SOURCE: MagneGas Corp.

MagneGas Corp.

June 22, 2010 17:28 ET

China Update: MagneGas Secures $2.0 MM Investment Commitment, 20% of China Joint Venture

Indication for First $1.0 MM Installment by June 30th, Remainder by September 30th

TAMPA, FL--(Marketwire - June 22, 2010) -  MagneGas Corporation ("MagneGas" or the "Company") (OTCBB: MNGA), a producer of a metal working fuel and natural gas alternative made from liquid waste, announced today that Beijing-based DDI Industry International ("DDI") has signed an agreement to proceed with Phase II of the MagneGas China initiative. Under the terms of the Phase II agreement, DDI will acquire the exclusive MagneGas™ Technology and manufacturing rights for the Greater China market. As compensation DDI will directly invest $2.0 MM in MagneGas in two installments, and will grant to MagneGas 20% ownership in a new China-based Joint Venture.

DDI has pledged the following:

  • $1.0 MM by June 30, 2010
  • $1.0 MM by September 30, 2010

Through the transaction, MagneGas is selling to DDI 14,814,815 shares of its common stock.

Per the additional terms of the agreement, DDI will create a new China-based Joint Venture company ("MagneGas China") to house and administer the rights; DDI will seek to take this Joint Venture company public in the Asian market in the future. DDI will grant to MagneGas 20% of MagneGas China, giving the Company and its investors a significant and perpetual share of China market operations. MagneGas CEO Dr. Ruggero Santilli or his assignee will receive a full voting seat on the MagneGas China Board of Directors, and DDI CEO Allen Feng or his assignee will receive a full voting seat on the MagneGas Board of Directors.

Previously in Phase I, DDI signed a Purchase Agreement for a 200kw Refinery at a price of $1.9 million and made a $950,000 down payment. As announced last week, the manufacturing of the Refinery is nearly complete, and the Company believes DDI will assume ownership and pay the $950,000 balance by no later than August 31, 2010.

"We are very excited about our partnership with DDI and the opportunities now available to our company in the Greater China market," stated MagneGas President Richard Connelly. "DDI is a Beijing-based company with over 10 years of experience in environmental protection and waste disposal. DDI plans to use the MagneGas™ Technology to recycle sludge and food oil waste and create MagneGas™, which it intends to sell to fuel city buses and taxis, as well as for the metal working market. With the investment and equipment purchase from DDI, we are for the first time sufficiently capitalized to properly pursue the potential of the MagneGas™ Technology and its many applications."

Added DDI CEO Allen Feng, "As China has evolved into the manufacture center of the world, the issue of environment pollution has become a top priority of the Chinese Government. The Chinese Government has pledged to invest 100 billion Yuan in the next three years to help solve this environment problem. By using MagneGas™ Technology, DDI believes it will make a significant contribution to this effort, helping China's 1.3 billion citizens enjoy a healthier, greener life."

DDI has the option to extend the Phase II close until December 31, 2010, though it has provided written confirmation that it will proceed according to the schedule defined above. MagneGas management cannot offer any assurance as to the final closing date. 

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About MagneGas Corporation (www.magnegas.comFounded in 2007, Tampa-based MagneGas Corporation (OTCBB: MNGA) is the producer of MagneGas™, a natural gas alternative and metal working fuel made from liquid waste such as sewage, sludge, manure and certain industrial and oil based liquid wastes. The Company's patented Plasma Arc Flow™ process gasifies liquid waste, creating a clean burning fuel that is essentially interchangeable with natural gas, but with lower green house gas emissions. MagneGas™ can be used for metal cutting, cooking, heating or powering bi fuel automobiles.

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