MagIndustries Corp.

MagIndustries Corp.

August 22, 2012 17:15 ET

MagIndustries Announces Extension of Loan Facility With Evergreen

TORONTO, ONTARIO--(Marketwire - Aug. 22, 2012) - MagIndustries Corp. (the "Company") (TSX:MAA) is pleased to announce that it has entered into an agreement with Evergreen Resources Holdings (BVI) Ltd. ("Evergreen"), the Company's controlling shareholder, to extend the terms of the loan originally provided to the Company by Evergreen on August 23, 2011 (the "Loan").

The Loan originally entered into on August 23, 2011 was a C$50,000,000 principal amount term loan with an interest rate of 10.5% per annum calculated daily and compounded monthly, which interest, if unpaid, was to be capitalized and added to the outstanding principal balance. At a special meeting of the shareholders on October 25, 2011, shareholders approved a conversion feature which permitted the Loan to be converted, in whole or in part, at the option of Evergreen, into common shares of the Company on the basis of a conversion price per share of $0.1712 (the "Conversion Feature"). After the approval of the Conversion Feature, the interest rate of the Loan decreased to nil and the maturity date of the loan was extended to August 23, 2012.

The new loan agreement which has been entered into is for a principal amount of $50,653,425 (the "New Loan"), which includes the original C$50,000,000 loan and interest thereon capitalized from the period from August 23, 2011 to October 25, 2011. The New Loan bears interest at 10.5% per annum calculated daily and compounded monthly. The additional interest that accrues will not be capitalized and will not be convertible into common shares of the Company. Subject to the approval of disinterested shareholders (which approval will be sought at a special meeting of shareholders of the Company to be held on October 9, 2012) and receipt of regulatory approval, the New Loan will be convertible, in whole or in part, at the option of Evergreen, into 295,770,211 common shares of the Company, being a conversion price per share of approximately $0.1712 (the "New Conversion Feature").

In the event that the disinterested shareholders of the Company approve the New Conversion Feature, the Loan will become interest free, as from the date of such approval. The Loan will mature on February 23, 2013 unless the disinterested shareholders of the Company approve the Conversion Feature, in which case the maturity date may be extended to the first anniversary of the New Loan.

At the special meeting of shareholders, shareholders will also be asked to consider and if deemed advisable pass an ordinary resolution permitting the payment of interest on the loan. This approval will be required pursuant to the rules of the Toronto Stock Exchange in the event that the accrued interest amounts to greater than 10% of the market capitalization of the Company.

Given Evergreen's shareholding in the Company, the Loan constitutes a related party transaction pursuant to applicable securities laws. The entering into of the New Loan is exempt from the valuation and minority approval requirements of National Instrument 61-101 based on the financial hardship provisions of such Instrument. The New Conversion Feature of the New Loan is subject to disinterested shareholder approval by virtue of the rules of the Toronto Stock Exchange. In the event that the Loan is fully advanced, the disinterested shareholders approve the New Conversion Feature and Evergreen exercises the New Conversion Feature in full, its share ownership of the Company would increase from approximately 77% to approximately 86% on an undiluted basis.

About MagIndustries Corp.

MagIndustries is a Canadian company whose common shares are listed on the TSX and trades in Canadian currency under the symbol "MAA". The Company has 460,172,463 shares outstanding on an undiluted basis. MagIndustries is focused on the development of its potash assets in the Republic of Congo. More information on the Company is available on 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: 55917T 102

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