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FEB 2011 TSX : MXY A GLOBAL GEOTHERMAL POWER COMPANY
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Magma presentation-feb-16 -2011

Dec 15, 2014

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Page 1: Magma presentation-feb-16 -2011

FEB 2011TSX : MXY

A GLOBAL GEOTHERMAL POWER COMPANY

Page 2: Magma presentation-feb-16 -2011

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

These slides and the accompanying oral presentation contain certain “forward-looking information” within the meaning of Canadiansecurities 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 additionalcapital, production costs and revenue, future demand for and prices of electricity, business prospects, opportunities and estimates ofrecoverable geothermal energy “resources” or “reserves” or energy generation capacities (at either P90 or based on the GeothermalCode for Public Reporting). Such forward-looking information reflects management’s current beliefs and is based on informationcurrently available to management.

A number of known and unknown risks, uncertainties and other factors, may cause our actual results or performance to materiallydiffer from any future results or performance expressed or implied by the forward-looking information. Such factors include, amongothers, those discussed in the section of our prospectus entitled “Risk Factors”. These factors should be considered carefully. Theforward-looking information is also based upon what management believes to be reasonable assumptions, including, but not limitedto, assumptions about: the success and timely completion of planned exploration and expansion programs, including expansion andimprovements 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 energygeneration; the accuracy of resource and reserve estimation methodology and probabilistic analysis used to estimate the quantity ofpotentially recoverable energy; geological, geophysical, geochemical and other conditions at our properties; the reliability of technicaldata, including extrapolated temperature gradient, geophysical and geochemical surveys and geothermometer calculations; capitalexpenditure estimates; availability of capital to fund exploration, development and expansion programs; the differences in financialresults reported under IFRS and Canadian GAAP; and general economic conditions. Forward-looking information and statementsare also based upon the assumption that none of the identified risk factors that could cause actual results to differ materially from theforward-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 coulddiffer materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance onforward-looking information. Other than as required by applicable securities laws, we assume no obligation to update or revise suchforward-looking information to reflect new events or circumstances.

2

Page 3: Magma presentation-feb-16 -2011

MAGMA ENERGY - STRATEGY & VALUE CREATION

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

Magma’s mission: to build a leading pure play geothermal power company

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

We are a power company and an energy resource company

3

DISCOVERYRETURNS

UTILITYRETURNS

ACQUISITIONEXPLORATION

FEASIBILITY

PERMITTING

FINANCING

CONSTRUCTION

OPERATIONS

TIME

PRO

JEC

T VA

LUE

$

Page 4: Magma presentation-feb-16 -2011

BALANCED PORTFOLIO: GLOBAL EXPLORATION & OPERATIONS

ICELAND: 2 power plants with 175 MW capacity 80 MW of expansions underway Additional 150 MW of defined expansion plans

USA: 23 MW power plant with expansion potential Steady, predictable and long-life cash flow Excellent government support for geothermal projects 12 other exploration properties

CHILE / PERU: Huge (320 MW) inferred resource discovered at low cost Positioned in emerging world-class geothermal markets Growing government support for geothermal projects

4

Page 5: Magma presentation-feb-16 -2011

Mission: To build a leading pure play geothermal power company Strong team of explorers, builders and operatorsExecution: From 2008 startup, the world’s fastest growing geothermal power company

Growing financial strength

 $(10)

 $(5)

 $‐

 $5

 $10

 $15

 $20

 $25

Jan ‐ Jun/08

July/08 ‐Dec/09

Jan ‐Dec/10

Jan ‐Dec/11e

Millions USD

EBITDA

 $‐ $10 $20 $30 $40 $50 $60 $70 $80

Jan ‐ Jun/08

July/08 ‐Dec/09

Jan ‐Dec/10

Jan ‐Dec/11e

Millions USD

REVENUE 

16 91

1,023

1,650

23

190

0

50

100

150

200

250

0250500750

1000125015001750

2008 2009 2010 2011e

Installed Ca

pacity (M

W)

Prod

uctio

n (GWh)

POWER  GROWTH

MAGMA ENERGY - CORPORATE SUMMARY

5

199555

990 1,19060

181181

11

86

195195

0

400

800

1200

1600

2000

2008 2009 2010 2011eMW 1

GEOTHERMAL RESERVES & RESOURCES GROWTH

Inferred Indicated Reserves

1 Geothermal Reporting Code verified MW2 2008/09 actual and 2009/2010 reflects Magma’s equity portion in HS Orka3 2011 is an estimate and reflects Magma's consolidated portion in HS Orka4 Assumed aluminum price of USD 2,300/tonne and 111 ISK/USD

2 2222 23 3

Page 6: Magma presentation-feb-16 -2011

Magma gained control of HS Orka during Q1, full consolidation of results occur in Q2

Q1 OPERATING AND FINANCIAL HIGHLIGHTS

Expressed in thousands of US dollars, except for MWh and per share amounts

ACTUAL

2011-Q2 Year EndJune 30-2010

NET PRODUCTION (MWh) 351,461 62,072

TOTAL REVENUE 18,751 5,056

GROSS PROFIT 5,485 1,659

EBITDA (1) 6,155 (3,261)

