MagEnergy sees rehab tendering for 1,424-MW Inga 2

MagEnergy Inc. announced July 6 it has completed technical studies for rehabilitation of four units of the 1,424-MW Inga 2 hydroelectric project in the Democratic Republic of Congo (DRC).

MagEnergy, a unit of Canadian magnesium producer MagIndustries Corp., also has made available an initial US$12 million for Phase 1 refurbishment at Inga 2 and another US$1 million for rural electrification projects in the DRC. In April, it began emergency repairs to 178-MW turbine-generator Unit G-23, which is to return to full operation by early 2007.

As a result of those milestones, the company said it had fulfilled its obligations under a May 2005 rehabilitation agreement with the DRC utility, Societe Nationale d’Electricite (SNEL). It said an addendum to that agreement now has been signed with the utility.

Another US$10 million allotted for emergency repairs

�The recently signed addendum approves the process of concluding a definitive business agreement between SNEL and MagEnergy, which will entrench the long-term rights of MagEnergy at Inga 2,� the company said. �MagEnergy also wishes to advise that on June 21 the Board of Directors of MagIndustries approved an additional US$10 million facility for emergency repairs to the four operating turbines at Inga 2.�

MagEnergy said the emergency work is to begin immediately and be completed by March 2007. Although it is in advanced talks with financial institutions interested in participating, MagEnergy said the facility will be funded entirely by equity at this stage.

Completion of Phase 1 refurbishment is to lead to Phase 2, in which MagEnergy will finance full renovation of four more units at an estimated cost of US$110 million.

Four-unit rehab tendering seen in late 2006

The tender and project finance of Phase 2 is to be finalized by fourth quarter 2006; on-site rehabilitation is to begin in January 2007.

�It is expected that tenders will soon be called for the execution of the rehabilitation phase,� MagEnergy said. �The rehabilitation of the first turbine is expected to be completed and on line by the first quarter of 2008.�

Currently, the 350-MW Inga 1 and 1,424-MW Inga 2 plants produce a total of only 500 MW due to lack of maintenance. MagEnergy and its partner, Industrial Development Corp. of South Africa, which holds 30 percent interest in Phase 1 and 15 percent of Phase 2, plan to restore a significant portion of the lost generation.

DRC Energy Minister Salomon Baliene said in June that DRC officials plan to meet in South Africa in July with governments, companies, and banks about investing up to US$40 billion to expand the Inga complex on the Congo River to a target capacity of 40,000 MW.

For information, contact MagIndustries Corp., President William Burton, 372 Bay St., Suite 801, Toronto, Ontario M5H 2W9 Canada; (1) 416-3687911; E-mail: wburton@magindustries.com; or Georges Kyriakos, Vice President Development, MagEnergy Inc., Johannesburg, South Africa; (27) 11-2637704; E-mail: gkyriakos@magindustries.com; Internet: www.magindustries.com.

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