Polaris Geothermal Inc.

Polaris Geothermal Inc.

June 12, 2007 10:02 ET

Polaris Geothermal Announces Resolution of Concession Dispute and Commencement of Drilling

TORONTO, ONTARIO--(Marketwire - June 12, 2007) - Polaris Geothermal Inc. ("Polaris" or the "Company"), (TSX:GEO) a renewable energy geothermal power producer, is pleased to announce that it has resolved all issues respecting Resolution PGR/HE-05-2007 dated February 23, 2007 (the "Resolution") which was issued by the Office of the Attorney General of the Republic of Nicaragua (the "PGR") (see the Company's press release dated February 26, 2007). The Company is pleased to announce that the PGR has issued a resolution and letter to the Company's Nicaraguan subsidiary, Polaris Energy Nicaragua S.A. ("PENSA"), stating that the Concession is valid, legal and in full force and further recognizes PENSA as the legal holder of the Concession, subject to PENSA complying with all the obligations established in the Concession agreement. (the "Concession Agreement"). The Company and PENSA have also received a letter from the Ministry of Energy and Mines ("MEM") which acknowledges the PGR's letter and states that the Government of Nicaragua fully supports the development of the Concession by PENSA.

Given the delays that have occurred with respect to the advancement of the project as a result of the Concession dispute, the Company is also pleased to announce that PENSA has reached agreement on an addendum (the "Addendum") to the Concession Agreement with MEM. The Addendum includes a schedule for drilling and plant construction to increase installed capacity first to 35 MW and subsequently to 85 MW, at which time the two existing back pressure turbo generators will be removed from service to leave 75 MW installed capacity. Production from the facility is expected to be sufficient to achieve production of 66 MW which Polaris can sell under its take-or-pay power purchase agreement to the Company's existing buyers, the distributors Disnorte and Dissur, subsidiaries of Union Fenosa of Spain.

Tom Ogryzlo, President and CEO noted: "The Company is very pleased to now have the strong support of the new Nicaraguan government to facilitate the expansion of the San Jacinto-Tizate geothermal project. Particularly, the newly created Ministry of Energy and Mines has acted in a firm but fair manner to assist in resolving all outstanding issues regarding the Company's title to the Concession".

Commencement of Drilling Program

The Company is also pleased to announce that mobilization of drilling contractors is underway for the first four wells required for the San Jacinto-Tizate geothermal project's expansion to 35 MW. Drilling of the first well is scheduled to commence in August, 2007.


This press release includes certain "forward-looking statements". Statements respecting the development of the San Jacinto-Tizate geothermal project, including the Company's ability to meet drilling schedules in a timely manner and achieving projected production levels 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 actions of the Nicaraguan government, political risk, changes in legal, social or political conditions in Nicaragua, 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.

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