MagenergyOne of the hopeful aspects of SH relates to the upside of magenergy. I have tried to learn as much as i can about the hydroprojects in the DRC, yet i still feel unsatisfied. One thing that i have noticed is that Magindustries doesnt seem to mention Zongo II anymore. As far as i could tell, it isnt in their website, nor is mentioned in the recent MD&A. Zongo seemed like a connection between MAA and SH, given that SH has invested there recently.
In reading the MD&A, i didnt get that much new, but the following paragraph was noteworthy. In reference to Inga II, it writes that
In the second stage, when the emergency repairs are complete, the Company expects to earn a return
by sharing in the sale of electricity from turbine G-23. The refurbishment works were expected to be
completed in the second quarter of 2009. However, these refurbishments are currently on hold, as the
project has encountered a Euro 5 million cost overrun that is required to be financed by SNEL.
MagEnergy has proposed funding options for this cost overrun and is currently awaiting a decision
from SNEL on how to proceed. The Company believes that the expected return on the project will
exceed the cost of this investment.
That was not happy reading. I, for one, did not know about this 5 mill Euro issue and the hold up. And the last sentence is less than inspiring for an investor.
However, that is all puppy chow compared to some of the ideas floating around about the potential upside of an MAA/SH upside regarding the energy side. At this moment, i am not putting much into that upside. I want it to be there, but i just think that that is pure speculation. Firstly, what exactly does MAA bring to the table? that is a real question...they might bring something, but i am unconvinced that sinohydro is a babe in the woods. Secondly, (also an actual question), wouldn't MAA brag about the upside to magenergy from a deal with SH? They havent done so, even tangentially, rather they are fully focusing on the potash deal.
Having said that, i still think that the magenergy/forestry and maybe metals divisions are unrecognized and will bring an added upside, beyond the current calculations which seem to think that MAA is only potash. At the end of the day, i am hoping that potash will be our big daddy, while seeing unseen upside from the other divisions. However, i am dismissing, for now, the idea that there is some invisible gem in magenergy.