MagIndustries Corp.

MagIndustries Corp.

June 30, 2008 13:01 ET

MagPotash Announces Potash Marketing Agreement and Strategic Investments


MagIndustries Corp. ("MagIndustries" or the "Company")(TSX VENTURE:MAA) is pleased to announce that MagMinerals Potash Corp. ("MagPotash"), the Company's potash development subsidiary, has reached a 12-year marketing agreement with Ameropa Group ("Ameropa") for the sale of granular potash derived from MagPotash's Kouilou project in the Republic of Congo. The marketing agreement provides for the supply of 1.2 million tonnes of granular potassium chloride per year (representing both phases of MagPotash's Kouilou project) to be sold by Ameropa. The initial supply of 600,000 tonnes per year ("tpy") from phase I of the project is anticipated to begin in the first quarter of 2011 with the remaining 600,000 tpy anticipated to commence by the first quarter of 2013.

At the same time, Ameropa will invest CAD$70 million in MagPotash securities at a price of CAD$5.00 per security. The offering will be structured in a manner similar to that used for the financing which was completed in April 2008 (see press releases dated April 3, 2008 and April 29, 2008). Ameropa will acquire 14,000,000 common shares ("MagHoldings Shares") in MagMinerals Holdings Corp. ("MagHoldings"). MagHoldings will subsequently use the proceeds from the Offering to subscribe for CAD$70,000,000 of subscription receipts in the capital of MagPotash at a price of CAD$5.00 per subscription receipt.

In addition, Portonovo, which is controlled by French businessman Hubert Pendino, President, Director General of Socofran, will invest CAD$35 million on the same terms as set forth above.

Of the CAD$105 million proceeds from the offerings, CAD$75 million will be applied to the construction of phase 1 of MagPotash's Kouilou potash project and the remaining CAD$30 million will monetize a portion of MagIndustries' investment in MagPotash with these proceeds to be used by MagIndustries Corp. for general corporate purposes, principally the working capital needs of MagForestry, MagEnergy and MagMetals. The investment is expected to close on or about July 11, 2008.

Subsequent to the strategic investments by Ameropa and Portonovo, and subject to the previously announced MagPotash reorganization including the exercising of the subscription receipts, MagIndustries will hold 94 million shares (a 67% interest), Ameropa and Portonovo will hold 14 million and 7 million shares (10% and 5% interests), respectively, and the subscribers to the financing completed in April 2008 will hold an aggregate of 25,250,000 shares (a 18% interest) in MagPotash.

Founded in 1948, Ameropa is a privately owned, Swiss based international grain and fertilizer trader. Ameropa employs 2,265 people worldwide and annually sells eleven million tons of fertilizers, three million tons of grains and sizeable volumes of petrochemicals and metals. The company has its headquarters in Binningen, Switzerland, near Basel, with regional offices on five continents. Further information on Ameropa is available on their website

Mr. Hubert Pendino, President, Director General and founder of Socofran, arrived in Congo in 1968. His company has developed into one of the country's largest building and infrastructure construction companies. His entrepreneurship and his humanitarian interests in Congo have been recognized by both French and Congolese governments, most recently with the awarding in Brazzaville of the French croix de l'Ordre national du merite on March 14, 2008.

In connection with the above issuances, MagPotash has agreed to use its best efforts to cause a liquidity event to occur before October 3, 2008 (the "Liquidity Event Deadline"). Such liquidity event will involve (i) the completion of a reorganization to, among other things, cause MagMinerals Inc. (Barbados) ("MagBarbados") (the entity which holds the potash assets) to become a wholly-owned subsidiary of MagPotash, (ii) causing MagPotash to become a reporting issuer in one or more provinces of Canada and (iii) causing the common shares of MagPotash to become listed on a Canadian exchange.

Each subscription receipt will entitle the holder thereof to acquire (for no additional consideration) at any time, and will be deemed to cause the holder thereof to acquire on the completion of a liquidity event, one common share in the capital of MagPotash (or in the event that the aforementioned liquidity event does not occur by the Liquidity Event Deadline, 1.05 common shares in the capital of MagPotash).

In connection with the transaction, MagIndustries will issue to the purchasers a right (an "Exchange Right"). In the event that the Liquidity Event does not occur by December, 31, 2008, the Exchange Right will entitle and obligate the holders of MagHoldings Shares to exchange such shares for common shares in the capital of MagIndustries ("MagIndustries Shares"). The number of shares to be issued on such exchange will be calculated by dividing the issue price of the MagHoldings Shares (multiplied by 1.05) held by such holders by the lower of (i) 92.5% of the volume weighted average price of the MagIndustries Shares for the twenty (20) trading day period ending on December 31, 2008, and (ii) $2.79.

About MagIndustries Corp.

MagIndustries Corp. is a Canadian company whose common shares are listed on the TSX-V Exchange and trades in Canadian currency under the symbol "MAA". The Company has 197,514,016 shares outstanding on an undiluted basis. MagIndustries' wholly owned resource subsidiaries are operating and developing major industrial projects in the Republic of Congo (ROC) and the Democratic Republic of Congo (DRC).

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.
    Rich Morrow, Director of Corporate Development
    Director of Investor Relations
    416-368-5048 (FAX)
    Cell: 416-258-0829