MagIndustries Corp.
TSX : MAA

MagIndustries Corp.

April 04, 2012 15:35 ET

MagIndustries Announces Signing of Engineering Design Contract for Mengo Project and Exploration Well Drilling

TORONTO, ONTARIO--(Marketwire - April 4, 2012) - MagIndustries Corp ("MagIndustries" or the "Company") (TSX:MAA) is pleased to report that it has entered into two contracts to further the development of its potash projects in the Republic of Congo ("ROC"). The first contract is for engineering design work for the Company's flagship Mengo potash project (the "Mengo Project"). The second contract is for exploration well drilling at the Company's additional exploration licenses which surround the Mengo mining license.

The Mengo Project is a proposed 1.2 million tonnes per year potash mine and processing plant to be constructed in two modules of 600,000 tonnes per year each. The Mengo Project is located near the village of Mengo, 25 kilometers east of the Atlantic port city of Pointe-Noire, ROC. The Company holds a mining license for a 136 km2 area (the "Mengo License") containing proven and probable reserves of 33.2 million tonnes(1)(2)(3) of potash (KCl), which was granted in March 2008.

The engineering and design contract has been entered into with the with the Changsha Design & Research Institute of the Ministry of Chemical Industry ("Changsha Institute"), People's Republic of China ("China"). This contract is for the full design, engineering services and procurement assistance associated with the construction of the Mengo Project, including brine extraction, transfer, processing plant, waste brine transmission, brine effluent handling, thermal power station, offices and housing, public utility interfaces, auxiliary engineering and the external transportation, external engineering work (including supply of water, natural gas, electricity supply and access roads) and the water supply and pumping. The total price of the contract is approximately US$17,800,000 subject to adjustment mechanisms for the US dollar/Chinese Yuan exchange rate and performance incentives of up to 18%.

Founded in 1978, the Changsha Institute is a research, exploration, design and supervision unit directly under the China's former Ministry of Chemical Industry. It has 428 employees and is qualified in many fields such as chemical, petrochemical and pharmaceutical industries (chemical engineering, chemical mines), construction (construction projects), municipal projects (environmental health engineering), environmental engineering (solid waste disposal project), engineering exploration, engineering supervision and engineering consultation. After three decades of development, the Changsha Institute has completed more than 3,000 domestic and overseas projects, more than 100 national and provincial key scientific research projects and has won more than 120 awards such as the national and provincial science and technology award, the excellence design award and the project consultation award. It has served clients not only in China's 25 provinces, cities and autonomous regions, but also in Turkey, Kazakhstan, Turkmenistan, Canada, and Laos. It has established partnerships with institutions of the United States, Australia, Chile and Israel.

The exploration well drilling contract has been entered into with No.417 Team of Bureau of Geology and Mineral Exploration and Development Hunan province ("417 Team"), a public institution registered under the laws of China. MagIndustries holds three mineral exploration licenses in the Kouilou region surrounding the Mengo License: Makola, Loango, and Tchizalamou. The three licenses total 2,056 km2. In August 2010, the Company published a report (amended in November 2010) with a total inferred resource of 1.7 billion tonnes(3)(4) of potash (KCl) within the 1,111 km2 Makola exploration license area. The drilling contract calls for the drilling of 6 exploration wells or approximately 5,400 metres of drilling in about 7 months. The price of the contract is approximately CNY28.8 million (approximately USD$4.6 million).

Mr. Longbo Chen, CEO of MagIndsturies commented: "These contracts take us that much closer to our goal of achieving first production from the Mengo Project in approximately 3 years. The Changsha Institute is considered China's foremost expert in chemical processing plant design and engineering and we have utmost confidence in their ability to design and engineer a world-class plant. Furthermore, potentially increasing MagIndustries' potash resources through additional drilling will add value to our Company by identifying potential additional potash plant locations to increase future production."

National Instrument 43-101 ("NI 43-101) technical report disclosures

  1. The NI 43-101 compliant technical report for the Mengo License entitled "Updated Reserve and Resource Estimate for MagMinerals Kouilou Potash Project, Republic of Congo" dated June 10, 2009 (the "Mengo Report") estimates proven reserves of 151.2 million tonnes of carnallitite, at a carnallite grade of 64.4% of ore and a KCl grade of 17.3% of ore, concluding with proven reserves of 26.1 million tonnes of KCl. The technical report further estimates probable reserves of 40.3 million tonnes of carnallitite, at a carnallite grade of 65.7% of ore and a KCl grade of 17.6% of ore, concluding with probable reserves of 7.1 million tonnes of KCl.
  1. The Mengo Report estimates inferred resources of 1,215.7 million tonnes of carnallitite, at a carnallite grade of 64.1% of ore and a KCl grade of 17.2% of ore, concluding with inferred resources of 209 million tonnes of KCl.
  1. The NI 43-101 compliant resource estimate for the Makola exploration license entitled "Resource Estimate, Makola Exploration License, Kouilou Region, Republic of Congo" dated November 18, 2010 (the "Makola Report") estimates inferred resources of 9.2 billion tonnes of carnallitite at an average K2O grade of 12.1%, for a total inferred resource of 1.7 billion tonnes of potash (KCl).
  1. The authors of the Mengo Report and the Makola Report, Dr. Henry Rauche, EurGeol and Dr. Sebastiaan N.G.C. van der Klauw, EurGeol, of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH, each of whom are qualified persons for the purposes of NI 43-101, have reviewed and approved the scientific and technical disclosure contained in this release.

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 456,772,463 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, www.magindustries.com.

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.

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