MAGMA ENERGY CORP. AND PLUTONIC POWER CORPORATION ANNOUNCE MERGER TO CREATE ALTERRA POWER CORP.

VANCOUVER, March 7 /PRNewswire-FirstCall/ - Magma Energy Corp (TSX:MXY) and Plutonic Power Corporation (TSX:PCC) today announced that they have entered into an arrangement agreement (the "Arrangement Agreement") to merge and create Alterra Power Corp. ("Alterra"), a leading renewable power producer, with a post-deal market capitalization of approximately $575 million.

Under the terms of the Arrangement Agreement, each Plutonic shareholder will receive 2.38 shares of Magma for each Plutonic share held, and Magma will change its name to Alterra. The exchange ratio represents a premium to Plutonic shareholders of 32% over Plutonic's 20 day weighted average share price on the Toronto Stock Exchange. At the conclusion of the merger there will be 470 million shares of Alterra issued and outstanding and 487 million shares on a fully diluted basis.

Merged Entity Highlights

    -  Solid base of producing assets in three key renewable energy sectors:
       Geothermal, hydro and wind. Six operating plants in three locations:
       two geothermal plants in Iceland and one in Nevada; two hydro plants
       in British Columbia; one wind farm in British Columbia; and an option
       on one solar project in Ontario.

    -  Increased production capacity: 2011 production capacity of 198
       megawatts generating 1,340 gigawatt hours/year from Magma's geothermal
       assets and 168 megawatts generating 460 gigawatt hours/year from
       Plutonic's hydro and wind assets.

    -  Significant immediate increase in cash flow generation to both
       companies.

    -  Strong growth platform in geothermal, wind and hydro sectors:
       Near-term growth in Iceland and Nevada geothermal production;
       near-term growth prospects in British Columbia hydro and wind assets
       and Ontario solar assets; significant large long-term growth prospects
       in Chile, Peru, Nevada and Iceland geothermal assets and British
       Columbia hydro assets.

    -  Shared commitment to social responsibility: Both Magma and Plutonic
       recognize a commitment to social responsibility and sustainable
       development of renewable energy projects. The shared values and
       experience in this area will be a competitive advantage in creating
       long term value for shareholders and the communities in which Alterra
       operates.

    -  Complementary management teams: Magma's and Plutonic's highly regarded
       management teams blend renewable energy exploration, development,
       financing and operations skill sets.

    -  Significant administration synergies: Estimated at $2.2 million per
       year.

    -  Financial support: Magma to provide short term financial support to
       Plutonic by subscribing for a $10 million convertible debenture.

Ross Beaty, Magma's Chairman and CEO commented, "This merger will strengthen both companies and will create a larger, more diversified renewable energy company with assets across a broader spectrum of the clean energy industry. It has the potential to lower the cost of capital to develop each company's existing growth assets, to enable those assets to be developed more quickly, and to better attract new opportunities for future development. Geothermal will remain a core focus of the new company, but hydro, wind and solar assets will be solid business platforms for future growth. In the renewable energy business, bigger is better and this combination will achieve that while enhancing returns to each company's shareholders."

Donald McInnes, Plutonic's Vice-Chairman and CEO said, "2010 was a breakout year for Plutonic having completed the transition into an operating company. To continue to build on the success of our history as a project developer, a merger with Magma will provide our shareholders with the best path to further value creation achieved through a larger market size, greater liquidity, better access to capital, and diversity of geography and technology with a healthy development pipeline that provides significant growth opportunities."

Alterra Management Team and Board of Directors

Ross Beaty will be the Executive Chairman and CEO and Donald McInnes will be Executive Vice-Chairman. Bruce Ripley will be Chief Operating Officer and John Carson will be Executive Vice President.

The Board will initially be comprised of the following seven directors:

    Ross Beaty
    Donald McInnes
    David Cornhill
    David O'Brien
    Donald Shumka
    Paul Sweeney
    Walter Segsworth

Transaction Summary

The proposed merger will be effected by way of a plan of arrangement under the Business Corporations Act (British Columbia). Each Plutonic shareholder will receive 2.38 shares of Magma for each Plutonic share held. All outstanding options to purchase Plutonic shares will be exchanged for options to purchase common shares of Alterra in accordance with the same exchange ratio.

Completion of the merger is conditional on approval of Magma and Plutonic shareholders at special meetings expected to be held in late April 2011, and satisfaction of other customary approvals, including regulatory, stock exchange and court approvals.

The Arrangement Agreement contains standard deal protections, including a commitment by Plutonic not to solicit alternative transactions, a ten business day right for Magma to match any superior proposal received by Plutonic and payment by Plutonic to Magma of a termination fee of $5.7 million if the transaction is not completed in specified circumstances.

Magma has subscribed for a $10 million unsecured convertible debenture from Plutonic. These proceeds will be used by Plutonic to fund working capital and repayment of a $8 million promissory note held by GE Energy Financial Services Holding Company. The convertible debenture bears interest at the rate of 8% per annum on drawn amounts, will mature on August 31, 2011 and will be convertible into Plutonic shares at any time at the option of Magma at a conversion price of $2.90 per Plutonic share. In certain circumstances, Magma can put any undrawn amount of the convertible debenture to Plutonic prior to conversion.

