STOCK EXCHANGE ANNOUNCEMENT
Notice of Extraordinary General Meeting and Associated Documents
15 February 2002

Dear Shareholder

Attached are a Notice of Meeting and an Explanatory Note for a General Meeting of shareholders on 19 March 2002, to consider and if thought fit, approve an issue of shares under the Shareholder Share Purchase Scheme ("SPSS").

The purpose of the SPSS is threefold:

to provide small shareholders with an opportunity to increase their holdings to a marketable parcel;

to enable all shareholders to purchase shares at a discount to market price and free from brokerage commission and stamp duty;

to provide the Company with additional working capital for the development of the SAMAG magnesium project.

Shares issued through the SPSS will rank equally with all other ordinary shares and will therefore be eligible to receive any distribution in the proposed sale or spin off of the company’s non magnesium exploration assets.

SAMAG Project Status

The SAMAG project is at an exciting stage of its development. Management is finalising the Bankable Feasibility Study, which leads into completing the project financing later this year. Your Directors expect that as the final components of the financing are put into place the share market will provide greater recognition of the SAMAG project value.

The project development team is finalising all the engineering and contracts necessary to support the required project financing, by later this year, of around $800million. This work is progressing well and in accordance with your Directors’ expectations. We are strengthening your Board and management to ensure that we have the required skills to bring this exciting project to fruition.

SPSS will be priced well below potential value

A recently prepared independent report from Bell Potter Securities Limited concluded "…the potential value of Pima shares in mid 2002, fully diluted, is approximately $0.50 per share based on the first stage, 65,000 tonne project, and $1.30/share assuming a threefold expansion in the longer term." This potential value is significantly above the likely SPSS offer price.

Proven and low risk technology provides competitive advantage

SAMAG is planning on becoming the lowest total cost magnesium producer, based on the sustainable competitive advantage provided by our world wide exclusive licence of the Dow magnesium technology. This technology is proven and very low risk compared to competing technologies. Furthermore, continuous improvements to the Dow technology over a period of many years means that despite relatively old origins, the technology is modern and complies fully with all environmental standards.

SAMAG will be a major business

Your company expects to be generating revenues (all exported) in excess of A$400 million per year and generating substantial profits by 2005/6 when the plant will be fully operational. The business will employ over 300 people and be a major industrial development for Port Pirie and South Australia. The export revenue will be a major positive contributor to the Australian economy.

SAMAG is entering a growth market

The magnesium market is projected to show dramatic growth over the next 10+ years as its lightness and strength are sought by automotive manufacturers as an enabler to reduce vehicle weights and emissions. Every 10 kilograms of magnesium alloys reduce carbon dioxide emissions by around 50 kilograms over the life cycle of a car. Currently the average car has around 3kg of magnesium content. This is projected to increase to around 9 – 10 kilograms by the end of this decade. This growth will increase the market for primary magnesium from around 370,000 tonnes per annum to over 1,000,000 tonnes per annum by 2010. SAMAG is planning on being a major and profitable participant in this strong growth market.

Your Directors recommend you vote in favour of the SPSS.

In closing, we note the Bell Potter Securities Limited conclusion:

"Strong upside expected as milestones are reached"

Your Directors and management are committed to ensuring that those milestones are reached and the upside realised for the benefit of shareholders. The SSPS is part of that commitment.

Yours faithfully,

Patrick Elliott
Chairman

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notice is hereby given that an Extraordinary General Meeting of Pima Mining NL will be held at the AAP Centre Theatre, Ground Level, Corner George and Jamison Streets, Sydney 2000, on Tuesday 19 March 2002 at 10.00am.

The purpose of the Meeting is to consider, and if thought fit, pass the following resolutions.

