The person referred to below has become a substantial...

The person referred to below has become a substantial shareholder in LUM (26million).



The Australian Securities and Investments Commission (ASIC) has obtained undertakings from Nimbus Mines Limited (Nimbus) and its managing director, Mr Christopher John Daws, in the Queensland Supreme Court, regarding an offer being promoted by Nimbus Mines and Mr Daws in relation to the ordinary shares of Australian Magnesium Corporation Limited (AMC).

The undertakings were made with the consent of both Nimbus and Mr Daws.

ASIC alleged that the offer, which involved various lending and borrowing arrangements for AMC shares, amounted to the offering of a financial service by Nimbus Mines and Mr Daws, however neither of these parties are licensed to provided those services. Mr Daws was also permanently banned as a securities representative and proper authority holder in May 2001.

ASIC further alleges that the failure by Nimbus Mines to disclose this information to shareholders, as well as some of the representations made by Nimbus in their letter of invitation, was potentially misleading and deceptive.

The letter of invitation was sent to ordinary shareholders of AMC who held at least 34,000 shares. Nimbus Mines and Mr Daws offered to purchase the ordinary shares of AMC shareholders. If the shareholders accepted, the proceeds of the sale were to be used to purchase AMC’s Distribution Entitled Securities (DES).

At the time of the offers, these DES were entitled to receive three remaining capital payments (each of 3.2 cents totalling 9.6 cents) with the last distribution scheduled for November 2004. These securities convert to ordinary shares in December 2004.

ASIC alleges that Nimbus and Mr Daws intended to provide these converted shares to the original shareholders who lent their ordinary shares to Nimbus Mines Limited. ASIC alleges that the effect of the transaction is to lock in the arbitrage between the ordinary shares and the DES, for the sole benefit of Nimbus Mines .

Nimbus Mines and Mr Daws have undertaken to the Court that they will not engage in conduct which involves distributing the offer to any shareholder of AMC, registering any share transfer as part of the offer, or selling or transferring any shares which have been registered in either of their names, as part of the offer.

Nimbus Mines and Mr Daws have further undertaken to notify the Australian Stock Exchange Limited and shareholders of AMC who received the offer, about the terms of the undertakings provided to the Court.

‘ ASIC has acted to ensure that securities are traded on a fully informed basis, and to ensure that financial services are provided by suitably qualified licensees and representatives of those licensees’, ASIC Director of Enforcement, Mr Allen Turton said.

‘ASIC warns investors against accepting unsolicited offers for the purchase of shares, and recommends that investors only deal with a licensed

securities dealer or investment adviser’, Mr Turton said.