Federal Court Action

Dear Shareholder

You may have read recent press reports about legal action commenced against your company relating to allegations of pollution from the Cockle Creek smelter in New South Wales and the Port Pirie smelter in South Australia.

I want to explain the legal action, and tell you what we are doing about it.

An Application and a Statement of Claim were served on the company on Monday 28 February 2000 by solicitors acting for two former residents of Boolaroo, a suburb adjacent to the company`s Cockle Creek smelter. The Applicants, Ms Roslyn Cook and her daughter, Samantha, allege that due to emissions from the smelter, they have suffered personal injury, property damage and a reduction in the value of their former property.

The claims raised in this legal action by Ms Cook and her daughter are pursued not only on their own behalf but as representatives of two groups of people connected with Port Pirie and Cockle Creek.

This legal action is what is often referred to as a "class action".

In the interests of our shareholders, we will be vigorously defending this legal action. While we are confident of our position, the nature of cases such as this is that it may take quite some time to resolve.

Consistent with our vision and values, we treat our environmental obligations with the utmost seriousness.

We work together with governments at federal, state and regional levels to agree standards, targets and goals against which our performance can be monitored. We consult regularly with communities around our sites to keep them informed of our progress. Of course we must strive for improvement in all areas of our operations, including the environment. In this regard a significant part of our annual capital expenditure is devoted to environmental initiatives and upgrades. At all times, we have and will continue to act responsibly.

Environmental excellence is one of our core business objectives and we believe it is integral to our future competitiveness and commercial success. Details of our environmental performance can be found in our Pasminco Environment Report, which was issued in August 1999. If you would like a copy of the report, please let us know, and we will mail one to you. Alternatively you can find it on the company`s website, www.pasminco.com.au.

Yours sincerely

Mark Rayner
Chairman

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