Project Reviews/Board Changes

RNS Number:8923X
AuIron Energy Ld
28 June 2002


AuIron Energy Limited

28 June 2002



                           RESULTS OF PROJECT REVIEWS

                     BOARD, MANAGEMENT AND COST RESTRUCTURE

  • Business case review outcomes:
      • AuIron to curtail funding of SASE and restructure the Project
      • Ballymoney Project prospective
  • Board, management and cost re-structure
  • Corporate restructure planned to introduce strategic partners to SASE &
    Ballymoney

AuIron Energy Limited ("AuIron") has completed comprehensive business case
assessments of the SASE/Whyalla Pig Iron Project ("SASE Project") and the
Ballymoney Lignite Coal Mine and Power Project ("Ballymoney Project"), and also
a review of its corporate activities. The outcomes and consequent measures that
AuIron is immediately implementing are set out below.



SASE PROJECT

Significant technical progress has been made towards proving the commercial
application of AusIron technology during the Demonstration Plant campaigns to
date.

However, the business case for a one-module SASE Project as currently conceived
does not indicate an adequate risk-adjusted return to AuIron. The primary
factors leading to this result were: the capital requirements, the economic
fundamentals of the business case and projected production costs relative to the
sector. Other factors bearing on the future of the project are: the level of
capital required of AuIron, the further time required to provide a sound
technology platform for scale-up, stakeholder synergies, and whether the project
would provide a robust platform for achieving AuIron's goal of a 5-module
development using its own resources.

 The Board has therefore determined that AuIron will cease funding further
development of the project as sole investor and will limit further expenditure
to areas that facilitate realisation of value for AuIron shareholders.
Shareholders will be aware that, with the exception of the START Grant from the
Commonwealth government, virtually all SASE funding has so far been borne by
AuIron. Aggregate expenditure amounts to $41 million to date.

Corporate options to preserve and enhance the value of SASE for AuIron are being
pursued with a view to rapid implementation, including the introduction of a
strategic shareholder to SASE Pty Limited to support further development.

Rectification works necessary to restore the Demonstration Plant following the
fire on 7 May 2002 are expected to be completed by September 2002 and will be
largely covered by insurance.



BALLYMONEY PROJECT

The business case assessment of the Ballymoney Project confirms the
prospectivity of the project. It gives the Board confidence to continue to
develop the project as a potential new electricity provider to the island of
Ireland. Ballymoney is well placed to service anticipated growth in power demand
in this market and provides the advantage of indigenous fuel to reduce high
reliance on imported gas for power generation.

AuIron will progressively commit resources to the project against defined
milestones. Preparations are under way to lodge the Development Application for
mine, power station and transmission lines by September 2002 with a view to the
involvement of a major power partner at an appropriate time.



BOARD, MANAGEMENT & COST RE-STRUCTURE

AuIron has present cash reserves of some $A32 million of which approximately $7
million has been committed. To conserve this asset a cost-cutting plan has been
implemented to reduce general and administrative costs by at least $A2 million
per year (approximately one third). This will derive mainly from reductions in:
management costs, the use of consultants, corporate overheads, and the number
and fees of directors.

 Prior to the Company's next AGM the Board will be reduced to 3 non-executive
and 1 executive directors. The changes will be designed to secure the
appropriate skill base for the Company's future. Mr Alf Paton, Chairman, has
advised that he will oversee the Company's transition but does not intend to
seek re-election at the next AGM. Fees to directors have been reduced by 25%.

 Mr Neill Arthur, Managing Director, is retiring from the Company, effective 1
July 2002. The Board acknowledges his contribution to the development of the
Company's projects over many years. Mr Jon Parker (currently Chief Operating
Officer) has been appointed Managing Director effective 1 July 2002.



THE FUTURE

The Board looks forward to working closely with its new Managing Director and
wishes to assure shareholders that it is committed to restoring value in AuIron.
The Board believes that the actions announced today will transform the Company
and reposition it to take full advantage of the Ballymoney opportunity, preserve
value in SASE, and restore confidence.



Alfred Paton

Chairman





CONTACT DETAILS

AuIron Energy Limited

Phone: 61 (0) 2 9357 2044

Facsimile: 61 (0) 2 9368 1313

Mr Joe Fontana                                  Mr Jon Parker

CFO & Company Secretary                         Mobile - 61 (0)408 921 551



College Hill

Mr Peter Rigby                                  Tel - 44 20 7457 2020

END



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