STOCK EXCHANGE ANNOUNCEMENT

Successful Completion of Bankable Feasibility Study for SAMAG Magnesium Plant

14 August 2002

The Directors of Pima Mining N.L. advise that the Bankable Feasibility Study (BFS) for the proposed SAMAG magnesium metal and alloy plant at Port Pirie, South Australia, has been completed. The BFS completion follows the recent announcement of financial support for the project by the South Australian Government.

Major Results of the BFS are:

• Planned annual production rate of 71,000 tonnes of magnesium metal in product. With the addition of alloying metals total plant output is expected to be around 77,000 tonnes per annum. Production will commence in Month 28 after Financial Close and reach 90% of capacity by Month 37 after Financial Close.
• Capital Cost: A$733 million (unescalated, direct and indirect EPC and owner’s capital)
• Operating Cost: A$1.06 (US$0.59) per pound at planned production rate.
• Economics

  Nominal Pre-tax IRR 20.9%
  Real Project After Tax IRR 14.8%
  Payback Period 5.6 years
  NPV@10% A$752 million

The results obtained in the BFS were based on the following key data and assumptions:

• Magnesium Prices as forecast by international consultants CRU, with exchange rate of A$1.00 = US $0.55
• A metal offtake agreement with German trading house ThyssenKrupp Metallurgie
• Plant design based on the proven Dow magnesium technology, which dramatically reduces process risks.
• Capital Costs based on projected final fixed price EPC contract value agreed with Thiess Ltd
• Operating Costs based on contracted power costs and estimated other costs based on basic design engineering
• Project Financing

The BFS indicates that the SAMAG project offers attractive returns for both potential equity investors and debt providers and the Board has now resolved to proceed with arranging the necessary project financing.

The Company is being advised in respect of financing by UBS Warburg (equity), Westpac Institutional Bank (debt) and Marsh (insurance).

In accordance with their advice, the company plans a project financing with approximately 60-65% senior debt and 10% subordinated debt with the balance from equity or similar instruments. The equity requirement will be in the range A$250 – A$300 million.

The company intends to fund a substantial portion of the equity requirement by introducing appropriate joint venture partners and discussions with potential partners will occur in September and October.

Debt financing plans are well advanced. Independent Engineers Behre Dolbear Australia Pty Ltd have also completed their review of capital and operating cost estimates for the intended lending banks.

A debt Information Memorandum is planned for release in the market in September.

For further information contact:

Gordon Galt
Managing Director
Pima Mining NL
(02) 9252 1505