ANM 0.00% 5.5¢ advanced magnesium limited

austmag sinks on talk of new stanwell project part, page-2

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    qld gov will not extend financial assistance to am AMC talks put wind up investors
    May 27 2003
    By Alex Tilbury

    Australian Magnesium Corp shares yesterday sank to record lows as the light metals group announced talks were under way with a number of potential new corporate partners to make progress on its embattled Stanwell project in central Queensland.

    Chief executive Rod Sharp said continued development of the $1.4 billion project near Rockhampton was dependent on finding a new strategic partner.

    AMC's ordinary shares fell to 16¢, down 4.5¢, while its dividend enabled stapled securities - backed by the Queensland Government - dropped 4¢ or 24.5 per cent to 13¢.

    AMC and its principal shareholder Newmont Mining Corp believed the anticipated level of additional funding and balance sheet support for Stanwell required the introduction of a new partner.

    Mr Sharp said Newmont was working closely with AMC to introduce a new partner. AMC had retained Standard Bank London as its corporate adviser.

    JBWere Queensland manager Colin McKenzie said the news of a third party was a surprise and a concern to investors. "It will lead to a dilutionary effect for existing shareholders," he said. "There is a fair bit of risk involved and the market is pricing that in."

    Mr McKenzie said yesterday's share price fall reflected the market's concern that as time went on the project developed a greater risk profile.

    AMC's Mr Sharp said that next month the company would need to secure reasonable assurance of interim financial support from its key stakeholders to carry it and the project through to the finalisation of any agreement with a new partner, which could take a number of months.

    "Should a new partner not be secured, or interim financial support not become available in the time frame required, AMC would need to review the basis for proceeding with Stanwell.

    Mr Sharp said expenditures had been reduced in recent months and a number of activities suspended but it was important that AMC quickly resolve its funding and support issues to maintain the existing project schedule and meet its customer commitments.

    Queensland Premier Peter Beattie told reporters yesterday that the Government did not have any plan to extend its financial assistance to AMC.

    "We have secured the money that is allocated and we do want AMC to survive . . . but we don't have any plans to extend that financial position," he said.
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