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austmag surges 40pc after agreement with

  1. henrikc

    729 Posts.

    AustMag surges 40pc after agreement with governments
    10:49, Thursday, 25 March 2004

    Sydney - Thursday - March 25: (RWE) - Shares in Australian
    Magnesium Corporation Ltd jumped 1.5c to 5.2c this morning after the
    company reached agreement on terms for the government stakeholders to
    exit their involvement.
    As announced on March 15, the Commonwealth and Queensland
    governments indicated they would exit their position as secured
    creditors, extinguishing all their debts, and provide AustMag with an
    opportunity to pursue its business strategy.
    The business strategy involves:
    1. Continuation and development of the Queensland Magnesia
    Business (QMAG);
    2. Implementation of the Advanced Magnesium Technologies
    business; and
    3. Progression of the Primary Magnesium Technology research into
    the AM Process.
    AustMag says it is engaged with several potential investors, who
    have expressed interest in the business plans and are examining the
    investment opportunity.
    It has been agreed with the government stakeholders that -
    AustMag will retain:
    * QMAG and its associated assets;
    * all of AustMag's magnesite resources;
    * all assets, alloy and metal handling technologies and
    intellectual property required for the Advanced Magnesium Technology
    business;
    * intellectual property, plant design, process design
    improvements and research programs relating to the AM process for the
    production of magnesium metals;
    * the Gladstone Pilot plant site, equipment and operating
    licences;
    * Brisbane corporate office, equipment and facilities;
    * certain physical assets from the Stanwell Magnesium Project,
    which could be used in future magnesium casting business or in
    developments of the AM process; and
    * $8 million in cash ($3 million of which will be paid to the
    government stakeholders if the company raises sufficient capital to
    pursue its business plan or by September 30 but if AustMag were to cease
    its operations, other than QMAG, before September 30, that amount would
    be available for the benefit of creditors).
    In return, AMC will relinquish to the government stakeholders:
    * cash in the escrow accounts of $38.4 million;
    * cash in other accounts exceeding $8 million;
    * the land that comprises the Stanwell magnesium plant site,
    which will be reserved as a site for a magnesium plant for five years.
    * physical assets not required to implement the business plan;
    * other assets of the Stanwell Magnesium Plant that the company
    may in the future determine are not required for implementation of the
    business plan.
    AustMag says it regards this agreement as "a very positive
    resolution to a complicated and difficult situation".
    However, the company notes the above agreement does not address
    the QMAG debt issue and AustMag is in discussions with Newmont, the debt
    guarantor, ANZ, the debt provider, and other banking institutions.
    The two remaining distribution payments to holders of
    distribution entitled securities will be paid as scheduled on May 23 and
    November 23.
    Copyright © 2004 RWE Australian Busine

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