Polaris Geothermal Inc. Announces $25 Million Private Placement

TORONTO, ONTARIO--(Marketwire - June 28, 2007) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Polaris Geothermal Inc. ("Polaris Geothermal" or the "Company")(TSX:GEO) is pleased to announce that it has entered into an agreement ("Agreement") with Jacob & Company Securities Inc. ("Jacob & Co.") in which Jacob & Co. has agreed to purchase, subject to certain conditions, including due diligence, and with the right to substitute purchasers, a private placement of 20,833,333 equity units ("Units") at a price of $1.20 per Unit resulting in gross proceeds of $25,000,000 to Polaris Geothermal, prior to consideration of the Over-Allotment Option described below (the "Offering"). Each Unit will consist of one common share of Polaris Geothermal ("Common Share") and one common share purchase warrant ("Warrant"). Each Warrant will entitle the holder to subscribe for one Common Share at $1.50 per share at any time until the date that is 36 months from closing.

Skyberry Holdings Ltd., a Bahamian business corporation, is expected to subscribe for approximately 16,666,666 Units.

The net proceeds of the Offering form part of the funds required to be used for drilling and plant construction to increase installed capacity to 37 MW and are also to be used for general corporate purposes.

The Agreement and the Offering are subject to the receipt of all necessary approvals, including regulatory and stock exchange approvals. Closing is expected to occur on or about July 12, 2007 ("Closing").

Under the rules of the Toronto Stock Exchange, the Offering is subject to shareholder approval. The Company expects that it will rely on an exemption from obtaining shareholder approval at a meeting of shareholders by receiving written consent to the Offering from holders of more than 50% of the Common Shares.

Polaris Geothermal has agreed to pay Jacob & Co. a commission equal to 7% of the aggregate gross proceeds and to issue 1,458,333 broker warrants to acquire Units ("Broker Unit Warrants") representing 7% of the number of Units issued under the Offering. One Broker Unit Warrant will entitle the holder to acquire one Unit for $1.20 at any time until the date that is 24 months from Closing.

Polaris Geothermal has also granted Jacob & Co. an over-allotment option ("Over-Allotment Option") to place an additional 5,833,333 Units at $1.20 per Unit, which, if exercised in full, would result in additional gross proceeds to Polaris Geothermal of $7,000,000, at any time until August 4, 2007. If the Over-Allotment Option is exercised in full, Jacob & Co. will be paid a commission equal to 7% of the gross proceeds of the Over-Allotment Option and 490,000 additional Broker Unit Warrants, representing 7% of the number of Units issued under the Over-Allotment Option.

All of the securities issued in connection with the Offering will be subject to a four -month hold period from the date of issue.

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.

FORWARD-LOOKING STATEMENTS

This press release includes certain "forward-looking statements". Statements respecting the completion of the Offering and development of the San Jacinto-Tizate geothermal project, including receiving the requisite approvals, 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.