To approve an offer of Shares to Shareholders up to a maximum of $3,000 per shareholder, under the Shareholder Share Purchase Scheme. The terms of this issue are as follows:

a) Issue price:

no less than 90% of the average closing price of Pima’s shares on the ASX over the last five days immediately prior to the announcement of the Offer.

b) Issue date:

as soon as practicable, but in any event no later than 18 June 2002.

c) Stock Exchange Listing:

application will be made to list these shares on the ASX. Issued shares will rank pari passu with existing ordinary shares.

d) Entitlement:

all shareholders who are recorded on the register of members at 5.00pm on Friday 19 April 2002, subject to their having an address in a jurisdiction in which it is lawful and practical to issue shares.

e) Closing date:

applications must be received by 5.00pm on Tuesday 23 April 2002.

f) Allotment:

shares will be allotted within seven days (7) of the closing date.

g) Directors’ entitlements:

directors of the Company who are shareholders on the record date of 19 April 2002, will be entitled to participate in the issue on the same terms as all other shareholders. Directors who do not hold shares in the Company will not be entitled to participate.

h) Use of funds:

all funds raised from this issue will be used as working capital to maintain the momentum on the SAMAG Project as it approaches financial close.

In accordance with ASX Listing Rule 7.4, to ratify the placement to institutional investors, in December 2001, of 29,500,000 ordinary shares at 18 cents per share, (ranking pari passu with all other ordinary shares from the day of allotment) with attaching 14,750,000 (i.e. one option for every two shares) 20 cent options, the details of which are set out in the attached Explanatory Note.

Voting Exclusion – in accordance with ASX Listing Rules, the Company will disregard any votes cast by any of the participants in this placement, or any of their associates.

However the Company need not disregard a vote if:

it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy determines.

BY ORDER OF THE BOARD

Neil Hooper
Company Secretary

15 February 2002

EXPLANATORY NOTE

Resolution number 1 - Offer of shares under the Shareholder Share Purchase Scheme

In January 2002, Pima’s directors decided to adopt a Shareholder Share Purchase Scheme (SSPS). The terms of this SSPS are set out in the attached document. The issue of shares under the SSPS does not require shareholder approval unless the total number of shares to be issued would exceed the 15% limit (ASX Listing Rule 7.1) for any 12-month period. As Pima has already undertaken a share placement in the past 12 months, there is virtually no capacity for the Company to issue shares under the SSPS, unless shareholders give their prior approval. Accordingly, shareholders are being asked to approve this resolution, thereby allowing shares to a maximum value of $3,000 per shareholder, to be offered to all shareholders who are recorded on the register of members as at 5.00pm on Friday 19 April 2002.

Resolution number 2 – to ratify the placement of 29.5m shares to institutional investors

In December 2001, Pima undertook a placement of 29,500,000 shares at 18 cents per share (the "Placement"), to a small number of investors. For every two shares acquired, participants received one option, with an exercise price of 20 cents and expiry date of 25 November 2003. The Placement was managed by KTM Capital Pty Limited who received a fee of up to 4% on funds raised. All funds raised from the Placement were applied to the advancement of the Company’s SAMAG Project.

ASX Listing Rule 7.1 stipulates that a listed company may not, without the approval of holders of ordinary securities, issue securities in excess of 15% of its issued capital, within a 12-month period. While the Placement of 29,500,000 shares plus 14,750,000 options did not exceed this 15% limit, they did amount to slightly over 14% of the issued capital. Therefore, if the directors chose to undertake another issue of securities in the near future, this would be very difficult to achieve within the remaining allocation under the 15% limit. However, subsequent shareholder approval for the Placement will exclude the Placement from the 15% limit and would allow directors, if they chose, to undertake another issue of up to 15% of Pima's then issued capital. While directors currently have no intention for another issue of shares (other than those issued under the proposed Shareholder Share Purchase Scheme), by approving this resolution, shareholders will be giving directors additional flexibility if they deem a subsequent issue of shares necessary.

PIMA MINING NL – SHAREHOLDER SHARE PURCHASE SCHEME

Background

The Directors of Pima Mining NL have established a Shareholder Share Purchase Scheme (SSPS), which enables Eligible Shareholders to purchase Shares at a discount to market, without incurring brokerage fees. All funds raised by the SSPS will be used to advance the SAMAG Project.

