Polaris Geothermal Inc.
TSX : GEO

Polaris Geothermal Inc.

August 15, 2007 09:27 ET

Polaris Geothermal-Operations Update

TORONTO, ONTARIO--(Marketwire - Aug. 15, 2007) - Polaris Geothermal Inc. ("Polaris" or the "Company") (TSX:GEO), a renewable energy geothermal power producer, wishes to provide an update on the operations at the San Jacinto-Tizate geothermal concession in Nicaragua (the "Concession").

As part of the current drilling program, while drilling a well on the Concession, the Company encountered a high pressure, shallow steam zone at about 150 m, which ultimately resulted in a strong discharge up and adjacent to the well including breaking through the surface of the well pad beside the drill rig. The discharge was eliminated by pumping cement into the well which now can no longer be used.

This type of discharge within the well is not an uncommon feature of geothermal drilling and the drilling crews and engineers are all trained in responding to control the discharge. However, a breach to the surface outside the well, a "blow out", is rare and can have severe consequences. The prompt action to cement in the well stopped the blow out and prevented the surface breach from spreading.

Jim Lawless, Geoscience Manger of Sinclair Knight Merz ("SKM") of Auckland, New Zealand, said of the incident: "We have experienced well "kicks" on many projects and while they are never regarded lightly the established procedures were successful in stopping the discharge up the well, which was the immediate problem. The break out to the surface was much smaller but was actually of greater potential concern and now has been successfully dealt with. The well was designed using normal industry practice. Knowledge gained through this experience will be used to modify the casing design for subsequent wells." SKM, which has been working closely with the Company on the Concession since the Company first became involved with the project, is a 6,000 person strong organization, with extensive engineering, scientific and project management expertise which has been extensively involved in geothermal projects worldwide since 1975.

The drilling rig has experienced some minor damage and this is now being repaired by the rig contractor. There are no environmental impacts from the discharge as the drilling mud used in geothermal wells is essentially only bentonite clay, which is a harmless natural product.

As soon as the rig is ready for operations, anticipated to be in about 3 weeks, the Company will continue with its drilling program. It is not anticipated that this incident will have a significant impact on the start-up or cost of the expansion to the generating plant being installed by the Company.

FORWARD-LOOKING STATEMENTS

This press release includes certain "forward-looking statements". Statements respecting the development of the San Jacinto-Tizate geothermal 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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