MagIndustries Corp., Toronto, reports that its subsidiary, MagMinerals Potash Corp., has reached a 12-year marketing agreement with Ameropa Group 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 mt 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 mt/y from phase I of the project is anticipated to begin in the first quarter of 2011, with the remaining 600,000 mt/y anticipated to commence by the first quarter of 2013.
At the same time, Ameropa will invest C$70 million in MagPotash securities at a price of $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. Ameropa will acquire 14,000,000 common shares in MagMinerals Holdings Corp. MagHoldings will subsequently use the proceeds from the offering to subscribe for $70,000,000 of subscription receipts in the capital of MagPotash at a price of $5.00 per subscription receipt.
In addition, Portonovo, which is controlled by French businessman Hubert Pendino, president, director general of Socofran, will invest $35 million on the same terms as set forth above.
Of the $105 million proceeds from the offerings, $75 million will be applied to the construction of phase 1 of MagPotash’s Kouilou potash project, while the remaining $30 million will monetize a portion of MagIndustries’s investment in MagPotash. These proceeds will 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 percent interest); Ameropa and Portonovo will hold 14 million and 7 million shares (10 percent and 5 percent interests), respectively; and the subscribers to the financing completed in April 2008 will hold an aggregate of 25,250,000 shares (a 18 percent interest) in MagPotash.
Founded in 1948, Ameropa is a privately owned, Swiss-based international grain and fertilizer trader.
Hubert Pendino arrived in Congo in 1968. His company has developed into one of the country’s largest building and infrastructure construction companies.
In connection with the above issuances, MagPotash has agreed to use its best efforts to cause a liquidity event to occur before Oct. 3, 2008. The 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.