ANM 0.00% 5.5¢ advanced magnesium limited

austmag's stanwell project faltering AustMag's Stanwell project...

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    austmag's stanwell project faltering AustMag's Stanwell project faltering
    4/06/03 By: Sarah Richards

    Australian Magnesium Corp’s (ANM) $1.5 billion Stanwell magnesium project has failed leaving the project more than $500 million in debt, said newspapers this morning. The company last week said it had suffered cost overruns and was urgently seeking a $200 million injection.

    The project, located 25km south west of Rockhampton had been 10 years in the making with first metal production expected in the second quarter of 2004, ramping up to full production in 2007. The company forecast that it would be profitable by 2006.

    Yesterday ANM shares were halted ahead of an announcement about the company’s future on Thursday. The Australian Financial Review reported this morning that it was in crisis talks late yesterday with its creditors and engineering group Leighton Holdings (LEI) over the appointment of administrators or receivers to the project.

    ANM chief executive Rod Sharp last week said that unless a white knight could be found quickly, the project was in danger of collapse. Although it is believed BHP Billiton (BHP) and Anglo American each held separate discussions with ANM, The AFR said they could not support the project in such short time frame.

    At the end of the March quarter, construction of the plant was only 3.5% complete although the engineering work was 55% complete and procurement of essential materials was 66% complete.

    The federal and Queensland governments are ANM’s largest creditors, being owed about $400 million, The AFR added.

    SHAW Stockbroking’s Brent Mitchell said that contractor Leighton is not exposed.

    “Leighton has indicated to us that they were being paid on a weekly basis and are covered up to the end of May,” he said. “Consequently, their exposure is minimal apart from the loss of work in hand.”

    Newmont Mining (NEM) provided a $75 million hedge fund guarantee, while Ford Motor Co lent ANM $30 million to repaid once production commenced. The government owned CSIRO is also unlikely to be repaid its owed $50 million.

    ANM closed at 19c yesterday, slumping 63% since the same time last year.
 
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