MGX RESOURCES LIMITED — Capital/Financing Update 2003

Jan 14, 2003

Mount Gibson Iron Limited

ABN 87008670817

First Floor, 7 Havelock Street
West Perth 6005, Western Australia

PO Box 55, West Perth WA 6872

Telephone: 61-8-9485 2355 Facsimile: 61-8-9485 2305 E-mail: admin@mtgibsoniron.com.au

15 January 2003

VIA FACSIMILE: 1300 300 021 No. Pages $=$ 2

The Manager Company Announcements Australian Stock Exchange Limited Level 10, 20 Bond Street SYDNEY NSW 2000

TALLERING PEAK HEMATITE PROJECT- PROGRESS ON ORE SALES

Mount Gibson Iron Limited's Marketing Manager, Mr Warwick Davies, has reported his high level of confidence of finalising medium term sales contracts within the next few months, for all of the Company's of 1.5 Mtpa production of iron ore from its new mine at Tallering Peak, after visiting prospective Chinese customers last month.

Mr Davies has reported that the Tallering Peak ore, which is extremely dense and hard with high iron content and low contaminants, is proving extremely attractive to steel makers because of its minimal degradation during handling and its inherent strength in the blast furnace. An added attraction is its relatively high content of magnesium oxide, which reduces the amount of flux that must be added during the iron making process for the removal of slag.

The Company has restricted its potential buyers in both China and Japan to those steel mills operating through ports limited to receiving Panamax size vessels (65,000 DWT), similar to those which will be able to be loaded at Geraldton. Sales contract negotiations are focused on a number of steel mills located in north-east and central China, as well as two mills in Japan.

A subsidiary of international steel trader, Stemcor Limited, has entered into a contract to purchase 500,000 tpa of lump ore for the life of the Tallering Peak mine and Glencore International SA has recently agreed to purchase 100,000 tpa of lump ore and 250,000 tpa of fines for its pig iron plant near Nanjing. Glencore has already contracted to purchase all of the planned production from the Company's proposed second iron ore mine at Mt Gibson.

Mr Davies has also reported the current high level of iron ore demand in China will continue throughout 2003, strengthening the outlook for price increases.

Mr Brian Johnson, Managing Director of Mount Gibson Iron Limited, said that the generally anticipated 3% to 4% increase in iron ore prices for 2003 together with operating cost savings becoming apparent as the Company finalises its contracting arrangements for the Tallering Peak Project, should largely offset the impact of recent increases in the exchange rate.

Yours sincerely, MOUNT GIBSON IRON LIMITED

Ŵ

Angela Dent Company Secretary

Enquiries: Mr Brian Johnson Managing Director Telephone: 08-9485-2355 E-mail: brianjohnson@mtgibsoniron.com.au