Terms of Issue of Shares under the SSPS

The SSPS has been structured to comply with ASIC Class Order 00/194, dated 16 February 2000 (the "Class Order").

ASX Listing Rule 7.1 stipulates that a listed company cannot issue more than 15% of its capital within a 12 month period, without shareholder approval. Accordingly, if the SSPS is expected to exceed 15% (or take the total issued Shares in a 12-month period to exceed 15%), then Directors will seek prior shareholder approval. Alternatively, Directors may, at their absolute discretion, adjust, on a pro-rata basis, the allotment of Shares so that the 15% ceiling is not exceeded.

The SSPS will operate on the following terms:

Each Eligible Shareholder may apply for Shares worth up to a maximum of $3,000 once in any consecutive 12 month period;

Directors reserve the right to refuse an Application if they consider that the Applicant is not an Eligible Shareholder, or has not otherwise complied with the terms of the SSPS;

Shares for a successful Application under the SSPS will be issued no later than seven (7) days after the Closing Date as stipulated in the Offer;

Shares issued under the SSPS will be ordinary fully paid shares and will rank pari passu with all other Shares;

the Company will apply for ASX quotation of the Shares issued under the SSPS;

the SSPS will be administered by the Directors who will have an absolute discretion (subject to compliance with Listing Rules and the Corporations Act) to determine appropriate procedures under the SSPS, to resolve conclusively all questions of fact or interpretation arising in connection with the SSPS and to delegate their powers and discretion under the SSPS;

if, or to the extent that, an Application is refused, the Application monies will be returned in full without interest;

subject to the provisions of the Class Order, the Directors may amend any of the terms and conditions of the SSPS at any time;

the SSPS may be suspended by the Directors; and

these terms and conditions are governed and construed in accordance with the laws for the time being in force in New South Wales.

Eligibility

Shareholders who are eligible to participate in the SSPS are those shareholders who:

are recorded on the register of members at 5pm on the relevant Record Date for the Offer; and

have an address in a jurisdiction in which it is lawful and practical to offer and issue shares under the SSPS.

Calculation of Purchase Price

The Purchase Price of Shares issued under the SSPS will be determined by the Directors, but will not be more than the weighted average closing price of Shares on the ASX over the last five (5) days of trading immediately prior to the date of the Company’s announcement of its intention to make the Offer, nor less than eighty per cent (80%) of that weighted average number.

Risk

Each Shareholder acknowledges that although the Purchase Price may be at a discount to the weighted average as outlined in the calculation of the Purchase Price, subscription for the Shares are a speculative investment and the price of the Shares as quoted on the ASX may change between the date of the Offer and the date of issue of Shares under the SSPS.

DEFINITIONS

Application means an application for Shares under the terms and conditions of this document;

ASIC means the Australian Securities and Investments Commission;

ASX means the Australian Stock Exchange Limited;

Closing Date means the date specified in an Offer, or such later date as may be determined by the Directors, as the last day of the Offer;

Company means Pima Mining NL (ACN 003 669 163);

Directors means the directors of the Company;

Eligible Shareholders means shareholders of the Company eligible to participate in the Offer;

Listing Rules means the listing rules (including appendices) of the ASX, as amended from time to time;

Market Price has the same meaning as defined in the Listing Rules;

Offer means a non-renounceable offer of Shares made to Eligible Shareholders under the SSPS from time to time;

Purchase Price means the subscription price for each Share determined in accordance with the terms and conditions specified in the Offer;

Record Date means the date specified as such in an Offer made pursuant to the SSPS;

SSPS means the Pima Mining NL Shareholder Share Purchase Scheme, as approved by Directors from time to time;

Shares means ordinary fully paid shares in the issued capital of the Company.

For further information

In accordance with Australian Stock Exchange listing requirements, the geological information in this report has been based on information provided by geologists who are corporate members of the Australian Institute of Mining and Metallurgy or Australian Institute of Geoscientists and who have had in excess of 5 years experience in their field of activity.