Project Overview
MagMinerals Potash Corp., together with its Congolese subsidiary MagMinerals Potasses Congo SA ( MPC ) are developing a potassium chloride (KCl), (more commonly referred to as potash) production plant (the “Project”) to be located close to Pointe-Noire in the Republic of Congo (“ROC” or “Congo”).
MPC owns exclusive rights to the Project, one of the world’s largest undeveloped potash deposits. The immediate focus of MPC is to construct and commission a 600,000 tonne per year potash plant to produce agricultural-grade potash fertilizers to meet growing demand from markets in South America, South Africa, South Asia and Europe. The facility is scheduled to start production in 2012 and will be among the world’s lowest-cost producers due to its highly efficient solution mining technologies, access to local natural gas, and its proximity and existing links to port facilities which are situated within easy reach of its principal markets.
In late 2008 MPC signed a twenty-five year Potash Investment Agreement with the government of the Republic of Congo granting exclusive rights to MPC for the development of the Project and all fiscal aspects of its operations. An independent feasibility report was completed by SNC Lavaline in 2008 which detailed capital and operating costs.
In June 2009, a National Instrument 43-101 compliant technical report estimated proven and probable reserves of 33.2 million tonnes of potash which can support a reserve life of more than fifty-four years at a projected production rate of 600,000 tonnes per year. The 2009 Technical Report estimated proven reserves of 151.2 million tonnes of carnallitite, at a carnallite grade of 64.4% of ore and a KCl grade of 17.3% of ore, concluding with proven reserves of 26.1 million tonnes of KCl. The 2009 Technical Report further estimates probable reserves of 40.3 million tonnes of carnallitite, at a carnallite grade of 65.7% of ore and a KCl grade of 17.6% of ore, concluding with probable reserves of 7.1 million tonnes of KCl. Please refer to the June, 2009 Updated Reserve and Resource Estimate for MagMinerals Mengo Permit Area, Kouilou Region, Republic of Congo, available in the Reports and Articles section of our Resource Library on this site and on www.SEDAR.com.
Also in late 2008, a contract was signed for the drilling of the first fifty production wells that will feed potash-rich brines to the production facility. All related equipment has been on site since November 2008 and drilling is advancing on schedule and within budget. In October 2008 MPC began pre-construction activities at the plant site such as tree cutting (by MagIndustries’ MagForestry division) and preliminary earthworks.
In March 2009, the Company signed a gas supply agreement with Eni Congo S.A. Reaching agreement for the supply of natural gas is considered to be the last significant agreement that the Company requires to continue to advance the project’s debt financing prior to commencing construction.
MPC is now in the late stages of arranging project debt financing with a consortium of development finance institutions and export credit agencies for 70% of the total capital cost of the facility. MagMinerals’ management team expects to complete this phase in 2009. The debt financing is supported by an off-take agreement concluded with Switzerland’s Ameropa AG for the marketing and sale of 100% of the first phase of the potash production, as well as the second phase if and when additional capacity is completed.
Construction of the production facility is expected to commence in late 2009 with production projected in 2012. Towards the end of the construction of the first phase MPC will begin the planning for an expansion of the facility, doubling capacity to 1.2 million tonnes per year.