msc future, page-8

independent valuation Manager
Company Announcement Office
Australian Stock Exchange Limited
Level 4, 20 Bridge Street
Sydney NSW 2000
21 September 2006
STOCK EXCHANGE ANNOUNCEMENT
INDEPENDENT VALUATION
SKARDON RIVER KAOLIN PROJECT
In conformity with International Accounting Standards requirements, an independent valuation has been commissioned over the Skardon River Kaolin Project. The valuation has been undertaken by Hall Chadwick Corporate (NSW) Limited who is licensed to issue independent expert reports.
The valuation as at September 2006 is $143.3 million. This valuation represents the present value of projected future cash flows of the project using a Discounted Cash Flow (DCF) Rate of 14%. The DCF Rate was calculated using the Capital Asset Pricing Model, incorporating a nominal risk free interest rate of 5.8%, a market risk premium of 6%, an equity Beta factor of 2, an exchange rate of US$0.76, and an annual inflation rate of 3.5%.
The valuation recognises past project delays caused by; plant refurbishment, shipping and container availability delays, (all of which have now been overcome), and the commencement of approximately 70 active new customers covering all the major product category offerings from Skardon River.
The underlying assumptions impacting on the valuation also included a reasonability test on; ore availability; mining costs; production costs; market pricing; shipping costs; projected sales development; fixed and variable costs as well as additional capital expenditures.
A sensitivity analysis using; +/- 1% DCF Rate; +/- 1 US cent in exchange rate movement and, +/- 2% in sales prices provided a range of project values from $122 million to $156 million. The sensitivity analysis deals with each type of variation in isolation from potential variations in any of the other key assumption categories.
C V Alexander
Managing Director
About MSC:
MSC has commissioned a world class china clay (kaolin) project at Skardon River, in northern Queensland which is currently in the marketing roll out stage. Additional premium quality kaolin projects are being developed in China and Western Australia which will transform MSC into a leading regional based supplier with a full range of exceptionally high grade kaolin products for the paper, paint, polymer, cosmetic, pharmaceutical and ceramic industries focused on S. E. Asia and selected world markets.
Contact: Vic Alexander, CEO Tel: 02-9290 2400