Omagine, Inc. (“Omagine”) is publically traded on the OTC-BB (OMAG) and conducts all of its business activities through its wholly owned subsidiary, Journey of Light, Inc. (“JOL”, and together with Omagine, the “Company”). JOL has proposed to the Government of the Sultanate of Oman (the “Government”) the development of a real-estate and tourism project (the “Omagine Project”). JOL’s attorneys are presently conducting discussions with the Government regarding the final wording of the “Development Agreement” for the Omagine Project.
Journey of Light, Inc. and the Project Company
JOL is a real-estate development, entertainment and hospitality company focusing on Middle Eastern development opportunities resulting from the recent aggressive growth strategies adopted by governments in the hyper-wealthy Persian Gulf region. These governments are seeking to diversify their economies through mega-projects that create tourist destination hot spots.
The Omagine Project will be developed by Omagine SAOC (the “Project Company”), an Omani company presently under formation by the Company and other Founder Shareholders. The three Founder Shareholders are Omagine, JOL and Consolidated Contractors International Company, SAL (“CCIC”).
The Project Company has arranged approximately $99 million of equity capital for itself and with that, the financial capacity to begin development of the Omagine Project almost immediately after the signing of the Development Agreement with the Government. The Project Company also has an agreement with Oman’s largest financial institution – Bank Muscat - to arrange the Construction Financing and, although it is unlikely to be required, provide additional equity capital to the Project Company if it is required.
The $ 1 Billion + Development
The Company's planned Omagine Project is an integration of cultural, heritage, educational, entertainment and residential components. The development site is located on an amazingly pristine coastal stretch of beachfront approx. 20 kilometers northwest of Muscat and only 4 kilometers from Oman’s International Airport. The approximately 1,000,000 square meter development site (equal to approx. 245 acres) has one kilometer of beach frontage – but will be developed to have over seven km. of water frontage – of which 1.8 km. will be beach-front. The Omagine Project also includes several hundred thousand square meters of residential property that will be developed for sale of residential housing units. Significant commercial, retail and hospitality elements are also included. The Omagine Project is expected to take between 4 to 5 years to complete.
Management is aware that due to market conditions the value of the Omagine Project site has increased sharply over the past 2 years and, provided such values are sustained, this increased value will have a materially positive effect on the Project Company’s future cash flows as well as its financing activities. The Omagine Project’s presently estimated construction and capital cost is approximately U.S. $1.5 billion plus.
The projected financial model presently predicts an internal rate of return ("IRR") for the Omagine Project of 20% and net positive cash flow in excess of USD $600 million (the "Projected Cash Flow") over the five year period immediately subsequent to the signing of the Development Agreement. As of the date hereof, the "net-present-value" of such Projected Cash Flow is projected to be approximately USD $300 million.
Assuming the Development Agreement will be signed with the Government, as presently contemplated Omagine SAOC will, upon corporate formation, be owned eighty-eight (88%) percent by JOL and ten percent (10%) by Omagine (collectively, the “Company Equity”) and two percent (2%) by CCIC. The Company Equity of 98% is expected to be reduced subsequent to the signing of the Development Agreement by up to a maximum of 40% (to no less than 58%) depending upon the finalization of shareholder agreements between the Project Company and each of CCIC and “Newco”, a group of prominent Omani business people. The Company signed a Memorandum of Understanding with Newco whereby for their U.S. $48 million investment into the Project Company, Newco will receive a 30% equity participation in the Project Company. The Company Equity will remain the majority equity stake in the Project Company and the Government will not own any equity of the Project Company.
In order to move into the actual development stage of the Omagine Project, the Founder Shareholders and the Government must sign the Development Agreement. Subsequent to the signing of the Development Agreement, the Omagine site's value will be definitively determined by a qualified independent real-estate appraiser and such appraisal will be used by Bank Muscat to optimize the Project Company's capital structure and in its internal financing discussions and in its discussions with other financial institutions and investors.
Please be advised that the foregoing assumptions and this discussion are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve uncertainties and other factors which could cause the outcomes described herein to differ from future Company achievements expressed or implied by these forward-looking statements.
OMANI GOVERNMENT APPROVAL
In May 2008 the Company announced that it received an official letter from the Government of Oman formally approving the terms by which the Omagine Project will be developed (the “Approval Letter”). The Company is required to formally notify the Government in writing by May 30, 2008 of its approval of the Approval Letter and furnish the Government with various confirmations relating to shareholders of the Project Company and elements of the Project.
Approval of such commercial terms is required before signing a Development Agreement with the Government. The Company’s attorneys are now concluding the Development Agreement with the Ministry of Tourism and anticipate signing it within the next several weeks.”
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