A full copy of the Arrangement Agreement will be filed by each of Magma and Plutonic with Canadian securities regulatory authorities and will be available at www.sedar.com. In addition, a detailed description of the Arrangement Agreement will be included in the joint management information circular which will be mailed to Magma and Plutonic shareholders later this month.

Board Recommendations

Both Magma's and Plutonic's boards of directors have determined that the proposed merger is in the best interests of their respective companies and shareholders and recommend that their respective shareholders vote their shares in favour of the merger.

Shareholder Support

The largest shareholders of both Magma (Ross Beaty and a charitable foundation, collectively holding 38.7% of Magma's outstanding shares) and Plutonic (Goodman & Company, Investment Counsel Ltd. and 12 of the directors and officers of Plutonic, collectively holding, directly or indirectly, 20.2% of Plutonic's outstanding shares) have executed agreements to vote their shares in favour of the merger.

Advisors and Counsel

Magma's financial advisor is Raymond James Ltd. and its legal counsel is Borden Ladner Gervais LLP. Raymond James Ltd. provided an opinion to Magma's board of directors that the transaction is fair, from a financial point of view, to the shareholders of Magma.

The financial advisor to the special committee of Plutonic's board of directors is Cormark Securities Inc. and Plutonic's legal counsel is Miller Thomson LLP. Fasken Martineau LLP acted as counsel to the special committee. Cormark Securities Inc. provided an opinion to Plutonic's board of directors that the consideration to be received pursuant to the transaction is fair, from a financial point of view, to the shareholders of Plutonic.

Conference Call and Webcast

Magma and Plutonic will host a joint conference call and webcast at 10 am EST on Monday March 7 for members of the investment community to discuss the merger. Details are as follows:

    Date: Monday, March 7, 2011

    Time: 10:00 am Eastern Time - 7:00 am Pacific Time

    Dial-In Numbers:
      North American toll-free number:      1-888-231-8191
      Switzerland toll-free number:         0-800-835-354
      United Kingdom toll-free number:      0-800-051-7107

    Audio Webcast:
      A live audio webcast can be accessed at:
      http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3434200

    Playback Available for One Week Following the Call:
      North American and International:     1-800-642-1687 / 1-416-849-0833
      Replay PIN Number:                    5015 8963

About Magma Energy Corp.

Magma Energy Corp. is a geothermal power company which operates, develops, explores and acquires geothermal energy projects. We have an extensive portfolio of properties throughout the western United States, Iceland and Latin America, including one operating power plant in Nevada and two in Iceland. For more information visit www.magmaenergycorp.com

About Plutonic Power Corp.

Plutonic Power identifies, develops and operates clean power projects in a safe reliable and efficient manner. Plutonic Power strives to be a leader in clean power. Plutonic's principal operating facilities are the Toba Montrose Hydroelectric Project and the Dokie Wind Farm. These assets are held in partnership with GE Energy Financial Services of which Plutonic is the managing and operating partner. For more information, visit www.plutonic.ca

The TSX Exchange does not accept responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Information

This news release contains 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, the timing and prospects for Magma shareholder and Plutonic shareholder approval of the merger, the implementation of the merger, the integration of Magma and Plutonic following the merger (including synergies), management's expectations regarding Alterra's production capacity, results of operations, cash flows, revenues and requirements for capital, future demand for and prices of electricity, and Alterra's business prospects and opportunities.

These statements reflect the current views of Magma and Plutonic with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Magma and Plutonic, are inherently subject to significant business, economic, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause Alterra's actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained in this press release, and Magma and Plutonic have made assumptions based on or related to many of these factors. Such factors include, without limitation: fluctuations in currency markets (particularly with respect to the Icelandic Krona, the U.S. dollar and Canadian dollar); risks related to the technological and operational nature of Alterra's business; changes in national or regional governments, legislation, regulation, permitting or taxation; political or economic developments in Canada, the United States, Iceland or other countries where Alterra may carry on business; risks and hazards associated with the business of renewable energy generation; risks relating to the creditworthiness and financial condition of suppliers and other parties which Alterra will deal with; inadequate insurance or inability to obtain insurance to cover these risks and hazards; employee relations; relationships with and claims by local communities and First Nations; availability and costs of equipment and labour; litigation; the success and timely completion of planned expansion and development programs; the growth rate in net electricity consumption; support and demand for renewable energy; government initiatives to support the development of renewable energy generation; the reliability of technical data and capital expenditure estimates; and availability of capital to fund development and expansion programs. 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.

Although Magma and Plutonic have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. 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 forward-looking information. Other than as required by applicable securities laws, neither Magma nor Plutonic assumes any obligation to update or revise such forward-looking information to reflect new events or circumstances.

SOURCE Plutonic Power Corporation