Magindustries Corp (MAAFF)

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3, Congo (B) Mengge 1200kt / a potash project project general contract

This contract was signed in July 2013 and is the general contract of the project; the company mainly undertakes the general contracting work of the project construction of this contract, and the performance period is about 36 months. The price of this contract is divided into fixed and non-fixed parts, of which the fixed part price is US$497,391,000 and the non-fixed part price is US$24,462,000. The above amount is paid by the owner according to the payment conditions and proportions stipulated in this contract.

As of September 30, 2018, the accumulated revenue of the project was RMB 20,813,300, and the accumulated collection was equivalent to RMB 134,496,900. The project settlement was not confirmed. At present, in view of the fact that the actual controller of the project has changed, and the construction scale, product plan and construction conditions of the project may undergo major changes, the uncertainty of the implementation of the general contract is increased. In 2017, the company accrued 270 million yuan of asset impairment provision for the project.

In March 2018, the Company filed a civil lawsuit with the Zhejiang Provincial Higher People's Court on the guarantee of the project owner's actual controller, Chunhe Group Co., Ltd. (see Donghua Technology No. 2018-017 for details). In July 2018, the Higher People's Court of Zhejiang Province issued a judgment on the case of the company v. Chunhe Group Co., Ltd., and issued a Civil Judgment [(2018) Zhemin No. 10], and sentenced Chunhe Group Co., Ltd. after the judgment came into effect. Within 30 days, the company will pay USD 30.053 million (equivalent to RMB 187.48 million) and RMB 127.785 million (see Donghua Technology No. 2018-046 for details). In view of the fact that Chunhe Group did not appeal the judgment of the first instance within the statutory time limit, the above judgment took effect. The company applied to the Zhejiang Provincial High Court in September 2018 for application (see Donghua Technology No. 2018-053 for details).

In September 2018, MagMinderals Potasses Congo SA (hereinafter referred to as “MPC”), a project company of the Congo (Bamboo) Potash Project, convened a general meeting of shareholders, its shareholder MagMinerals Inc (representing 90% of the shares) and Congo (Brazil) Mining Ministry (representative 10 % equity) sent representatives to attend the meeting. The general meeting of shareholders decided to adjust the administrative staff of MPC and agreed to carry out relevant business activities within the framework of the development of the Mongo PIA Agreement (Mineral Mining Agreement). The company is in close communication with relevant parties and pays close attention to the progress of the project, with a view to promoting the project restart as soon as possible.

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