MagIndustries Corp.

MagIndustries Corp.

March 26, 2009 10:16 ET

MagIndustries' Potash Subsidiary Signs Gas Agreement With ENI

TORONTO, ONTARIO--(Marketwire - March 26, 2009) - MagIndustries Corp. (TSX VENTURE:MAA) ("MagIndustries") is pleased to report that its Republic of Congo subsidiary, MagMinerals Potasses Congo S.A. ("MagPotasses"), has signed a gas supply agreement (the "Agreement") with Eni Congo S.A. ("EniCongo"), a subsidiary of international oil major Eni S.p.A. of Italy, for the supply of gas to MagPotasses' Kouilou potash project (the "Project"). The agreement represents the last significant cornerstone contract required for the full development of the Project. The Project is located 25 kilometers from the port city of Pointe-Noire, one of West Africa's best deep-water ports and the Republic of Congo's industrial capital.

The Agreement is based on a contracted supply of associated gas from EniCongo which operates the on-shore M'boundi oil field. EniCongo will supply the gas from its treatment plant to be located at Djeno, 25km southwest of the Project. The gas supply will support all the requirements of the potash processing plant. Additional gas quantities will also be made available to support the Project's back-up power facilities if electricity supplies fail.

MagPotasses is now working with Eni to complete detailed engineering for the gas pipeline from Djeno to the Project site. The installation of the gas pipeline is being considered within the same corridor as EniCongo's other pipeline installations which are currently under construction.

MagPotasses is owned 90% by MagMinerals Inc. (a wholly owned subsidiary of MagIndustries) and 10% by the government of the Republic of Congo

About the Kouilou Project

MagPotasses owns exclusive rights to the Project, one of the world's largest potash deposits. The immediate focus of MagPotasses is to construct and commission a 600,000 tonne per year potash plant to produce agricultural-grade potash fertilizers to meet growing demand from markets in South America, South Africa, South Asia and Europe. The facility is scheduled for start-up late in 2011 or early 2012 and will be among the world's lowest-cost producers due to its highly efficient solution mining technologies, access to local gas, and its proximity and existing links to port facilities which are situated close to its principal markets.

In late 2008 MagPotasses signed a twenty-five year Potash Investment Agreement with the government of the Republic of Congo granting exclusive rights to MagPotasses for the development of the Project and all fiscal aspects of its operations. An independent feasibility report completed in 2008 detailed capital and operating costs and was announced together with a National Instrument 43-101 compliant technical report (the "Technical Report") indicating proven and probable reserves of 33.5 million tonnes of potassium chloride which can support a reserve life of more than fifty-four years at a projected production rate of 600,000 tonnes per year.

Also in late 2008 a twenty-four month contract was signed for the drilling of the first fifty production wells that will feed potash-rich brines to the production facility. All related equipment has been on site since November 2008 and drilling is advancing on schedule and within budget. In October 2008 MagPotasses began pre-construction activities at the plant site such as tree cutting (by MagIndustries' MagForestry division) and preliminary earthworks.

MagPotasses is in the late stages of arranging project debt financing with a consortium of development finance institutions and export credit agencies for 70% of the total capital cost of the facility. MagMinerals' management expects to complete this phase shortly. The debt financing is supported by an off-take agreement concluded with Switzerland's Ameropa AG for the marketing and sale of 100% of the first phase of the potash production, as well as the second phase if and when additional capacity is completed.

MagIndustries has engaged Morgan Stanley as its financial advisor to help identify sources for the remaining equity financing (approximately $130 to $180 million) for the project. Construction of the production facility is expected to commence shortly thereafter with a projected production start-up date late in 2011 or early 2012. Later in 2009 planning will begin for an expansion of the facility, doubling capacity to 1.2 million tonnes per year.

Once operational, MagPotasses' facility is expected to be the world's first new entrant into the potash industry with little new supply forecasted over the next five years. Additionally, the Project's feasibility study forecasts that FOB potash costs will be amongst the lowest in the world. Due to high barriers to entry, and a number of distinct competitive advantages, MagMinerals is positioned to generate significant returns for MagIndustries' shareholders in the coming years.

About MagIndustries Corp.

MagIndustries Corp. is a Canadian company whose common shares are listed on the TSX-Venture Exchange and trades in Canadian currency under the symbol "MAA". The Company has 288,079,962 shares outstanding on an undiluted basis. MagIndustries' resource subsidiaries are operating and developing major industrial projects in the Republic of Congo and the Democratic Republic of Congo.

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.

The authors of the Technical Report, Dr. Henry Rauche and Dr. Sebastiaan van der Klaw, Eur Geol., are the qualified persons with respect to the technical reporting and have reviewed and approved the contents of this press release.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • MagIndustries Corp.
    Rich Morrow
    416-368-5048 (FAX)
    C: 416-258-0829