MagIndustries (MAA-V) has lined up the energy it needs for its Kouilou potash project in the Republic of Congo.
Now all that is left is to build a pipeline to the yet to be built processing plant and it can begin mining what it says will be one of the lowest cost potash projects with one of the largest potash deposits in the world.
The inking of a deal with Italian oil and gas producer Eni, is the last key agreement the company needed to secure to push ahead with the project.
The plan is to have Eni supply gas from its own yet to be built treatment plant that will sit 25-km southwest of Kouilou.
The two companies are working together on engineering the pipeline.
Toronto-based MagIndustries says the amount of gas contractually secured will meet all of its future processing plant’s needs with enough for back-up power facilities as well.
Kouilou is owned by MagPotasses – which is owned 90% by MagIndustries and 10% by the government of the Republic of Congo.
The Project lies 25-km from the port city of Pointe-Noire, which serves as the country’s industrial capital and is home to a deep-water port.
The deal with Eni is the latest in a series of milestones for the company in the country.
In late 2008 it signed a twenty-five year development agreement for the project with the government and it also finished a feasibility study last year that put proven and probable reserves of 33.5 million tonnes of potassium chloride — enough for a mine life of 54 years at a rate 600,000 tonnes per year.
Construction of the facility is expected to start shortly with a start-up of production slated for late 2011 or early 2012.
As for getting the funds it will need to build the project, the company says it is in the late stages of arranging project debt financing that would cover 70% of the total capital cost.
Supporting the debt will be an off-take agreement done with Switzerland’s Ameropa AG for the marketing and sale of 100% of the first phase of production, as well as the second phase if and when additional capacity is completed.
But even if that debt financing is completed, the company will still need another $130 to $180 million and it has not given word on how those funds will be raised.
In Toronto on March 26, the company’s shares were up 40% or 8¢ to 28¢ on roughly 9.4 million shares traded. Its share price has moved between 16.5¢ and $3.72 over the last 52-week period and it has 288 million shares outstanding.