Sunday, August 7, 2005
"I still believe there is a glimmer of hope out there but it just needs to
be run by somebody that knows what they're doing. These people just
obviously do not know how to mine sapphires and I just don't think they
know how to mine at all."
The remote Queensland town of Sapphire is up in arms over a mining company
that recently listed and is already in trouble. Katrina Nicholas reports
on claims that ASIC should be taking action.
ROSS GREENWOOD: Corporate Australia tends to focus on the big end of town,
but with almost eighteen hundred companies listed on the stock exchange
there are many whose operations never make the headlines. Katrina Nicholas
travelled to the gem fields of central Queensland to file this report on
Australia mining, a small cap miner in the spotlight for all the wrong
KATRINA NICHOLAS: Out here everyone believes they'll strike it rich, the
grey nomads have up stumps and downed tools, making fossicking their way
of life. But it's not only the small timers chipping away. These gemfields
are home to the big end of town too, but in sleepy sapphire, they've never
seen a fight like this.
LES HAYES, former mine manager, Australis: We want our money George,
everybody wants their money.
LES HAYES: Come on, you're a public company you shouldn't be doing this,
you are trading insolvently if you've got no money.
'We're not going away George we're staying here.'
KATRINA NICHOLAS: The company at the centre of this dispute is Australis
mining. Its life as a listed company is short it made its stock exchange
debut in March but already its list of enemies is long.
LES HAYES: Who do we go to if we can't go to our own government authority
to look after us people, and the public's money, with a public company,
public money and they are trading insolvently as far as I'm concerned. If
they had money they could come and pay us now and this wouldn't have
happened, it would be all over. They've never had a good reputation for
KATRINA NICHOLAS: Creditors of Australis are angry they haven't been paid.
But most aren't surprised. Les Hayes was until a few weeks ago Australis's
LES HAYES: Years ago I managed a mine for Great Northern mining and I was
approached then by Elias Christianos to go and manage a mine for him, and
I said no I was happy where I was, and I left Great Northern and we bought
this business here, family business, and Eli kept on ringing me and
badgering me, will you come and run my mine for me, and I told him when
you get some money I'll come and do it.
KATRINA NICHOLAS: By Eli, Hayes means Elias Christianos, Australis
mining's biggest shareholder. He owns 55 per cent of the group through a
Malaysian-based holding company.
LES HAYES: I still believe there is a glimmer of hope out there but it
just needs to be run by somebody that knows what they're doing, these
people just obviously do not know how to mine sapphires and I just don't
think they know how to mine at all.
KATRINA NICHOLAS: ASIC searches show Christianos has been involved in a
string of failed mining companies. He's also been bankrupt, and served
time in jail for perjury and attempting to pervert the course of justice.
Gil smith did most of the concreting for Australis's mine, and is some
$21,000 out of pocket.
GIL SMITH, concreter: Being a concreter I was nearly first out there and I
thought well, there's no problem here I'll get paid, because I'm in early
in case they did go down, but five, nearly six months now and I just get
excuses, excuses, excuses. I can't understand how ASIC let them float a
company with the record they've already had, I mean gee ... wow.
KATRINA NICHOLAS: Neither can Les Hayes, whose complaints to Australia's
corporate regulator have so far fallen on deaf ears.
LES HAYES: Well it appears to me that I've got two battles on my plate
here, I've got a battle with Australis mining and I also have a battle
with the Australian government that ASIC are sitting on their hands, I've
lodged a complaint with ASIC, on Australis, and they sent me a letter
saying yes we've received your complaint, they sent me a pamphlet saying
yes your complaint does matter and then they send me another letter saying
no we're not going to do anything.
KATRINA NICHOLAS: ASIC declined to comment publicly about Australis
however sources close to the organisation say it is keeping an eye out.
That's little comfort for those shareholders who helped Australis raise $4
million earlier this year by buying shares at 20 cents apiece. When
Australis first released its prospectus it was forecasting this mine would
make a $2.5 million net profit for the 05 financial year, fast forward a
few months and that was revised downwards to $1.8 million, now
shareholders have been told they can expect a $2.4 million net loss. It
appears most of the $4 million raised has already been spent. More than
$100,000 went to repay a loan to Australis's CEO, Anthony Damianos while
another some $340,000 went to Ted Tzovaras, an Australis director and long
time family friend of the Christianos's.
KAY DANES: We took it on face value that he was a lawyer of some
reputation and he was there to represent us and do the best that he could
KATRINA NICHOLAS: He acted for Kay and Kerry Danes, the couple goaled in
Laos in 2000 on gem stealing charges. The couple eventually received a
presidential pardon but for them, the battle continues.
KAY DANES: I really have no idea where that money has gone and that's why
I've been trying ever since I came home to learn where that money went,
how it was dispersed, how it was spent.
KATRINA NICHOLAS: Questions are also being raised over the quality and
quantity of the sapphires unearthed by Australis. The prospectus said it
would produce 2.5 million grams of sapphires by June. Earlier this month
it told investors just 47,000 grams, or 2 per cent of that amount, had
LES HAYES: I used to call it dizzy dirt, the dirt would go from one place
to another and you know every time you pick up a metre of dirt that costs
you in excess of $1, and if you pick it up from here and put it over there
and then you pick it up from there and you put it over there, and then you
move it all around the countryside, it gets dizzy and it costs you over $1
every time you pick it up, and they moved it, they moved it heaps of times.
KATRINA NICHOLAS: Australis has its mining headquarters here in Sapphire
but despite repeated attempts by Business Sunday to get executives to come
and talk to us, all offers have been declined. We did manage to get Elias
Christianos on the phone, who promised an interview back in Sydney. That
was also cancelled, as were several further attempts, leaving Australis
creditors and shareholders wondering just what will become of the
Christianos's latest venture.
ROSS GREENWOOD: And Business Sunday has since learned ASIC has received
several more complaints about Australis' tardiness when it comes to paying