MagIndustries Corp.: Framework Agreement with General Contractor for the Mengo Potash Project
March 18, 2013 (Source: Marketwire) Toronto, ON — MagIndustries Corp. (TSX:MAA) is pleased to announce that it has entered into a “Framework Agreement” with East China Engineering Science and Technology Co., Ltd. (“ECEC”) under which ECEC will provide a range of services related to the engineering, planning, construction and performance of the Company’s 1.2 million tonnes per annum Mengo Potash Project in the Republic of Congo (the “Project”). The Framework agreement took effect immediately on its signing on March 16, 2013 and it is anticipated that the Framework Agreement will be replaced by a general contract (the “General Contract”), currently under negotiation, when certain contract specifics of the scope of services have been finalized.
Indicative terms and conditions in the Framework Agreement
The main Indicative terms of the Framework Agreement entrust ECEC with general contracting work of the Project, that is: ECEC shall be responsible for the overall planning, project management, design management and coordination; procurement, construction, installation, testing of equipment, materials and integrated systems and commissioning.
The outline of the essential duties and obligations of the two parties will be further defined under the General Contract. According to the indicative terms, MagIndustries will provide technical documents and information, fulfill payment obligations and execute other work within its responsibilities; ECEC will complete all work specified in the indicative terms, be responsible for progress and quality of the Project plant and guarantee safe and effective completion of the Project while abiding by all applicable laws and regulations.
The indicative terms provide a contract price within the existing scope of work of RMB 3,050,000,000 Yuan (approximately equal to US$480 million at today’s exchange rate). The General Contract price will be specified in US dollars at an exchange rate of US$ to RMB that will be based on the arithmetic mean value of spot exchange buying rate and spot exchange selling rate issued by Bank of China one working day before the general contract is signed. Payment will be made by MagIndustries to ECEC on the basis of a schedule, terms and conditions to be set forth in the General Contract. The General Contract price will be adjusted to reflect aspects of the scope of services which are still being finalized.
The Framework Agreement specifies completion of the Project by December 31st, 2015 (i.e. completion of construction, commissioning, testing and handover of plant).
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Based in Beijing, Peoples Republic of China, ECEC is a modern scientific and technological engineering company with the former Third Design Institute of the Ministry of Chemical Industry as its principal initiator. It was the first joint-equity enterprise in the prospecting and engineering industries approved by the former State Economic and Trade Commission. It was listed on Shenzhen Stock Exchange in July, 2007.
ECEC specializes in technology research and development, consultation, engineering design, procurement, construction management, startup training, supervision, project management contracting and general contracting, etc. in the domain of project construction. ECEC has a dozen state Class-A qualifications in the field of chemical industry, petrochemical industry, municipal works, architecture, environmental protection and other fields, as well as Class A qualification for general contracting of projects. It has qualifications for overseas contracting projects with import-export operation rights as well as QHSE management system certification of conformity. Over the past 50 years, ECEC (including its principal initiator) has completed more than 1,000 projects covering various large and medium-sized engineering design and turnkey project contracts, and has earned more than 200 ministerial/provincial and higher level awards such as the National Prize for Progress in Science and Technology, the Silver Key Prize for Turnkey Project Contracting, the Prize for Excellent Engineering Design, Outstanding Project Supervision Company, etc. In the meantime, ECEC has successively completed a number of overseas project construction mandates and accumulated rich experience in overseas project construction.
MagIndustries is a Canadian company whose common shares are listed on the TSX and trades in Canadian currency under the symbol “MAA”. The Company has 755,942,674 common shares outstanding. MagIndustries is focused on the development of its potash assets in the Republic of Congo.
Except for historical information, this press release 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. Specifically, with respect to this press release there is a risk that the parties may fail in their efforts to conclude and enter into the General Contract, or that having done so, that either party may fail to meet its obligations under the General Contract. 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 press release might not occur.
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