NZ Silicon Producer Facing Dissolution

A prominent company exploring for silicon in Southland is facing dissolution if it does not get an injection of capital in the next year.

Silicon Metal Industries is one of four firms believed to hold exploration permits to search for silica at Pebbly Hills.

In the firm's annual report, issued in March, chairman Michael Hawarden said SMI concluded the year with a $62,000 deficit and an injection of funds was vital to keep the company alive. Overtures had been made to local and overseas financial institutions to raise $500,000 initially, he said.

However, shareholders were also being asked to increase their holdings in the firm, being offered up to $5000 in shares at 2.5c each.

"Our hope is shareholders will avail themselves of this discounted offer, which will enable the company, firstly, to survive, and to pursue capital raising from other sources, leading ultimately to capturing the very considerable value which it is felt is inherent in this project." The year's activities would depend on the successes or otherwise of interim capital raising, he said.

It was a difficult time to be seeking capital, given the disarray in world financial markets, but he believed the future of the project was positive.

"The silicon market appears to be relatively buoyant, and a weaker New Zealand dollar enhances the viability significantly."

Previous geological investigations had also indicated the presence of economically significant gold grades in the area, he said. "This alluvial gold could be recovered as a byproduct of the gravel washing and screening stage. Further testing to confirm actual grades is warranted."

SMI has about 70 New Zealand shareholders, including the South Island's richest man Allan Hubbard, and some in South Africa.

Three of its South African directors were recently investigated for fraud by South Africa's Government, but no prosecution has been taken.

Source: stuff.co.nz