teetering - tottering - toppling over?

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    From the Port Pirie Recorder........

    Friday, 11 July 2003

    Magnesium International's inability to raise its target of $8.3 million through an entitlements issue has threatened the finalisation of the company's venture with CSIRO.

    Raising only $2.9 million has meant the company will have to renegotiate the magnesium sheet contract with the Federal Government research facility.

    Company managing director, Gordon Galt, said he was happy with the response from shareholders to the entitlements issue considering the circum$tances at the time.

    "Particularly, the announced problems with the Australian Magnesium Company in Queensland's proposed magnesium smelter at Stanwell 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 the company when the entitlements issue was planned," he said.

    "These matters have affected the issue despite the fact that we have worked hard to reassure our shareholders that our smelter project is different from the Queensland project."

    "We are convinced that the review will confirm the attractiveness of the SAMAG project for South Australia," Mr Galt said.

    "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."

    He said he remained "positive" that the magnesium sheet venture with CSIRO would still go ahead.

    "Because of the shortfall in our entitlements issue 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 CSIRO has now expired," he said.

    "I had a meeting with senior representatives at CSIRO recently and we have re-commenced our negotiations and we will have to re-arrange the venture contract."

    He said a new player in the magnesium smelter market, La Trobe Magnesium, would have no impact on the proposed $1 billion smelter at Port Pirie.

    The $984 million Latrobe project planned for Victoria's La Trobe Valley proposes to extract magnesium metal from the fly ash in brown coal. "The project has a long way to go," Mr Galt said.

    "They have to test the technology which has never been used before by building a pilot plant.

    "By their own admission they could not be operating before 2009. We are well in front of that."

    He said the plan was to keep working on critical issues for SAMAG.

    "This especially applies to the assembly of the cornerstone investor group and fixing the engineering procurement contract price for smelter construction with Thiess," he said.

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