Aus Mines to issue shares to creditors

Former nickel miner Australian Mines will resolve its outstanding debts through the issue of nearly 3 billion shares to creditors at no cost.

The company today invited creditors of the company to subscribe to 2.8 billion shares for no consideration, with shares priced at 0.1 cents, a steep discount to its last traded share price of two cents.

Trading of shares in the company was suspended late last year.

"It is not possible for the company to settle all of its outstanding debts in cash, however the Board is committed to ensure that all outstanding company debts are settled in a manner that is fair to all creditors," Australian Mines chairman Neil Warburton said.

Creditors who subscribe to the placement will have the opportunity to "sell down" their shares through Patersons Securities, with Australian Mines to cover the cost of broker fees.

The creditor placement is conditional on the company reaching 90 per cent of acceptances to the placement, the completion of a five-for-one entitlement offer to shareholders to raise $2.2 million and shareholder approval.

Australian Mines said the entitlement offer is "proposed" to be underwritten by Patersons.

Mr Warburton said funds raised from the entitlement issue will be used for gold exploration at the company's tenements in WA.

Australian Mines closed its Blair nickel mine in December due to the sharp fall in the nickel price.

The company has since sold some infrastructure assets from the mine, generating some $2.15 million.