miningnews update

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    SAMAG project backed by Thiess
    Brad Ricks
    Thursday, June 19, 2003
    MAGNESIUM International has announced contractor Thiess as its first "cornerstone investor" for the SAMAG magnesium smelter project in South Australia.
    Thiess will contribute up to $20 million in equity towards the project after being awarded an exclusive engineering, procurement and construction (EPC) contract for constructing the first module of the proposed 84,000tpa smelter.
    It is yet to be determined whether the equity from Thiess will be contributed as a joint venture or as a shareholder in MIL.
    MIL managing director Gordon Galt announced earlier this year that the company would build the smelter in two stages with the first module to have a capacity of 41,000tpa.
    Module one is to be built and commissioned over a three-year period from the date of financial close for the project and the EPC contract is expected to have a value of close to $500 million.
    Original cost estimates from MIL for the complete construction of module one were over $600 million.
    Galt said MIL and Thiess would be sitting down to work out a fixed price for the contract.
    Fellow magnesium hopeful Australian Magnesium Corporation and its contractors Leighton Holdings did not have a fixed price agreement for the failed Stanwell Magnesium Project, which was kneecapped by a $200 million cost blowout.
    "They (Thiess) wouldn't be putting their money into the project if they thought there was going to be cost blowouts that would present problems," Galt said.
    "Thiess has been around the project for three years, they know and trust the technology and I think it is critical that we have a good working relationship with them."
    Money from MIL's current $8.3 million capital raising will be used to complete the cost schedule.
    MIL is attempting to attract $80 million towards the cost of the project by way of cornerstone investors.
    Shares in MIL were unchanged in early afternoon trade at 10 cents.
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