first new entrant to the potash industry! september 2008
TRANSCRIPT
First New Entrant to the Potash Industry!
September 2008
Disclaimer
Except for historical information, this presentation contains forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time-to-time in the Company's ongoing filings. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this presentation might not occur.
MagMinerals – Company Presentation Sep 2008 2
MagPotash
Hydroelectric Developments (DRC)
Forest Products(Eucalyptus)
(ROC)
Kouilou Potash Project(ROC)
Magnesium Alloys(ROC)
100%100% 100%62% F.D.Pre-IPO
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Republic of Congo – Attractive for Investment
Republic of Congo (ROC)
Location of Kouilou Potash project
Single party dominance, stable country
Population: 3.9 Million
Major multinationals (TOTAL, Chevron-Texaco, ENI) operating uninterrupted for ~30 years
Mag Experience in the ROC
11-year operating history in the ROC (licensed in 1997)
Senior management with deep roots in the country/continent
Largest non-government employer through MagForestry
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Potash Market Dynamics
Global potash consumption to grow 14 MM tonnes/yr by 2020
Higher crop demand from population growth and biofuels
Global grain restocking and potash catch-up are drivers
India/China have official policies to increase potash use
Most new capacity controlled by major producers (2011+)
MagPotash has one of the only investable near-term production plays outside of the majors
Potash Price Forecast(Brazil CFR)
0
200
400
600
800
1000
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1400
1600
2004
2006
2008
2010
2012
2014
2016
2018
Bra
zil
cfr
($ /
to
nn
e)
Source: Fertecon
Current: US$600 – US$1,000 per tonne
(June. 2008)
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Key Potash Import Market: Brazil
Brazil 3rd largest importer of potash
Strong potash demand/limited domestic supply
1Source: Fertecon
+2.62.6 MM
Tonnes/yr
(+59%59%) vs. 2008
+2.62.6 MM
Tonnes/yr
(+59%59%) vs. 2008
0
1,000
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5,000
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
000'
s Ton
nes
K 20
Imports
Domestic Supply
2008E Demand: 4.9 MM
2008E Demand: 4.9 MM
2020E Demand: 7.6MM
2020E Demand: 7.6MM
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MagPotash Location Advantages
Shortest shipping distance to key Brazilian and African markets
CANADA (33%)9,505 n.m.
BRAZIL
BELARUS (19%)5,874 n.m.
RUSSIA (19%)6,259 n.m.
ISRAEL (12%)6,234 n.m.
CONGO (0%)3,556 n.m.
Legend:Country (% of Total Brazil KCl Imports in 2007)
Nautical Mile Shipping Distance
Ports: Pointe-Noire (ROC), Rio de Janeiro (Brazil), Vancouver (Canada), St. Petersburg (Russia), Kaliningrad (Belarus), Tel-Aviv (Israel). Source: Fertecon, www.searates.com.
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FOB Pointe-Noire Build-up for Brazil sales
$66 Net Realized Price Advantage vs. Sask.
Notes: Freight and related costs include shipping, storage, stevedoring, insurance, LC charges, technical losses and inspection costs. Freight and related costs based on management estimates.
