MagIndustries Corp.
TSX : MAA

MagIndustries Corp.

February 28, 2008 19:06 ET

Positive Feasibility for MagMinerals' Kouilou Potash Mine

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2008) - MagIndustries Corp., (TSX VENTURE:MAA) ("MagIndustries"), is pleased to announce that MagMinerals Inc. ("MagMinerals"), an indirect wholly owned subsidiary of MagIndustries, has received the results of a final feasibility study (FS) for the development of the Kouilou Potash Mine near Pointe-Noire, Republic of Congo. MagMinerals intends to build, own, and operate a stand-alone 600,000 tonne per year (tpy) potash mine and plant, 16 kilometers east of the Atlantic port city of Pointe-Noire, West Africa's best deep-water port.

The FS was carried out in two phases. Phase 1, completed earlier by Genivar LLP, consisted of a preliminary investigation of the quality of the resources, development of the preliminary scope of the project and the initiation of the environmental and social impact assessment (ESIA) study. The results of Phase 1 were announced by MagIndustries on March 29, 2006. SNC-Lavalin International Inc. (SLII), who were contracted in July 2006, have now completed Phase 2 of the FS and presented the results to MagMinerals as a 19 volume final feasibility.

The capital cost of the project has been estimated at US$723 million excluding financing costs, for a 600,000 tpy operation producing granular K60 grade potash. Direct and indirect operating costs, with contingency, are estimated to be $83/tonne FOB Pointe-Noire. BNP Paribas, financial advisors to MagMinerals, completed the financial analysis. Based on a net realized potash price of approximately US$500/tonne the first phase of the project yields an IRR of 26% and an NPV of US$450 million (assuming a12% discount rate). The Government of Congo will retain a 10% free carried interest in the Kouilou Potash Mine.

BNP Paribas have approached a group of international lenders who have given a strong expression of interest to debt finance 70% of the project costs to bring the Kouilou Potash Project into production. MagMinerals intends to provide the required 30% equity and close project financing by Q3 2008 with construction to begin immediately thereafter. On the basis of the acceptance of the FS, MagMinerals has now been mandated to complete all required agreements and proceed with corporate and project financing.

The FS is based on the application of proven solution mining technology to exploit MagMinerals 100% owned carnallite deposits which underlie the majority of the 2265 square kilometer Makola license. Solution mining produces potash-rich brine which, under the proposed plan, will be treated in a crystallization plant to produce granular grade potash fertilizers for export. The potash plant will utilize commercially available technologies. One of the primary inputs for this process is natural gas which is available locally (currently flared from the area's significant oil production with no public or industrial consumers). This gas supply, to be contracted from the Government of ROC, will also supply an onsite 26MW gas-fired power plant which will be sufficient to meet all mine and plant requirements.

MagMinerals is also pleased to report the finalization of a National Instrument 43-101 compliant Technical Report (TR) entitled the "Reserve Estimate for MagMinerals Makola Permit Area, Kouilou Region, Republic of Congo" which identifies proven and probable reserves available to support the Kouilou Potash Mine. These reserves are located in the 25 square kilometer Mengo area which represents only a small portion of the 2,265 square kilometer Makola Permit area. The proven reserves amount to 17.9 million tonnes of KCl while the probable reserves amount to 3.1 million tonnes of KCl. At a production rate of 600,000 tonnes of KCl this indicates a mine life of about 34 years. In addition, the earlier technical report (filed on SEDAR on Nov 20, 2007) showed inferred resources of 1.07 billion tonnes of carnallitite representing 185.9 million tonnes of KCl. Ercosplan notes that the proven and probable reserves are open in all directions and that additional drilling will likely increase the reserve base available for future plant expansions.

The potash deposits occur in the form of carnallitite rock which underlies most of the Makola Permit area. For the whole Congolese coastal basin geological resources (non National Instrument 43-101 compliant) have been estimated at 800 billion tonnes of carnallitite by the Congolese government. MagMinerals Makola Permit covers about 20% of the Congo Basin. The past producing Holle potash mine area (1,300 square kilometers) which lies within the Makola Permit but 20km northeast of the Mengo area, reported 30 billion tonnes of K2O (non National Instrument 43-101 compliant) as sylvite and carnallite. The detail of the data available for these historical resource estimates is less than that required for inferred resources according to CIM (2005).

Carnallite is a mineral best described as a magnesium-potassium-chloride or a double-salt with the chemical formula KMgCl3-6H2O. The carnallite occurs in multiple, horizontal horizons ranging in thickness from 0.5 meters to 24 meters ("m") with an average content of about 70% carnallite. Four horizons, located between 400m and 800m below the surface, have been considered for commercial development.

The TR is based on the technical results of 13 drill holes, 23 kilometres of seismic surveys, as well as down-hole geophysical surveys completed during MagMinerals recent exploration programs. The authors of the TR, Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau mbH (Ercosplan), formerly the East German Potash Consortium, have over 50 years experience in the potash industry. Ercosplan were responsible for planning and supervising the core sampling programs. The authors of the TR, Dr. Henry Rauche and Dr. Sebastiaan van der Klaw, are the Qualifying Persons with respect to the technical reporting and have reviewed and approved the contents of this press release.

MagMinerals has chosen Ameropa AG to market all exports of potash from the Kouilou Project. Ameropa, with its head office in Binningen, Switzerland, is privately owned and a leading global marketer of potash and other fertilizer products. Ameropa sells important quantities of potash in Brazil, Africa and Europe. Shipments of fertilizers and grains by Ameropa total 10 million tons annually, which is expected to lead to significant economies in ocean freight.

The Kouilou plant is based on a modular design and it is the intention of MagMinerals to double the first phase capacity as soon as possible to reach total production of 1,200,000 tpy to more fully utilize the extensive resource base available. The capital cost required to double the capacity of the plant is expected to be significantly lower than the first phase as it will benefit from the extensive infrastructure put in place by building phase 1. A copy of the TR will be available under MagIndustries' profile at www.sedar.com or at its website www.magindustries.com.

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 195,169,016 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 MagIndustries 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 MagIndustries 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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