STOCK EXCHANGE ANNOUNCEMENT
Dated: 3 July 2003

UPDATE REGARDING ENTITLEMENTS ISSUE PROCEEDS

Entitlements Issue

Magnesium International Limited (MIL) advises that the company’s entitlements issue, which closed on 30 June 2003, raised $2.9 million. The Issue had sought to raise $8.3 million.

MIL’s Managing Director, Gordon Galt, commented: “We are pleased with the response from shareholders given the market circumstances which arose during the issue, particularly the announced problems with AMC’s proposed magnesium smelter at Stanwell, Queensland and the South Australian Government’s surprise decision to conduct a review of the SAMAG magnesium smelter business case, neither of which were anticipated by MIL when the Entitlements Issue was planned. These matters have affected the Issue despite the fact that we have worked hard to reassure our shareholders that our smelter project is very different from the Queensland project and we are convinced that the review will confirm the attractiveness of the SAMAG project for South Australia. I am pleased that those shareholders who have contributed to the Entitlements Issue have continued to demonstrate their commitment to and confidence in our magnesium activities”.

In view of the fact that a shortfall has occurred MIL advises that it will now seek to make direct placements of as many of the shortfall shares as possible over the next three months on the same terms as in the Entitlements Issue as allowed under ASX Listing Rules. Placements can be made to existing shareholders and new shareholders.

Business Strategy

Mr Galt said “The first effect of the shortfall in our Entitlements Issue has meant that we have been unable to finalise our proposed venture with the CSIRO in accordance with the term sheet and our period of exclusive negotiations with the CSIRO has now expired. We will be re-commencing discussions with CSIRO shortly, with the intention of negotiating a new arrangement between MIL and CSIRO in the commercialisation of CSIRO's magnesium sheet technology as soon as possible".

“ In respect of SAMAG, we intend to keep working on the issues which are critical for SAMAG’s implementation, especially the assembly of the cornerstone investor group and fixing the EPC price for smelter construction with Thiess” Mr Galt said.

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.