TORONTO (miningweekly.com) – Toronto-based MagIndustries remains “optimistic” that a proposed deal with China's Sinohydro Corporation will be completed, but, in the meantime, has allowed an exclusivity period to expire and is holding talks with other interested parties to finance its Republic of Congo (ROC) potash project.

In June, MagIndustries signed a memorandum of understanding with Sinohydro, to sell a stake of almost 53%, or 400-million shares, to the Chinese firm for C$280-million.

However, Sinohydro is still working through its own internal approval channels and the board of directors has yet to make a decision.

The Sinohydro agreement is also conditional on the Chinese company arranging debt financing for the completion of Phase I of MagIndustries' Kouilou potash project, as a complement or alternative to debt financing that could be available to the company

Mag has extended the exclusivity period under the memorandum of understanding already, but decided this time to allow the restriction to lapse.

“We have had a constructive dialogue with Sinohydro and have seen progress in a decision process, which by all indications, still has the potential for a positive conclusion,” Mag CEO William Burton said.

“With the expiry of the Sinohydro exclusivity period, MagIndustries has started discussions with several other parties,” the firm said.

The discussions include the possibility of third parties investing in the company or directly in its MagMinerals potash subsidiary and/or the construction of the company's project as engineering, procurement and construction contractor and arrangement of the debt associated with the project.

The company will evaluate any resulting investment proposals with a view to building the project as soon as possible with minimum dilution to MagIndustries shareholders, the firm said.

“Interest in the project is happening in the context of a potash market that is showing signs of renewed demand growth and a view that, in time, potash buyers may once again be confronted by supply constraints with MagIndustries as the only realistic near-term new entrant to the industry.”

Besides the Kouilou potash project in the ROC, Mag also has forestry and wood-chip operations in the country, and hydroelectric assets in the Democratic Republic of Congo.

Shares in the company slid 6,9% on Monday, to C$0,54 apiece by 14:23 in Toronto.