Engineer with 25 years experience managing
g y p g g
CanGEA the operations and maintenance of geothermal power plants
John Selters: CHILE & ARGENTINA
Andrea Zaradic: VP Operations & Development
Country Manager
Mechanical Engineer with 20 years experience in
Mining engineer with over 40 years experience in Latin
engineering design, construction, commissioning and
America
operations with large international mining projects
16
17. Institutional Quality Board of Directors
Ross Beaty - Chairman and CEO
David W. Cornhill - [Independent] Member Audit, Compensation and Governance Committees
Mr. Cornhill is the founder, Chairman and Chief Executive Officer of AltaGas Income Trust, one of Canada’s largest
energy infrastructure groups, focused on gas and power infrastructure and renewable energy (wind and hydro).
With more than 25 years of experience in the energy industry, Mr. Cornhill also sits on several private and public
boards including AltaGas Utility Group and Ivey Business School.
Robert Pirooz - [Independent] Chair Corporate Governance Committee, Member Compensation Committee
Mr. Pirooz studied commerce at Dalhousie University and received a Juris Doctor degree from the University of
British Columbia in 1989. From May 1990 to February 1998, Mr. Pirooz practiced law primarily in the areas of
corporate, commercial and securities law. Mr. Pirooz' extensive legal and business background spans over 20
years and includes the role of General Counsel for the BCR Group of companies and Pan American Silver Corp, a
role in which he currently serves, and as principal in the Lumina group of resource companies. Currently a director
of 5 public companies, Mr. Pirooz has worked with Ross Beaty since early 1998.
Donald Shumka - [Independent] Chair Audit Committee, Member Governance Committee
Mr. Shumka is Managing Director of Walden Management Ltd., a financial consulting firm. Mr. Shumka received
his Bachelor of Arts degree from the University of British Columbia and a Master of Business Administration from
Harvard University. From 1966 -1979 he worked in a variety of positions in the forest industry, from 1979 -1989 he
was Vice President a d C e Financial O ce o West Fraser Timber Co Ltd. a d from 1989 - 2004 he headed
as ce es de t and Chief a c a Officer of est ase be Co. td and o 989 00 e eaded
the Forest Products Group for two Canadian investment banks. Mr. Shumka is active in the not for profit sector and
is currently the Chair of the British Columbia Arts Council.
Paul Sweeney - [Independent] Chair Compensation Committee, Member Audit Committee
Mr. Sweeney has over 30 years experience in financial management of mining and renewable energy companies.
He is currently Executive Vice-President, Business Development, of Plutonic Power Corporation, a run-of-river
hydro developer. He has served as CFO of a number of successful mineral resource companies including Canico
Resources and Sutton Resources and is a Director of several resource companies including Pan American Silver
Corp. where he chairs the audit committee.
17
18. Road to Success = Explore ► Acquire ►Build ► Produce
USA
ICELAND
USA
CHILE
ICELAND
USA
18
19. Global Advanced & Early Stage Project Pipeline
INDICATED &
STAGE PROPERTY AREA INFERRED EXPLORATION RESULTS
RESOURCES
EXPANSIONS & ADVANCED STAGE (Ha) MW
CHILE Mariposa (1) 104,000 320 2 slim hole, 3 more underway; 3 fumarole fields
(2)
49 MW of steam behind pipe from 6 production wells and outflow
ICELAND HS Orka 31,067 630 canal; 3 reservoirs; 50 MW Fuji turbine delivered June 2010;
further drilling underway
(3)
Production well drilling on-going
USA Soda Lake 2,881 41 > 100 wells on site including slim holes, temperature g
g , p gradient
and production/injection wells
(4)
USA McCoy 7,815 80 7 slim holes; 55 temperature gradient wells
(4)
USA Panther Canyon 4,515 34 85 temperature gradient wells
(4)
USA Desert Queen 5,448 36 13 temperature gradient wells, 4 new wells drilled
(4)
USA Thermo 713 20 1 slim hole; 21 temperature gradient wells
EARLY STAGE
ARGENTINA 2 Concessions 39,057 - 50 temperature gradient wells; hot springs, vents
PERU 7C
Concessions
i 7,900
7 900 - 34 hot springs on properties; sulphur deposits
1 dry production well (injection candidate); 9 slim holes;
USA 12 Leases NV + OR 38,016 - numerous temperature gradient wells
TOTAL 241,413 1,161
(1) Reporting Code Estimate GeothermEx
(2) Reporting Code Estimate Mannvit Engineering,
acquisition expected to close July ‘10
(3)
Reporting Codes Estimate SKM
(4)
Independent estimate P90 Geo Hills Associates
19