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ASC commences investigation into Cobar mines



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A U S T R A L I A N S E C U R I T I E S

C O M M I S S I O N

l>,tc: Friday 27 February 1998 _

The Australian Securities Commission (ASC) today announced it had begun a formal investigation into allegations of possible insolvent trading in the period leading up to the appointment of an administrator to Cobar Mines Pty Limited (in liquidation).

The investigation relates to events surrounding the provision of u letter of financial support by Ashanti Goldfields Company Limited to the directors of Cobar Mines Pty Limited and its parent company, GSM Metals Pty Limited, in early December 1997.

The letter of support was withdrawn by Ashanti shortly before Cobar Mines Pty Limited was placed into administration on 21 January 1998. Λ liquidator was subsequently appointed on 17 February 1998.

The Corporations Law states that directors ol"companies have a duty to ensure their companies arc able to pay their debts us and when they fall due, or take action to place the company into administration or liquidation.

Further the Corporations Law provides that a holding company of a subsidiary that continues to trade while it is insolvent may be liable for the debts incurred, if the holding company should reasonably have known that the subsidiary was insolvent at the time of incurring the debts.

The ASC is considering whether any debts were incurred at a time when Cobar Mines Pty Limited was insolvent, and whether any holding company may be liable in respect of any such debts.

The investigation will mainly focus on debts incurred in the period around and after the time of the provision of the letter of financial support.

The ASC is confirming that it has commenced a formal investigation because of the public interest in the matter, especially in the area around Cobar.

For further information contact: Issued by:

ASC COMMENCES INVESTIGATION INTO COBAR MINES

Greg Tanzer ACT Regional Commissioner Tel: (02) 6250 3887 Mob (0411) 549 144

ASC Media Unit Tel: (02) 9911 2097

ASC 98/053