AMR Technologies and Magnequench Combine

AMR Technologies Inc. and Magnequench, Inc have announced the signing of an agreement whereby AMR will combine with MQI. Under the terms of the transaction, AMR will issue new shares to the MQI shareholders in exchange for their MQI shares. Upon completion of the transaction, but before giving effect to the financings described below, MQI shareholders will hold approximately 26.9 million shares (62%) of AMR and the existing AMR shareholders will hold approximately 16.7 million shares (38%) of AMR.

The combined entity will be a world leader in the design and production of Neodymium-Iron- Boron powders (“Neo powders”), advanced rare earths and zirconium-derived specialty materials from three advanced manufacturing facilities in China and one in Thailand. These materials are essential inputs for virtually all electronic devices, including computers, mp3 players, personal video recorders, optical disc drives, mobile phones and plasma/LCD displays, as well as for a range of automotive and industrial products.

AMR ranks as the second largest producer of advanced specialty rare earth materials, which are used in the electronics and automotive industries. In addition to Neo powders and rare earths, AMR is the fastest growing producer of specialty zirconias used in automotive catalysts, electronic ceramics, fuel cells, thermal barriers and other applications.

AMR is one of the world’s largest producers, and MQI is one of the world’s largest consumers, of the rare earth element neodymium. Thus a key benefit of the transaction will be vertical integration via the additional production of neodymium by AMR for consumption by MQI in its production of Neo powders.

MQI is the key patent holder and world's largest producer of Neo powders used in the production of bonded magnets. Neo powders are the world’s strongest permanent magnetic powders in general production. Such magnets are used mainly in applications such as micromotors, precision motors and other motor and sensor applications where increased performance is required in combination with small size, weight and improved power efficiency.

A key growth driver will be the combining of AMR’s nanotechnology development efforts in the United Kingdom and Singapore with MQI’s research and development activities in Singapore. The focus will be on the continued development and commercialization of new magnetic powders, rare earth, and zirconium products along with nano products.

“The combination of MQI and AMR makes perfect sense. The new company will have superior growth prospects based on the ability to leverage a larger operating platform, a greater breadth of customers and a stronger financial position.” said Archibald Cox, Jr., President and CEO of MQI.

Mr. Cox will be Chairman and Mr. Gundy will serve as Vice Chairman of the Board of Directors of the combined entity. Constantine Karayannopoulos, Executive Vice President and COO of AMR, will be appointed CEO and President.

The combination is subject to approval of a majority of AMR shareholders voting at a special meeting of shareholders. A special meeting of AMR shareholders is expected to be held in July, 2005. In addition, the completion of this transaction is conditional upon closing of the private placement of convertible debt, the equity offering and the senior term debt and other customary closing conditions.

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