STOCK EXCHANGE ANNOUNCEMENT
Dated: 22 May 2003

SAMAG SMELTER PROJECT – EXTENSION OF DEVELOPMENT APPROVAL FOR SMELTER AND 400 MW GAS FIRED POWER STATION

Magnesium International Limited (ASX: MIL) today announced that the South Australian Development Assessment Commission has agreed to extend the Development Approval for the company’s SAMAG Magnesium Project until 5 July 2004.<p>

Magnesium International’s Managing Director, Mr Gordon Galt said, “The development approval which has been extended covers the building of a 70,000 tonnes per year magnesium plant and a 400MW power station. The approval is more than sufficient to enable the commencement of the first module of MIL’s wholly owned SAMAG smelter, which will have a rated capacity of 41,000 tonnes per year. MIL will apply for an increase in smelter capacity to cover the second module during 2004.

“ The fact that the development approval also covers a base load power station is also quite important, even though MIL has contracted to receive its power for SAMAG from NRG Flinders at Port Augusta.

“MIL is currently discussing the potential development of this power station with three parties and there are probably more parties who would be interested. Development of the station at the same time as the smelter will allow benefits to flow to both projects, so MIL is keen to promote this development. The Port Pirie site is an ideal location for a power station, with full approval already in place. A new power station will also be required from 2006 onwards to meet South Australia’s growing energy needs.”

Mr Galt added: “The approval extension provides additional flexibility for the smelter project. MIL will be ready to undertake its major capital raising from the third quarter of 2003 and is currently assembling a cornerstone equity group to commit to $80 million of the total equity requirement of $230 million. Final timing for the raising of the remaining $150 million from the equity markets will depend on getting the cornerstone group together and favourable equity market conditions.”

MIL is currently undertaking a 1 for 5 rights issue to raise $8.3 million to help fund ongoing work on the SAMAG smelter project and the commencement of its magnesium sheet metal manufacturing venture with the CSIRO.

For further information contact:

Gordon Galt
Managing Director

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.