Free on Rail - Saskatchewan $780
FOB Vancouver Price $820
Free on Rail – MagPotash Facility ~$846
Freight and related costs – PN to Brazil ($54)
CFR Brazil pricing $900
Rail and Handling to Vancouver ($40)
Freight and Related Costs – VCR to Brazil ($80)
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MagMinerals in Context
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Kouilou Potash Plant Design
Proven technology from leading equipment manufacturer (HPD)
Same process as Dead Sea Works facility (Israeli Chemicals)
– Current process in commercial operation since early 1980’s
Scale Model:Scale Model:
Phase I in BluePhase I in Blue
Phase II in Phase II in WhiteWhite
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MagMinerals Potash Video
Snapshot of the Kouilou Potash Project
600,000 tpy potash plant
Feasibility study Feb/08
Debt financing Sep/08 Construction start
Oct/08 US$60+MM development costs spent to date
Construction US$723MM
Includes Phase II infrastructure
Mid 2011
Description
Status/Targeted
Timing
Construction Cost Estimate
Production Start-up
Phase Phase I
Target debt-to-equity of 70:30
Project Financing
600,000 tpy expansion
NI 43-101 updated in August 2008
Final feasibility H1 2009
Technical feasibility update (June 2008) indicates US$423 MM
Late 2012 – Early 2013
Phase II
Target debt-to-equity of 70:30
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Blue Chip Project Team
Feasibility study
One of the leading groups of engineering and construction companies in the world
Active in 100 countries worldwide
Potash marketing / off-take
International grain and fertilizer trader with 1,100+ employees
Leading position in Brazilian market
Sells 10 million tons of fertilizer, 3 million tons of grain and sizeable petrochemical and metal volumes annually
Crystallization equipment
Global leader in evaporation and crystallization technology
Over 650 installations in 30+ countries
Veolia Environnement subsidiary, world’s largest environmental company
Financial project advisor
Nº6 in the banking industry (‘Global 2000 Forbes’ 2007)
Operates in over 85 countries and has 162,700 employees
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Blue Chip Project Team
E+PC
Engineering Procurement Contracting Management
E+PC is part of the publicly-listed AVENG group located in Johannesburg, South Africa
AVENG is the largest EPCM contractor in S.A. with over 30,000 employees and extensive project experience in Africa
Construction Management
A leading construction, engineering, procurement and development company
140,000+ employees; emphasis on the Middle East and Africa
ERCOSPLAN Solution
Mining Experts
Long-term support contract with access to experts for reserve evaluation, solution mining technology and operations
NORBERT GRÜSCHOW
Solution Mining Expert
MagMinerals Advisory Board
Chief technology advisor, solution mining, preproduction and commercialization
Mentor and trainer of junior resources
Manage cavern development R&D plan
3 year commitment
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Exclusive Rights to Significant Resource
Drill holes completed historically (1965-1990) 118
Production wells drilled (2006-2007) 12
Proven and Probable Reserve Life (@ 600k tpy) 54 years
43-101 Inferred Reserves (KCl) 209 MMt
43-101 Proven & Probable Reserves (KCl) 33.5 MMt
Mineral Exploration Area = 1,472 km2
Exploitation Permit = 136 km2
Resource Report(NI43-101) = 25 km2
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Low Cost Operation
Transportation cost advantages– Only 27km to 10 acre port site– ~US$18-40/tonne freight savings vs.
inland competitors– Shortest sailing distance to Brazil
Low cost energy access– 25-year natural gas supply
agreement in documentation stage– Allows low cost, short construction time solution mining
application
Positive labour conditions– Available low cost local labour– Strong reputation through MagForestry
Potential for best economics in the industry
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• 25-year mining license secured
Accomplishing Milestones - 2008
25-Year Mining License Secured$101MM Financing CompletedVeteran CEO Joins Team
Ameropa Off-take Agreement
Strategic Investors Fund $105MMNatural Gas Supply
Update of Reserve Estimate
Construction Progress
Finalize Potash Investment AgmtListing of Shares on TSX
March 25, 2008
• $101 million for MagMinerals ($4.00 per share)
• 5% dilution penalty if public-listing not met by Oct. 3, 2008
• Broad institutional participation
• Construction deposit, site prep, and €15MM loan repayment