EARNINGS (LOSS) PER SHARE (0.03) (0.07)

TOTAL ASSETS 656,222 198,703

TOTAL LIABILITIES 427,093 56,633

CASH GENERATED BY OPERATING ACTIVITIES (624) 89

6

(1) EBITDA is defined by the Company as earnings before interest and other financing costs, taxes, depreciation and amortization, as well as before deductions for non-cash chargesrelated to employee compensation, equity earnings/losses, loss on re-measurement of equity interest, NCI, gain on bargain purchase and changes to the balance sheet carryingvalue of long-term debt and derivatives. The Company discloses EBITDA as it is a measure used by analysts and by management to evaluate the Company's performance. AsEBITDA is a non-GAAP measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider netearnings in evaluating the Company's performance.

Page 7: Magma presentation-feb-16 -2011

0

100

200

300

400

500

600

700

Ram Power U.S. Geo NGP MAGMA Ormat

MW

Operating Development through 2013

DEVELOPERS

NORTH AMERICAN PRIMARY GEOTHERMAL COMPANIES

(1) Geothermal Reporting Code verified MWSource: Jacob Securities Inc

7

(1)

Page 8: Magma presentation-feb-16 -2011

0

1000

2000

3000

4000

5000

6000

0

100

200

300

400

500

600

700

2008 2009 2010 2011 2012 2013 2014 2015+

GWh

INSTAL

LED CAP

ACITY (M

W)

EXPECTED ORGANIC GROWTH

Soda Lake HS Orka Nevada Mariposa

CREATING VALUE

OUR PROGRESS Existing Iceland infrastructure allows for

rapid, low cost expansions Now the 2nd largest North American based

primary geothermal developer Major discovery in Chile

NEXT STEPS Complete expansions at HS Orka, Iceland Fulfill potential at Soda Lake, NV and

develop other US assets Develop Mariposa, Chile and explore other

Chile/Peru assets

VALUE PROPOSITION Non-declining assets providing steady

production and cash flow (forever) Strong inventory of development prospects Sufficient resources to increase existing

company proved reserves six-foldGrowing portfolio size reduces risk

Large team of geothermal experts - core asset

8

248

11

84

190

307

443

643

198

Page 9: Magma presentation-feb-16 -2011

TSX MXY

9

www.magmaenergycorp.com

Page 10: Magma presentation-feb-16 -2011

10

APPENDIX

Page 11: Magma presentation-feb-16 -2011

MAGMA ENERGY - GLOBAL PROJECT PIPELINE

STAGE PROPERTYAREA RESERVES RESOURCES

(HA) PROVED INDICATED INFERRED

Operations Soda Lake - Nevada1 2,881 20 41HS Orka - Iceland2 31,067 175 140 500

Advanced Mariposa - Chile3 104,000 320McCoy - Nevada4 4,621 170

Early Stage Argentina [2] 26,922

Chile [2] 158,000

Peru [7] 7,900

USA [11] 34,977

370,368 195 MW 181 MW 990 MW

PlantProperty

11

(1) Reporting Code Estimate GeothermEx(2) Reporting Code Estimate Mannvit Engineering (3) Reporting Codes Estimate SKM(4) Independent estimate P90 Geo Hills Associates

McCoy

Page 12: Magma presentation-feb-16 -2011

$-$1.00 $2.00 $3.00 $4.00 $5.00 $6.00

STP MXY CLL

CD

N $

/ B

OE

EV/BOE RESERVES & RESOURCES

EV/BOE Reserves EV/BOE Resources

(400)(200)

-200 400 600 800

1,000 1,200

STP MXY CLL

MEG

ATO

NN

ES

CO2 CREDITS (PENALTIES) FROM RESERVES & RESOURCES

-

500

1,000

1,500

2,000

2,500

STP MXY CLL

MM

BO

E

BOE RESERVES & RESOURCES

BOE Reserves BOE Resources

MAGMA IS AN UNDERVALUED ENERGY COMPANY

12

. . . . . @ $15/tonne≈ $14 billion credit over 30 years

TSX symbols: STP    Southern PacificMXY  Magma EnergyCLL Connacher Oil & Gas

Assumptions:0.62 bbl/MWh(th)0.1 MW(e) / MW(th)30 years of assumed project life430 kg CO2 emitted per BOE

Page 13: Magma presentation-feb-16 -2011

HS ORKA EXPANSION HIGHLIGHTS

Potential to expand from 175 MW to 405 MW

PPA discussions with Nordural and Others on-going

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

50 MW phase expansion commenced; as of Dec 2010 $39 MM already invested

Next 30 MW phase requires no additional drilling

~CapEx for full 230 MW expansion is ~$643 MM; will be staged

13

CONCEPTUAL PRODUCTION GROWTH EXPANSION BUDGET

Reykjanes 3 $131.2 MM

Reykjanes 4 $ 66.3 MM

Krýsuvik 1 $ 155 MM

Krýsuvik 2 $ 145 MM

Eldvörp $ 145 MM

Page 14: Magma presentation-feb-16 -2011

PRODUCTION - SODA LAKE, NEVADA

Ramping up to capacity of 23 MW Current throughput is 84,000 GWh/yr

Phase 2 expansion - achieve reservoir capacity 61 MW

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Page 15: Magma presentation-feb-16 -2011

