Polaris Geothermal Inc.

Polaris Geothermal Inc.

September 19, 2007 18:06 ET

Polaris Geothermal Inc. Enters Into Agreement With Exorka International Limited

TORONTO, ONTARIO--(Marketwire - Sept. 19, 2007) - Polaris Geothermal Inc. (TSX:GEO) ("Polaris Geothermal" or the "Company") is pleased to announce that it has entered into an agreement (the "Agreement") with Exorka International Limited ("Exorka") for the purposes of developing and operating Kalina based geothermal power projects.

Pursuant to the terms of the Agreement, Exorka has agreed to subscribe for 1,600,000 units of Polaris Geothermal at a price of Cdn$1.25 per unit for gross proceeds of Cdn$2,000,000 (the "Private Placement"). Each unit will consist of one class A common share and one class A common share purchase warrant (a "Warrant"), each Warrant entitling the holder to acquire one class A common share at a price of Cdn$1.50 until December 31, 2008. Coincidentally, Polaris Geothermal has agreed to subscribe for 900,000 ordinary shares of Exorka at EURO 1.00 per share.

Pursuant to the terms of the Agreement, Polaris Geothermal will grant to Exorka the exclusive right to supply a binary generation plant and related equipment of appropriate size and to Polaris Geothermal until June 30, 2009. In return, Exorka will issue warrants for Polaris Geothermal to subscribe for up to 1,000,000 Exorka ordinary shares at a subscription price of EURO 1.50 per share or such price as may result from application of agreed anti-dilution provisions should additional equity be issued by Exorka exercisable until December 31, 2008.

The Agreement requires Exorka to perform the following work at its cost: (i) technical, pre-engineering and brine testing work required for the potential supply of a Kalina binary plant at the Company's San Jacinto-Tizate power project located near Leon, Nicaragua on or before March 31, 2008; and (ii) a turn-key Kalina power plant proposal to Polaris Geothermal by January 15, 2008. The Agreement contemplates that Exorka and Polaris Geothermal will then negotiate in good faith the terms of supply for the Kalina plant.

The Company wishes to acknowledge the role played by Sinclair Knight Merz Ltd., the Company's strategic alliance partner, who was instrumental in sourcing and arranging for the entering into of the Agreement.

The closing of the Agreement and the Private Placement are subject to the receipt of all necessary approvals, including regulatory and stock exchange approvals.


This press release includes certain "forward-looking statements". Statements respecting the development of the San Jacinto-Tizate geothermal project, including its ability complete the proposed Agreement with Exorka and the Private Placement and complete successful negotiations to enter into a further supply agreement for a Kalina plant at the San Jacinto-Tizate project, 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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