The Australian Mines Limited (ASX: AUZ) share price will be on watch on Thursday when it returns from its trading halt.
Why were Australian Mines' shares in a trading halt?
The mineral exploration company's shares were placed in a trading halt last week whilst it prepared a response to an ASX query.
Among the many questions that the ASX wanted answered was an explanation for financial forecasts given in a presentation at a mining conference in London last month.
In that presentation the company's managing director Benjamin Bell stated that the Sconi nickel and cobalt project was expected to generate revenue of $400 million per year through a $5 billion deal with SK Innovation.
These comments were contrary to the requirements of the ASX listing rules and have now been retracted by the company. It also acknowledged that it did not have a "reasonable basis" consistent with the requirements of ASIC to offer financial forecasts.
Surprisingly, the company insists that such comments should not have had a material effect on the price or value of its shares. Given the company's market capitalisation is a touch under $300 million, I'm not sure I would agree with this view as those are significant forecast revenues for a company of its size.
What now?
Australian Mines' shares look set to have a positive return to trade on Thursday despite this unwanted development.
Whilst its shares were halted they were on fire in over the counter markets in the United States. Those US-listed shares rose 28% on Wednesday and a further 22% on Thursday.
Should you invest?
I think it is a little too soon to invest in Australian Mines and investors ought to wait until financial forecasts can be relied on.
Until then I would suggest investors stick with mining giants such as BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
