I e-mailed MSC with a few queries regarding their operations. I...

I e-mailed MSC with a few queries regarding their operations. I will post the e-mail I sent them later tonight, but below is the e-mail response.

Seems 2004 could be a great year for MSC. I guess time will tell.

The recent buying has been good, but appears to be the Fat Prohphet crew.


----------------


Dear xxxx,


Per your email,

1) Delays are the most frustrating aspects of new projects
particularly in mining where regulatory delays cover much of our
operations,usually all different govt depts. The barge compliance papers
are awaited and we hope we shall get these early after Xmas. We do not have
Kaolin quality issues. These are formulation issues matching product specs
to customer requirements which in the case of our ceramics products required
a modified plant process. We hired a qualified ceramist in March 2003 to
replace our earlier consultant and customer feedback has been very positive
and we have moved on to more advanced tests with UK customers with a
product launch expected early 2004. We have also made good progress with
our paper and rubber products testing with customers in Asia. Paint,(our
first product release), has met customer specs and we are supplying a major
Australian coy and once our barge is OK we will bulk ship these products to
Europe, planned for Feb/Mar. following bulk production in January'Feb.

2) We have numerous signed customer contracts , some awaiting
delivery, some awaiting customer changeover scheduling which depends on
their production planners, etc. Japan is not moving as fast as I wish and
we may make some changes.

3) Correct, in the middle of the offer a number of analysts advised
the ords were much better value than the prefs,(eg Fat Prophets),which is
flattering in some respects but no doubt reduced investor appetite, likewise
the market appetite for equities vs. fixed interest turned strongly against
the Deb issue and the take up was disappointing, however the structure is in
place for the future.

4) 2003 has been quite a difficult year but we are in much better
shape for 2004 and announcements will be made when meaningful.

5) The Cornell facility is new to Australia and is not understood. It
effectively provides the company with an equity funding guarantee over 3
years which we can use at our option. Considering that the biggest risk
for new projects is finance it very significantly reduces risk and in my
personal view warrants an extra 10 cents to our share price, we will need to
promote these points with brokers in the New Year. Dilution is minimized
assuming we build the share price over the next 3 years as we only pay 3%
discount to prevail

ing mkt price vs. 20% for institutional placements



Rgds



Vic Alexander