STOCK EXCHANGE ANNOUNCEMENT

Dated: 17 October 2002

Execution of Power Supply Contract

Magnesium International Limited (MIL) today signed the power supply contract for the SAMAG magnesium smelter at Port Pirie. The power provider, NRG Flinders, will supply the smelter from its Port Augusta power plant.

Key elements of the contract are:

• 15 year supply period
• 170MW nominal/190MW peak load supply
• 2% power interruptibility at NRG's request

Mr Gordon Galt, Managing Director of MIL, said, “this contract is another important step towards achieving our aim to develop the SAMAG smelter. We are very pleased to have NRG Flinders join us as our power supplier. The contract is innovative and recognises the specific nature of the smelter technology we will use. The proven Dow process allows instantaneous power interruptibility which is very important for South Australia and NRG. Sufficient upside power is available so we can rapidly realise process improvements which will allow us to reduce costs below those established in our Bankable Feasibility Study.”

The SAMAG smelter’s contract with NRG is a change from the original concept whereby SAMAG intended to build its own power station. “We retain the right to develop a major power station at the planned Port Pirie industrial park site,” said Mr Galt. “We intend to expand our smelter in stages from the initial 71k tonnes per annum capacity and will need more power later in this decade. We believe that Port Pirie will be a good place to establish new power capacity when we expand”.

Commenting for NRG, Managing Director Mr Bob Althoff said “this project is an exciting development for South Australia and for our company. The agreement underpins a significant proportion of our generation and we look forward to a long and fruitful partnership with MIL.”

“A key feature of this plant is the ability to instantaneously interrupt its power supplies and this feature will be enormously useful in managing peak summer demands for electricity in South Australia.”

For further information:

Gordon Galt
Managing Director