VANCOUVER — MagIndustries (MAA-V, MAAFF-O) has lined up a $100-million brokered offering for subsidiary MagMinerals that is earmarked for planned development of its Kouilou potash project, in the Republic of Congo.
Once the best efforts financing is complete, MagIndustries plans to spin off MagMinerals as a public company, either through an initial public offering or reverse takeover.
As well as funding the initial phase of mine development at Kouilou, proceeds from the offering will be used to repay roughly b15 million ($22.8 million) of MagMinerals’ existing project-related debt.
Located in the Republic of the Congo’sKouilou province, the Kouilou project recently saw completion of a positive feasibility study proposing development of a 600,000-
tonne-per-year potash operation, roughly 16 km east of the port city of Pointe-Noire.
The studyprojects estimated capital costs of US$723 million for the operation, which will produce granular K60 grade potash with direct and indirect operating costs (including contingency) estimated at US$83 per tonne. Based on a net realized potash price of about US$500 per tonne, the initial phase of the project yields an internal rate of return of 26% and a net present value of US$450 million (using a 12% discount rate). The Congolese government retains a 10% free carried interest in the operation.
The project has proven and probable reserves of 21 million tonnes of KCl (potassium chloride) within a 25-sq.-km section of the permit area. At its planned annual production rate of 600,000 tonnes, current reserves will last about 34 years. A late 2007 technical study also reviewed an inferred resource of 1.07 billion tonnes of carnallite (a magnesium-potassium- chloride salt) that represents about 185.9 million tonnes of KCl.
The feasibility study modelled solution mining on the carnallite beds that underlie most of the company’s 2,265-sq.-km Makola licence. The process extracts potash-rich brine that, under the proposed plan, would be treated in a crystallization plant to produce granular grade potash fertilizers for export.
The company says one of the
primary inputs for this process is natural gas, which is locally available, essentially as a waste product from the area’s significant oil production wells. Plans also call for the contracted gas to supply a 26- megawatt, on-site, gas-fired power plant.
Shares of MagIndustries rallied 19% on strong volume on the financing news — closing up 39 at $2.50 apiece.
MagIndustries has three other subsidiaries (MagEnergy, Mag- Forestry and MagMetals) involved in natural resource ventures in the Republic of the Congo and the neighbouring Democratic Republic
Be the first to comment on "MagIndustries eyes Congo potash mine"