AustMag sinks on talk of new Stanwell project partner May 27 2003
Australian Magnesium Corp shares yesterday sank to new lows as the light metals hopeful announced talks were under way with potential new corporate partners to advance 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.
AustMag's ordinary shares dropped to 16c, down 4.5c, while its dividend-paying stapled securities - backed by the Queensland Government - dropped 4c to 13c.
AustMag and its principal shareholder, Newmont Mining Corp, believe the expected level of additional funding and balance sheet support required necessitated the introduction of a new partner.
Mr Sharp said Newmont was working closely with AustMag to introduce a new partner and AustMag had retained Standard Bank London as its corporate adviser.
JB Were 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," Mr McKenzie 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 the project was attracting a greater risk profile.
AustMag's Mr Sharp said that during June 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 new partner, which could take months.
"Should a new partner not be secured, or interim financial support not become available, [AustMag] would need to review the basis for proceeding with Stanwell," he said.
Mr Sharp said that expenditures had been reduced in recent months and some activities suspended.
