This is an addendum to the Inga II rehabilitation agreement it signed in May 2005 with Societe Nationale d’Electricite (SNEL), the electric utility of DRC.

Under the terms of the rehabilitation agreement as previously signed, MagEnergy agreed to complete, within 12 months, the technical studies required for the rehabilitation of four turbines currently installed at the Inga II plant, which is located on the Congo river. These technical studies have now been completed on schedule.

MagEnergy’s Phase I financing of US$13M is directed at the refurbishment of turbine G23 and includes US$1M that will be dedicated to rural electrification projects within DRC.

Furthermore, on 21 June the Board of Directors of MagIndustries approved an additional US$10M facility for emergency repairs to the four operating turbines at Inga II. Although MagEnergy is in advanced negotiations with financial institutions interested in participating in the project, the facility at this stage will be entirely funded by equity. It is expected that this emergency work programme will begin immediately and be completed by March 2007.

The completion of the Phase I refurbishment will lead to Phase II, in which MagEnergy will finance the full rehabilitation of four turbines at an estimated cost of US$110M. The tender and project finance of Phase II will be finalised by the fourth quarter of 2006 and on-site rehabilitation work is scheduled to begin in January 2007. The Industrial Development Corporation (IDC) of South Africa currently holds a 30% interest in Phase I (MagEnergy 70%) and a 15% interest in Phase II (MagEnergy 85%). It is expected that tenders will soon be called for the execution of the Rehabilitation Phase. The rehabilitation of the first turbine is expected to be completed and on line by the first quarter of 2008.

The Inga hydroelectric project has a total capacity of 1774MW of which Inga I represents 350MW and Inga II 1424MW. The present total available generating output for both sites is approximately 500MW. MagEnergy’s programme will allow for the increase in power output of Inga II from about 360MW to 1000MW on completion of the work programmes.