Polaris Geothermal Inc.

Polaris Geothermal Inc.

January 08, 2007 18:58 ET

Polaris Geothermal Completes Second Tranche of Unit Financing and Provides Update

TORONTO, ONTARIO--(CCNMatthews - Jan. 8, 2007) -

Not For Distribution to US Newswire Services or for Dissemination in the United States

Polaris Geothermal Inc. ("Polaris Geothermal" or the "Company"), (TSX VENTURE:GEO) a renewable energy geothermal power producer, is pleased to announce that it closed on January 5, 2007 the second and final tranche of its previously announced offering of 9,600,000 units (the "Units") at a price of $1.25 per Unit. The second tranche was comprised of 138,000 Units for gross proceeds of $172,500. The Company has now received aggregate gross proceeds of $12 million in respect of the first and second tranches of the offering. Each Unit consists of one class A common share and one share purchase warrant (a "Warrant"). Each Warrant entitles the holder to acquire one class A common share ("Common Share") of Polaris Geothermal at an exercise price of $1.50 for a period of 24 months from the date of issuance. The Warrants are subject to an acceleration clause that if, at any time after six months following the closing of the Offering, the closing price of the Common Shares of the Company on the TSX Venture Exchange or the Toronto Stock Exchange exceeds $2.50 per share for a period of twenty (20) consecutive trading days, then the Company shall give notice to the investors that the Warrants must be exercised or they will expire thirty (30) days after such notice.

Dundee Securities Corporation acted as agent on the second offering and received a cash commission of 7% of the gross proceeds placed by the agent under the offering and compensation options equal to 7% of the number of securities placed by the agent under the Offering. Each compensation option will be exercisable at a price of $1.25 for one Unit until January 5, 2009 and is also subject to the acceleration clause described above. The securities issued pursuant to the second trance of the offering are subject to a four month hold period.

In other news, the Company is pleased to announce that its subsidiary in Nicaragua has finalized various agreements with independent contractors to provide drilling services, cementing services and integrated services agreements in respect of its 2007 drilling campaign, which agreements are scheduled to be signed later this week. Upon completion of these agreements, the Company plans to commence drilling the first of an anticipated four new geothermal wells, which, if successful, are expected to expand the production of the San Jacinto geothermal project to 31.4MW. Initial drilling results are expected to be released in the second quarter of 2007.

The Company also wishes to announce that its ongoing negotiations with the Banco Centroamericano de Integracion Economica, the Centralamerican Development Bank and Banco Nacional de Desenvolvimento Economica e Social of Brazil to obtain debt financing in respect of Phase 2 of the San Jacinto project are well advanced and that it is expected that such Phase 2 debt financing will be completed in the second quarter of 2007.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. All dollars in this release are in Canadian funds.


This press release includes certain "forward-looking statements". Statements respecting the ability of the Company to enter into drilling contracts, to successfully complete its drilling program and obtain expected increases in production therefrom, and to successfully complete negotiations with potential lenders upon satisfactory terms and conditions are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are "forward-looking statements". We caution you that such "forward looking statements" involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such risks and uncertainties include unpredictable results of exploration activities, uncertainties inherent in the estimation of geothermal resources, fluctuations in the costs of goods and services, problems associated with production operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company's filings with Canadian securities regulatory agencies. The Company expressly disclaims any obligation to update any forward-looking statements.

Contact Information