$$make some $ out of this dog of a stock $$, page-8

re: potential capital gain issues http://www.thecouriermail.news.com.au/printpage/0,5942,10982241,00.html

AustMag plunges 18% on massive turnover
Richard Owen
06oct04

TRADE in Australian Magnesium Corp shares was eclipsed only by turnover in Deutsche Office Trust yesterday as shareholders bet on the future of the company's magnesium technology business.


After topping turnover on Monday, almost 25.2 million AustMag shares changed hands again yesterday with the stock closing down 0.9¢ or 18 per cent at 4¢ while the distribution entitled securities gave up 0.2¢ or 3.6 per cent to end the day at 5.3¢.

Daytraders appear to have zeroed in on the stock as a turnaround story since the company announced plans last week to sell off its debt-laden Queensland Magnesia subsidiary and Kunwarara magnesite deposits.

AustMag has signed a preliminary agreement to sell QMAG and the Kunwarara deposit to US-based investment fund Resource Capital Funds and Newmont Australia.

If the transaction goes through, AustMag will be left debt-free with about $10 million cash on hand. It will retain ownership of its AM Technologies intellectual properties business and its proprietary magnesium process.

The Queensland-based company sent a memo to shareholders with its annual report on Friday urging them to support the sale at a meeting on November 4. If shareholders do not support the plan executive chairman Chris Rawlings warned there was a real prospect QMAG would go into receivership.

The market valuation of the DES, which still entitle owners to a final 3.2¢ capital return, continues to offer a significant arbitrage opportunity against the price of the ordinary shares which values the company's AM Technology at about $30 million.

Dr Rawlings was unable to say whether the market's confidence was warranted or not at this stage.

"Until we know what the basis of the commercialisation process is in relation to price, volume and other external fixed costs I don't know whether the current price being viewed is optimistic or pessimistic," he said.

"All I can say is we're going to commercialise the heart out of it and the value will progressively approximate the value of the company once we know some of the input parameters."

AustMag pulled the plug on its flagship $1.7 billion Stanwell magnesium project in June last year.





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