STOCK EXCHANGE ANNOUNCEMENT
Dated: 19 June 2003

MEDIA RELEASE

FIRST CORNERSTONE EQUITY CONTRIBUTOR FOR THE SAMAG PROJECT

Magnesium International Limited (MIL) and Thiess Pty Ltd (Thiess) today announced the signing of a Memorandum of Understanding (MOU) involving the funding of MIL’s SAMAG magnesium smelter project.

The MOU commits Thiess to contribute equity to the project on the award of an exclusive Engineering, Procurement and Construction (EPC) contract for the first module of the smelter.

MIL is proposing to build an 84,000 tonne per annum (tpa) capacity smelter in Pt Pirie in two stages. Module 1 will have a capacity of 41,000 tpa and be built and commissioned over a three-year period from the date of financial close for the project. Development of Module 2, with an additional capacity of 43,000 tpa, will commence during the commissioning phase of the first module.

The MOU provides for Thiess to be appointed as construction contractor for Module 1. The EPC contract for Module 1 will have an expected value of approximately $500 million.

Thiess will contribute up to $20 million of equity to the project at the time of financial close, with the final equity amount being dependent on the terms of the final EPC contract and following discussions with senior lenders to the project.

A decision as to whether the equity will be contributed as a joint venturer or as a shareholder in MIL will be made at a later time.

Commenting on the MOU, Mr Gordon Galt, Managing Director of MIL, said, “This is the important first step in assembling the cornerstone equity group for the smelter”.

“We declared some time ago that we would be approaching vested interests, i.e. organisations that would directly benefit from the construction and operation of the smelter, to make an equity contribution to the project”.

“Thiess is the first company to support this strategy and we are delighted to have this tangible sign of their backing. Thiess has been working with us on this project for three years, and is confident in the proven Dow technology which will used in the smelter,” said Mr Galt.

The Managing Director of Thiess, Mr Roger Trundle, said “We are very happy to be lending our support to the SAMAG project and will be actively assisting MIL to convince other potential equity contributors of the benefits of the project.

Module 1 of the smelter will take 27 months of construction before commissioning begins. MIL expects to have Module 1 fully commissioned 10 months later, so the overall period to achieve full production will be just over three years.

“Module 1 will be approximately equal to the largest capacity magnesium smelter currently in operation anywhere in the world. All the approvals are in place for this development so the sooner we get the other cornerstone investors in place the sooner we will be able to bring the project to market to raise the remaining equity,” said Mr Galt.

“Our initial equity target is $80 million and the on-market raising will be a further $150 million. Given appropriate market conditions we remain hopeful that we will be able to get the project to the equity market later this year” Mr Galt added.

MIL is currently undertaking a rights issue to raise $8.3 million. These funds will be used for the costs of final engineering, lender’s due diligence and legal costs associated with the SAMAG project, entering into a magnesium sheet metal manufacturing venture with the CSIRO and working capital.

For further information:

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.