MagIndustries Corp MAAFF

RE: RE: Looking Ahead

[Brainwave1]

Wesmile. You are correct that the China-RoC bilateral relationship is important for this deal; China is a large investor in infrastructure in that country. But RoC's interest is in seeing the project built and for the mining sector to develop. I am assuming that MAG's country managers have kept minister Oba in the loop about their intentions and explained clearly why they had little choice but to seek alternatives if the project was going to move ahead.

The MAG board has local representation and that is what they are there for--to use their contacts to communicate the company's side of things to the local authorities. MAG was on good grounds to exit from the China option and the Congolese authorities will understand that it is in their interests also, we have to assume they are also frustrated with the lack of progress. As for the question of why China did not move as promised, we don't really know and it is probably not possible to know given how opaque that situation and its constituent players are. But it appears they have not settled on a potash strategy yet and weren't ready to sign off on this. SDIC is not the main state potash player in China and so can't set the direction for policy on same.

Is there something fundamentally wrong with the Mengo project? The bankable feasibility study was done by an outside party. Complant did its own DD and also agreed to spend time/money on an engineering study so yes, they did have some skin in the game. We know that they recomended a yes to go ahead but ultimately did not have or get authority from their parent company, likely for the reasons mentioned. 

One more thing: China is not out. They have all the rights and ability to come in with a good offer just as before. All that has happened is that they've been asked to observe Chairman Mao's old maxim to: "either sh*! or get off the pot".