MagIndustries gets 25-year potash mining licence
2008-03-25 07:44 MT - News Release
Mr. Bill Burton reports
MAGMINERALS GRANTED 25 YEAR POTASH MINING LICENSE
MagMinerals Inc., an indirect wholly owned subsidiary of MagIndustries, Corp., has been granted a 25-year mining licence (the Makola mining licence) for its recently announced Kouilou potash mine. The Republic of Congo (ROC) approved the mining licence at the most recent meeting of the Council of Ministers in Brazzaville. MagMinerals intends to build, own and operate a stand-alone 1.2-million-tonne-per-year potash mine and plant, 16 kilometres east of the Atlantic port city of Pointe-Noire, West Africa's best deepwater port.
The Republic of Congo is a central African country with a population of about 3.4 million whose economy is dominated by offshore oil production. Major international firms such as Total, ENI, Chevron etc., have successfully carried out oil exploration and commercial production in the ROC without incident for over 30 years. The ROC is bordered on the south by the much larger and distinctly separate Democratic Republic of Congo. Republic of Congo is a functioning democracy with rule of law based on French civil code and mining law to World Bank standards.
MagMinerals recently received and announced the results of a final feasibility for phase I of the Kouilou potash project which was completed by SNC-International Inc. The capital cost for phase I has been estimated at $723-million (U.S.) excluding financing costs, for a 600,000-tonne-per-year operation producing granular K60-grade potash. The government of Republic of Congo will retain a 10-per-cent free carried interest in the Kouilou potash mine.
BNP Paribas, adviser to MagMinerals, has approached a group of international lenders who are working to complete their due diligence toward the debt financing of 70 per cent of the project costs to bring the Kouilou potash project into production. MagMinerals is anticipating closing its previously announced equity offering for $80-million to $100-million on April 3, 2008, as a first step toward providing the required 30-per-cent equity for phase I. Subsequent to this offering, MagMinerals intends to become a reporting issuer in one or more provinces of Canada through an initial public offering, reverse takeover or similar transaction. (For further detail please see news in Stockwatch March 20, 2008, announcing pricing of the financing.)
MagMinerals also recently announced a National Instrument 43-101-compliant technical report 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 reported upon are located in the 25-square-kilometre Mengo area which represents only a small portion of the recently granted 1,650-square-kilometre Makola mining licence. The proven reserves amount to 17.9 million tonnes of KCl (potassium chloride) while the probable reserves amount to 3.1 million tonnes of KCl. At a production rate of 600,000 tonnes per year of KCl this indicates a mine life of about 34 years. Inferred resources identified to date total 1.07 billion tonnes of carnallitite representing 185.9 million tonnes of KCl. The proven and probable reserves are open in all directions and additional drilling may increase the reserve base available for future plant expansions.
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 1.2 million tonnes per year to more fully use 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 I. A copy of the technical report will be available under the company's profile at SEDAR or at its website.