320 MW Inferred Resource discovered by Magma in 2009

50 MW Phase 1 exploitation plan approved in April 2010

Completed $21 MM slim hole drill program for resource confirmation

>$100/MWh power rates and drilling incentives available

<25 km from 2 transmission lines under development

ADVANCED DEVELOPMENT - MARIPOSA, CHILE

MP- 03 DRILL SITE

MP- 01MP- 02

15

MP- 03

Page 16: Magma presentation-feb-16 -2011

WORLD CLASS MANAGEMENT TEAM

Monte Morrison: USACountry Manager & VP Operations Professional Engineer with 25 years experiencemanaging the operations and maintenance of geothermalpower plants

John Selters: CHILE & ARGENTINACountry ManagerMining engineer with over 40 years experience in LatinAmerica

Dick Benoit: USAExploration ManagerOver 35 years experience in the geothermal industryboth nationally and internationally

Mark Kumataka: USAChief EngineerProfessional Engineer with over 30 years experience ingeothermal resource management in U.S. & LatinAmerica

Lyle Braaten: Secretary & General CounselLawyer. Extensive experience negotiating commercial agreements and implementing large infrastructure projects

Annette Cusworth: Chief Financial OfficerChartered Accountant with over 20 years experience in the public and private sectors

Dr. Catherine Hickson: VP Exploration & Chief GeologistWorld renowned volcanologist with over 25 years experience in Canadian and international geosciences

Anders Kruus: VP Corporate RelationsFinance professional with over 20 years international experience in capital markets and corporate finance

Asgeir Margeirsson: VP Operations & Development, Country Manager Iceland, Chairman HS OrkaAn extensive career in geothermal power development both within Iceland and internationally

Ross Beaty: Chairman & CEOGeologist 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) andseveral other resource companies that were successfully built and divested.

MAGMA ENERGY GLOBAL OPERATIONSMAGMA ENERGY CORP

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John Carson: Executive Vice PresidentMr. Carson is a highly experienced renewable energy business leader with a core expertise in structuring and leadingfinancial transactions. His financing experience includes senior positions held with GE Energy Financial Services,Terra-Gen Power and Noble Environmental Power, and he has closed over US$2 billion of transactions, primarily inthe renewable energy space.

Page 17: Magma presentation-feb-16 -2011

INSTITUTIONAL QUALITY BOARD OF DIRECTORS

Ross Beaty - Chairman and CEO

David W. Cornhill - [Independent] Member Audit, Compensation and Governance CommitteesMr. 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 CommitteeMr. 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 CommitteeMr. 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 and Chief Financial Officer of West Fraser Timber Co. Ltd. and from 1989 - 2004 he headed 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 CommitteeMr. 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.

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Page 18: Magma presentation-feb-16 -2011

NEWS - FLOW CATALYSTS

LOCATION GOAL TARGET DATE

Peru Exploration results On-Going

Soda Lake, Nevada Phase 1 expansion complete Q-1

Mariposa, Chile Slim hole drilling results Q-2

Soda Lake, Nevada New PPA with NV energy Q-2

Reykjanes, Iceland PPA negotiations with Nordural and others Q-2

McCoy, Nevada Slim hole drilling results Q-4

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Page 19: Magma presentation-feb-16 -2011

OWNERSHIP, CAPITAL STRUCTURE & COVERAGE

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CAPITAL STRUCTURE: AS OF DEC 31/2010

ISSUED & OUTSTANDING 313.8 MM

OPTIONS 3.3 MM

LONG TERM DEBT US $284.4 MM

CASH US $ 20.3 MM

SHAREHOLDERS’ EQUITY US $229.1 MM

ANALYST COVERAGE CONTACT

Cormark Securities MacMurray Whale

Jacob Securities John McIlveen

Mackie Research Capital Matthew Gowing

National Bank Financial Jeremy Mersereau

Pritchard Capital Partners Veny Aleksandrov

Raymond James Securities Steven Li

Salman Partners Mike Plaster

Wellington West Capital Mgmt Sean Peasgood

INDEX COVERAGE

Ardour Global Alternative Energy Index

S&P/TSX Clean Technology Index

40%

5%29%

26%

MAGMA ENERGY SHAREHOLDERS(DEC 2010)

Board and Management

Strategic Partner (AltaGas)

Estimated Institutional

Estimated Retail

5%

46%

11%

12%

26%

REGIONAL REPRESENTATION OFSHAREHOLDERS (DEC 2010)

USA

Canada

Europe

Other

Unknown Retail

Page 20: Magma presentation-feb-16 -2011

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TSX MXY

16-Feb-11

www.magmaenergycorp.com