austmag's sharp and brown leave sunken ship AustMag's Sharp and...

austmag's sharp and brown leave sunken ship AustMag's Sharp and Brown leave sunken ship
16/06/03 By: MiningNews.net

Australian Magnesium Corporation's (ANM) chief executive Rod Sharp and vice-president Tony Brown have resigned following the failure of the $1.7 billion Stanwell magnesium project. However with concessions from the project's major backers Newmont Mining, Leighton Holdings, the Queensland and Federal Governments, and the project's financiers, ANM will continue as a public company and seek alternate development scenarios.

Leighton has agreed to terminate its EPCM contract and form a joint venture on any future developments at Stanwell, while Newmont has approved concessions relating to its existing financial arrangements with ANM.

The financiers for the project have walked away, with the debt facilities being cancelled and associated foreign exchange and interest rate hedging contracts unwound.

The company will continue to operate with a five man board, with Chris Rawlings taking up the position of acting CEO and Roland Williams remaining on as chairman until ANMs annual general meeting in November.

"It's a new game and it all starts this afternoon," Williams told a press conference in Brisbane late Friday.

While the restructure has saved ANM from total collapse, Williams admitted it was a sad day for a company that was to become the world's largest magnesium producer on the back of the 90,000t a year Stanwell project.

"This was a ship that hit a rock," he said "We might have avoided the rock but we didn't."

The biggest rock for the Stanwell project came in the form of a $200 million construction overrun, which according to Williams, was due to the higher than expected cost of bulk construction materials.

"Once you trigger a project and you have a deadline to meet for the project, then money gets spent at what the outside world would think was a relatively high rate of knots," he said.

"We frankly did not know that we were getting into this problem until the figures became apparent as our design extended."