MAGNESIUM ELEKTRON SIGNS AJ LICENCE AGREEMENT.

4 April 2005

On the 5th January 2005 after a nine month Investment program, Magnesium Elektron pressed the start button to commence AJ62 ingot manufacture at its new facility in Manchester.

The dedicated production facility operates using flexible manufacturing technology enabling both initial AJ62 alloy ingot production and also the recycling of returns from the diecasting foundry.

The processing equipment and process were developed in-house over a two year period by a dedicated team of researchers, engineers and metallurgists to Magnesium Elektrons' own specification.  "Elektron Zirconium Refining Technology" was incorporated into the process to ensure that the exacting standards required by the automotive and diecasting industry would be met with a consistent high quality, high purity AJ62 alloy ingot.  This technology enables the manufacture of ingot having both a very low Iron content and also a more consistent chemical composition.   The low Iron content ensures that the alloy has excellent corrosion resistance whereas the consistent chemical composition enables more consistent and reproducible die casting characteristics to be achieved.  The benefit of these reproducible diecasting characteristics to the diecaster is seen as a reduction in reject rates and a minimisation of downtime.

Initial capacity of the dedicated facility is 7,000t / annum which brings the Magnesium Elektron total diecasting alloy manufacturing capacity at the three European facilities to 30,000t / annum.  The dedicated facility at Manchester will be the main production site for the AJ62 alloy and available capacity will be increased in line with customer demand.  However, as part of Magnesium Elektrons overall strategy, the alloy will also continue to be manufactured at the other two facilities; that is the second facility in Manchester, and also the facility in the Czech republic.  This flexibility to produce AJ62 alloy at multiple sites will enable capacity to more closely match sudden fluctuations in customer demand and ensures a strategic supply base of the alloy into the automotive sector.