MagIndustries Receives Conditional Funding Commitment from China Development Bank for the Mengo Project


MagIndustries Corp. (TSX:MAA) (the "Company" or "MagIndustries") announced today that it has received a Letter of Commitment (the “LOC”) from the China Development Bank (“CDB”)  related to the majority of the funding required to complete the construction of its proposed 1.2 million tonnes per annum Mengo Potash Project in the Republic of Congo (the "Project").  The LOC is a conditional commitment by CDB in favour of the borrower of record, MagMinerals Potash Corp. (the "Borrower"), a wholly owned subsidiary of the Company, to arrange a syndication loan (the “Loan”) for an amount up to US$740 million with a term of 12 years in connection with the Project, in which CDB will provide up to US$370 million as the lead arranger.


In addition to the terms in the LOC itself, the LOC is subject to the completion of a definitive loan agreement between CDB and the Borrower and to various conditions, principally:


(i)            Completion of all required and relevant approvals for the Project;

(ii)          Compliance with all local and international law applicable to the Project;

(iii)         Engaging legal counsel and consultants by CDB at the cost of the Borrower (principally for satisfaction of items (i) and (ii) above, any other legal opinions required by CDB;

(iv)         Reimbursement of CDB’s reasonable out of pocket expenses and deduction of taxes, fees, or governmental charges associated with the loan.


The LOC is outstanding for 12 months from today’s date unless terminated by mutual agreement or at CDB’s sole discretion for failure of the Borrower to meet the above conditions.  The detailed terms of the Loan will be disclosed by the Company if and when the definitive loan agreement is executed.


Mr Longbo CHEN, CEO of MagIndustries stated that “We are very pleased to have received the LOC from CDB. It has taken a year and half of dedicated effort by our financial and legal team with support from our controlling shareholder Evergreen Holding Group. This is a major step forward for the funding of the Mengo Project and we anticipate being able to complete the negotiation of the definitive documentation in respect of the Loan within the first half of 2014. In the meantime with the support of our contractors we remain largely on track with our time line for the Project, with construction now underway. 


As recently published in the Updated 43-101 Technical Report on the Mengo Project (see the Company’s press release of November 14, 2013), the estimated capital investment required to build the Project is approximately US1.3 billion. The Company is currently progressing well in negotiations to shift capital cost for new port facilities, included in the US$1.3 billion, into a separate Build Own Transfer agreement.  Of the remaining capital requirement, we anticipate that US$740 millions will be funded by the Loan, the balance has been largely funded by MagIndustries historic investment in the Project, subject to review by CDB, which may result in an unfunded equity gap, for which the Company has identified several potential strategic partners.