STOCK EXCHANGE ANNOUNCEMENT
Dated: 5 December 2002

Magnesium International and Thiess to build 71,000 tonnes per annum Magnesium Smelter for $751.5 million

Engineering Procurement and Construction Contract Finalised

Magnesium International Limited (MIL) and Thiess Ltd (Thiess) are pleased to announce that they have agreed on a final price for the Engineering, Procurement and Construction (EPC) of the SAMAG magnesium smelter to be built at Pt Pirie in South Australia. The price agreed is $751.5 million using a 30 June 2002 cost base.

The SAMAG smelter will utilise the proven Dow technology which has produced in excess of 5 million tonnes of magnesium - nearly half of the total quantity ever produced.

Noteworthy points include:

· The EPC price has been agreed after a period of three years of intensive investigation involving MIL, Thiess, Kvaerner and ex-Dow engineers. The basic engineering design stage is now complete and no further engineering work will occur until the detailed engineering stage which will commence after Financial Close on the project (targeted for mid-2003). The cost of this detailed engineering is included in the EPC price.

· The EPC price is a firm amount and, apart from normal cost escalation provisions with time, the price can only be varied if there is a change in the scope of the project. There is no potential for additional amounts to be added during the detailed engineering stage. Only A$35 million is subject to exchange rate risk.

· As part of the Agreement, Thiess will provide significant overrun facilities for late delivery of the project and for process rectification.

A comparison of the EPC price with the estimated EPC amount included in the SAMAG Bankable Feasibility Study is as follows:

-BFS Estimate (unescalated) $739 million

-Firm EPC price (unescalated) $751.5 million

The difference between the two prices results from the inclusion of additional electrolytic cells required by the proposed debt banks following the review of the SAMAG project by their independent engineer, Behre Dolbear Australia (BDA). With the inclusion of these cells, BDA has signed off that they agree with the plant capacity stated in the SAMAG BFS, namely 71,000 tonnes per year of magnesium metal.

The Managing Director of MIL, Mr Gordon Galt, said today “This is another important milestone for the SAMAG project. We have now delivered a firm construction price for this project which means that one more element of risk has been eliminated. Equity and debt participants in the project can now be even more certain about their returns. Together with low risk technology and a full 100% offtake agreement we continue to show how different the SAMAG project is compared to other proposed or developing magnesium projects.

The work involved to achieve this EPC price has been a real example of what a partnership process can deliver and we thank Thiess for their cooperation and for the support they have given the project. We will now proceed to draw up the final contract documentation for this work.“

Thiess Managing Director, Mr Roger Trundle, said that Thiess was also very happy with the EPC price announcement. “The price has been arrived at on an open book basis and both parties know that the project can be built on time and on budget. We are confident of the proven nature of the technology and are ready to commence construction as soon as the project achieves financial close. This is targeted to occur in the middle of 2003.”

For further information:

Gordon Galt (Managing Director)
Magnesium International Limited
02 9252 1505

Roger Trundle (Managing Director)
Thiess Ltd
07 3002 9090

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.