MagIndustries Corp.
TSX : MAA

MagIndustries Corp.

July 11, 2005 08:44 ET

MagIndustries Secures 71 Year Land Lease Agreement Through Strategic Investment in Congo Eucalyptus Operation

WALLACE, NOVA SCOTIA--(CCNMatthews - July 11, 2005) - MagIndustries Corp. (the "Company") (TSX VENTURE:MAA.U) is pleased to announce that, subject to the completion of its due diligence and receipt of all necessary regulatory approvals, the Company has the right to acquire indirect control of Eucalyptus Fibre Congo S.A. ("EFC"), a company registered in the Republic of Congo, through a US$2 million convertible secured loan (the "Loan") issued by Chartwell Carbon Technologies Ltd. ("CCT") (the holder of 95% of the issued and outstanding shares of EFC). The loan agreement to be entered into among MagIndustries, CCT and Adwell Holdings Limited (each of which are at arm's length to MagIndustries) will provide that the Loan will initially bear interest at the USD LIBOR three month rate plus 6% and will be secured by first ranking security over all of the issued and outstanding share capital of CCT and over all of CCT's assets. The Loan will be convertible by MagIndustries into shares representing 72% of the total issued and outstanding share capital of CCT. It is currently anticipated that this shareholding will be reduced to 55% upon CCT's current controlling shareholder advancing an additional US$600,000 to CCT. There is no obligation on MagIndustries to convert the Loan and such conversion will be conditional upon the entering into of a mutually agreeable shareholders agreement. No finders fee will be paid in connection with the transaction.

Following the conversion of the Loan, MagIndustries will assume management control of CCT as well as control of the board of directors of CCT.

EFC controls a 68,000 hectare eucalyptus plantation (of which 25,000 hectares is presently unplanted), the majority of which overlies MagIndustries' magnesium and potash mineral lease in the Pointe-Noire area of the Republic of Congo. In addition to securing long term land rights for brine well mining and industrial site development activities, the investment into EFC brings numerous operational synergies as MagIndustries proceeds with the development of the Company's Kouilou magnesium and potash plants.

EFC represents an existing and well established renewable forestry operation previously owned and operated by Shell Oil International, which is based on the planting and harvesting of eucalyptus trees. EFC holds an exclusive 50 year lease agreement with the Government of the Republic of Congo, which is renewable for an additional 21 years. In addition to the above mentioned 68,000 hectare plantation, EFC expects to secure an additional 50,000 hectares for plantation development. Eucalyptus plantations are typically harvested on a seven year rotation. Although past operations were based on the export of logs, the new business plan will expand into value added products such wood chips, utility poles, lumber and wood-pellets (bio-fuel) for which significant international off-takers and operators have confirmed their intention to participate.

The operation is now under the management of an experienced team of international industry professionals. The Chairman of the new company will be Mr. Will Ellis who has a successful history of developing and maximizing value in forestry plantations worldwide. Operations are expected to generate income in the near term. A recent valuation of the plantations by leading forestry consultants Crickmay and Associates, values the plantations and equipment at US$52 million (excluding 25,000 hectares of land to be planted valued at approximately $10 million). This valuation together with a recent Ernst & Young audit and valuation will contribute significantly to the asset value of MagIndustries' balance sheet.

About MagIndustries Corp.:

MagIndustries' three wholly owned 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 a leading participant in the rehabilitation of the Inga Hydro-electric station on the Congo River in the DRC. MagMinerals Inc. is concluding plans for the development of a 400,000tpy potash (fertilizer) plant at Pointe-Noire which may also include the production of salt and calcium chloride. MagMetals Inc. is planning the development of a 60,000tpy 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 in the ROC.

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". After taking the above transaction into account, the Company has 92,460,248 shares outstanding on an undiluted basis. More information on the Company is available at 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.

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

Contact Information

  • MagIndustries Corp.
    William Burton
    President & Chief Executive Officer
    (902) 257-1171 or (416) 368-7911