Investment Thesis:

MagIndustries is trading well below our valuation, which factors in a partial

value for the large potash project and eucalyptus plantation in the RoC, but no

value for the Inga power plant in the DRC. With the mining license and

updated technical report, the potash project is set to move forward once

financing is complete. The near-term catalyst the market awaits is a full

financing deal with a strategic partner, which would accelerate the

construction, moving the stock higher. With the expiration of the exclusivity

period with SinoHydro, a potential strategic investor, we are lowering our target

to C$1.40 from C$2.00, but maintaining our Buy (S) recommendation as the

Company is engaging several parties in financing discussions.

Highlights:

• Exclusivity Period Expires Without Renewal

MAA announced yesterday that it has elected not to extend the exclusivity

period with SinoHydro for the proposed C$280 MM financing, but remains

optimistic regarding the prospect of signing a definitive agreement.

Discussions have begun with several other potential partners.

• Reducing Target, Maintaining Buy (S) Recommendation

As a result of the increased risk to closing the financing for the potash project,

we have decreased our applied probability factor and delayed our estimate for

the project start-up, resulting in a reduction to our target price to C$1.40 from

C$2.00.

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