April 2008
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• Willy Verbrugghe joins as CEO
• International experience with Westinghouse Energy, Kollmorgen, Sermatech, PCC Flow Technologies and Vehoco
• Participated or led in build-out of large industrial projects in various countries
• Holds 3 masters degrees (science, engineering, business), speaks 5 languages and has lived in 4 countries
Accomplishing Milestones - 2008
25-Year Mining License Secured$101MM Financing CompletedVeteran CEO Joins Team
Ameropa Off-take Agreement
Strategic Investors Fund $105MM
May 1, 2008
Natural Gas Supply
Update of Reserve Estimate
Construction Progress
Finalize Potash Investment AgmtListing of Shares on TSX
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• Ameropa awarded exclusive 12-year potash marketing agreement
Governs the sale of 1.2MM tpy of potash (both Phases)
• Ameropa announces a $70MM strategic investment ($5.00/sh)
• Announced $35MM strategic investment by the president of a top ROC construction firm ($12 MM cash + $23MM paid-in-kind)
• Both strategics expected to contribute to success of project
Accomplishing Milestones - 2008
25-Year Mining License Secured$101MM Financing CompletedVeteran CEO Joins Team
Ameropa Off-take Agreement
Strategic Investors Fund $105MM
June 27, 2008
Natural Gas Supply
Update of Reserve Estimate
Construction Progress
Finalize Potash Investment AgmtListing of Shares on TSX
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• Official minutes outlining natural gas supply understanding between ROC government, ENI and Mag
• Formal supply agreement with ENI in drafting
• Pipeline construction started
Accomplishing Milestones - 2008
25-Year Mining License Secured$101MM Financing CompletedVeteran CEO Joins Team
Ameropa Off-take Agreement
Strategic Investors Fund $105MMNatural Gas Supply
July 2008
Update of Reserve Estimate
Construction Progress
Finalize Potash Investment AgmtListing of Shares on TSX
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Accomplishing Milestones - 2008
25-Year Mining License Secured$101MM Financing CompletedVeteran CEO Joins Team
Ameropa Off-take Agreement
Strategic Investors Fund $105MMNatural Gas Supply
• Ercosplan provided update of 43-101 reserve report (released August 2008)
Update of NI43-101 Reserve Estimate
• Site earthworks preparation started• Long lead time items contracted• All major purchasing packages being
prepared
Construction Progress
• Gas, rail and port agreements complete
• Water & construction permits• ESIA agreement
Potash Investment Agreement
• Filed preliminary prospectus in Canada on August 25, 2008
Listing of Shares
Update of Reserve Estimate
Construction Progress
Finalize Potash Investment AgmtListing of Shares on TSX
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NPV Sensitivity to Pricing
Sensitivity to Potash Pricing*
Current NPV Assumptions*
Discount Rate: 12.0%
Terminal Value: 7.5x EBITDA
Terminal Year: 2035
NPV per Share $31.85Pricing assumptions:(Fertecon Brazil cfr forecast less est. freight & other) $0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2004
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Net
-Bac
k P
rici
ng
Po
inte
No
ire
($ /
ton
ne)
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*Assumes $82 MM Phase I equity offering at $5.00/share and $160 MM Phase II offering at $12.00/share.
Brazil Potash Price (Cost & Freight )(US$ / Tonne)
$600 $800 $1,000 $1,200 $1,400 $1,600
NPV per Share $10.93 $17.45 $23.96 $30.48 $36.99 $43.51
CFPS $2.40 $3.57 $4.73 $5.90 $7.06 $8.23
MagPotash Ownership
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Pre-IPO F.D. Shares %MagIndustries 96,000,000 62.4%Ameropa 14,000,000 9.3%Interco Potash* 7,000,000 4.6%Other Investors 25,250,000 16.7%Employee Options 10,500,000 7.0%
Total 152,750,000 100.0%
*Formerly Portonovo - reflects 2,431,843 cash purchase and 4,568,157 to be issued for services rendered by Socofran.
Investment Highlights
Pure play exposure to attractive potash sector
Exclusive rights to large potash carnallite deposit
Strategic location relative to high demand potash end-markets
Proximity to high-capacity port with existing rail capabilities
Significant input and operating cost advantages
Blue chip project team of engineers, contractors, equipment providers and financiers
Construction to begin in H2 2008
Senior management with deep roots in the country/continent
Compelling valuation with well-defined growth potential
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