MagIndustries Corp.

MagIndustries Corp.

November 08, 2005 08:41 ET

MagEnergy Concludes Second Inga II Hydro-Electric Agreement

TORONTO, ONTARIO--(CCNMatthews - Nov. 8, 2005) - MagEnergy Inc., a wholly owned subsidiary of MagIndustries Corp.(TSX VENTURE:MAA.U), is pleased to announce the signing of a USD 9,000,000 Emergency refurbishment Facility Agreement with Societe Nationale d'Electricite (SNEL), the DRC state owned power utility. The Agreement defines the terms and conditions under which MagEnergy in partnership with the Industrial Development Corporation ("IDC") of South Africa are to immediately invest US$9,000,000 for the refurbishment of at least one turbine currently installed at INGA II. The investment is made within the framework of the Public Private Partnership between MagEnergy and SNEL and is pivotal in securing much needed energy supplies for this important African emerging market economy.

The Facility Agreement

The Facility Agreement will provide SNEL with US$9,000,000 to allow for the immediate refurbishment of at least one turbine currently installed at INGA II. Each turbine installed at INGA II has a capacity of 178 MW. The refurbishment program will be managed jointly by SNEL and MagEnergy and it is anticipated that work will be commissioned within twelve months.

MagEnergy, in exchange, will immediately receive a flat monthly fee which will be directed from existing external electricity off-take contracts for a 12 months period. Thereafter and for a period of 3 years, MagEnergy will participate in partnership with SNEL in revenues generated from the sale of power to ESKOM, the South Africa power utility. South Africa and SNEL entered into a Power Purchase Agreement in 1997.

The Agreement has received all authorizations as prescribed by the DRC regulations and specifically has been approved by SNEL's Management Committee, its Board of Directors as well as from the Minister of Energy and the Minister of Public Enterprise.

Four Turbine Rehabilitation Agreement

MagEnergy, as announced earlier this year, has already begun the first phase of the rehabilitation of four other turbines at INGA, estimated to cost US$110 million. The above noted Facility Agreement will assist the longer Rehabilitation program by rapidly re-starting at least one (1) turbine. A US$2 million bankable feasibility study for the rehabilitation is underway with the first turbine work expected to start in mid-2006.

As announced in September the Industrial Development Corporation (IDC) of South Africa has agreed to participate with MagEnergy in the rehabilitation of Inga II. IDC have agreed to a 10% free carry for MagEnergy in addition to their commitment to contribute 30% of the bankable feasibility study and the emergency refurbishment work in exchange for a 15% interest. IDC has also been granted a right of first refusal to act as lead mandated arranger for the project debt financing. As the turbines will be rehabilitated sequentially a significant proportion of the funding requirement will come from internal cash flow with first energy revenues from the Refurbishment program beginning in 2006 and from the rehabilitation expected in 2007.

MagEnergy has recently opened offices in Kinshasa, the capital of DRC, from which to direct the INGA Refurbishment Program and the INGA Rehabilitation Program (4 turbines). These agreements position MagEnergy as the leading provider of Foreign Direct Investment in the energy infrastructure of the DRC. MagEnergy's efforts are seen as critically important to support both stability and growth for the DRC as the country moves to its first democratic elections.

About INGA

Mr. Di Panzu, the General Director of SNEL, explained that "INGA is the largest single hydropower initiative in the world with a potential to reach 50,000 MW of electricity. Today INGA currently consists of two stations, INGA I (6 turbines of 52 MW each) and Inga II (8 turbines of 178 MW each), for a total installed potential of 1774 MW. Due to years of low demand and low maintenance budgets INGA I and II currently produce only about 700 MW. Rapidly expanding energy demands, both nationally and internationally, are the basis upon which we have concluded these important agreements."

About MagIndustries Corp.:

MagIndustries' resource subsidiaries are proceeding with the
development of major industrial projects in the Republic of Congo
(ROC) and the Democratic Republic of Congo (DRC).

- MagEnergy Inc. is the leading participant in the rehabilitation of
the Inga Hydro-electric station on the Congo River in the DRC.

- MagMinerals Inc. is planning the development of a 400,000tpy
potash (fertilizer) plant at Pointe-Noire, ROC.

- MagMetals Inc. is planning the development of a 72,000tpy
magnesium smelter adjacent to the potash plant for the production
of magnesium alloys for the global automotive industry. The raw
materials for the MagMinerals and MagMetals plants will be sourced
from MagIndustries' 100% owned magnesium and potash salt deposits
near Pointe-Noire.

- MagForestry controls 52.5% of Eucalyptus Fibre Congo, a 68,000
hectare eucalyptus plantation which overlies much of the
MagIndustries mineral deposits.

MagIndustries Corp. is a Canadian company whose common shares are listed on the TSX Venture Exchange and are traded in U.S. currency under the symbol "MAA.U". The Company has 92,585,248 shares outstanding on an undiluted basis. More information on the Company is available at its website,

Except for historical information, this press release contains forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time-to-time in the Company's ongoing filings. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.

Cusip: 558914 107

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