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MagIndustries shares down on Congo project financing delay

MagIndustries shares down on Congo project financing delay

Aug 31 (Reuters) - Shares of Canada's MagIndustries Corp MAA.TO fell as much as 19 percent Tuesday, a day after the company said it was re-assessing options for its Congo potash mine.

On Monday, MagIndustries had said China's Complant 000151.SZ, which had agreed to buy a majority stake in the Mengo project, was yet to get approval from its controlling shareholder, State Development and Investment Commission, for the deal. ReutersLink ID='ID:nSGE67T0LJ' /

The company had originally planned to sign the deal with Complant -- China National Complete Plant Import and Export Co Ltd -- by the end of July, with construction beginning in November. But later the signing was delayed by a month.

"Given the similar delays encountered in attempting to negotiate a similar agreement with the prior proposed partner (Sinohydro Corp Ltd), we believe the response to this update may be negative," said Jennings Capital analyst Russell Stanley.

Last November, the company had said Sinohydro would no longer have an exclusive rights to buy 400 million common shares of MagIndustries, after the extension provided to it expired.

The analyst, who has a "speculative buy" rating on the stock, said "this represents another potential delay in obtaining financing for the potash project."

The company had also said that its negotiations with Complant will continue but it is re-assessing its options in light of industry events.

BHP Billiton's BHP.AX $39 billion bid for the world's largest potash producer, Potash Corp POT.TO, has brought small and mid-sized potash explorers into focus.

Shares of Canada-listed potash exploration companies have risen on average more than 20 percent in the last two months, as interest in the fertilizer sector has spiraled to levels reached in mid-2008, when share prices peaked at the height of the commodity boom. ReutersLink ID='ID:[ID:nN23128720' /

Toronto, Ontario-based MagIndustries shares, which have risen 13 percent in the last one month, were down 12.5 percent at 35 Canadian cents in morning trade on the Toronto Stock Exchange. Earlier in the session, they touched a low of 32.5 Canadian cents. (Reporting by Aftab Ahmed in Bangalore; Editing by Maju Samuel) (aftab.ahmed@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messagi