Media Release
Dated: 30 July 2003

South Australian Government reaffirms $25 million commitment in infrastructure support for SAMAG Magnesium project

The Directors of Magnesium International Limited (MIL) were advised yesterday that the South Australian Government had completed its review of the SAMAG Project’s business case. As a result, the SA Government has reaffirmed its commitment to providing $25 million in infrastructure support to the SAMAG magnesium smelter project.

MIL’s Managing Director, Gordon Galt said “We were surprised that this review was undertaken at this stage and are pleased that the exercise is now a thing of the past. As we had previously stated and expected all along, the review has had a positive result and the Government has given the green light to its promised support. It has decided that the market will have the final say as to whether the project proceeds. In our opinion, the Government’s support is well placed, as we believe SAMAG has significant potential for economic benefits for South Australia and the country as a whole”.

MIL advises that the State Government’s review was comprehensive. The review team examined the engineering package, including the technology, capital and operating cost estimates, legal agreements, market analysis, financial models and the proposed financing arrangements. Where necessary the review work was undertaken by independent consultants, with considerable relevant expertise. “It is difficult to conceive what else they could have looked at” Mr Galt said. “I believe it is also notable that MIL had no input into the terms of reference for the review, so we can’t be accused of biasing either the investigation or the result. It was completely arms length and we cooperated fully with the Government at all times, just as we have in the past.”

“MIL is now focused on ensuring the uncertainty caused by the review is cleared up. The update review was announced in the middle of a capital raising via a rights issue to shareholders. There is little doubt that the take-up of rights by shareholders was adversely influenced by this uncertainty” Mr Galt said. “Hopefully people who have reservations about the SAMAG project will take the time to talk to us directly in the future rather than creating issues where none exist. We agree with the Government that the investment market is the right place for the project to be finally assessed, and at the appropriate time we will present all relevant data in a detailed prospectus as we recently did with our rights issue.”

“We will be communicating with shareholders in the next few days to give them more details of the review and its findings. We plan to undertake placement of the shares not taken up in the rights issue as soon as possible so that we can continue the final elements of work needed before proceeding to financial close. These are confirmation of a fixed price EPC contract for the smelter and the announcement of additional cornerstone investors. We already have one significant cornerstone investor, with Thiess having agreed to provide up to $20million in equity at financial close.”

Mr Galt added “We will also be using the results of the SA Government’s update review to support our case for a package of Federal Government assistance.”

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.