$$make some $ out of this dog of a stock $$, page-9

re: where did all the filth go? AustMag to sell core business

2004/11/04



Australian Magnesium Corp shareholders have today voted for the sale of the company's core magnesium business.

The sale of Queensland Magnesia and the company's Kunwarara operations to US-based investment fund Resource Capital Funds and Newmont Australia will ensure AustMag is debt free.

The sale will also refashion AustMag, which has a long history in mineral development in Queensland, into a technology based company.

Shareholders overwhelmingly agreed with the sale and the issue of 66.3 million options to RCF with 253,707,264, or 91.56 per cent, for the resolution.

The deal will mean AustMag will receive $8 million in cash and the assumption of $58.5 million of debt under QMAG's loan facility with ANZ.


Newmont will also forgive debts of $7.8 million and in addition RCF and Newmont will give a $2.5 million loan to QMAG for short-term working capital.

The sale depends on approval from the Foreign Investment Review Board and on a third party debt financier obtaining credit approval and entering into formal documentation.

After the meeting, AustMag executive director Chris Rawlings said hoped the settlement of the transaction would occur in the next couple of weeks.

"Then we move on being a pure technology company based on magnesium alloys and magnesium alloy process," he said. "We will be considering an issue of a new name because I think considering the past there probably is a need to rebadge the company as some stage."

The Queensland-based company previously warned shareholders that if they did not support the plan there was a real prospect QMAG would go into receivership.

QMAG based at Parkhurst, at Rockhampton in Central Queensland, is one of the world's largest magnesite, calcined magnesia and refractory magnesia operations.

It was established as a joint venture in 1987 to mine and process magnesite from the Kunwarara magnesite deposit. Since 1997 it has been a wholly owned subsidiary of Australian Magnesium Corp and employs about 200 people.

About 3 million tonnes of ore is mined each year at Kunwarara to yield some 450,000 tonnes annually of high-grade beneficiated magnesite, a simple first stage washing, sorting and screening process.

The Parkhurst plant, which processes the beneficiated magnesite, will be retained by AustMag.

The company reported that production at its Parkhurst plant was down 1.8 per cent in the three months to September on the previous quarter and 5.6 per cent on the same period last year.

The company said this was due to a maintenance shutdown in July.

AustMag pulled the plug on its flagship $1.7 billion Stanwell magnesium project in June last year. The Queensland government forfeited $69.4 million through its investment in AustMag.




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This story was found at: http://www.afr.com/articles/2004/11/04/1099362276135.html