In the two hours after the company made the announcement, 30% or about $4 million was wiped off its value as its shares fell to 21c, down 9c.

The company said its cash balance at June 30 was $3 million after accounting for the payout of creditors, accruals and contingent obligations.

In a market statement, the company said the lack of interest in the interim equity raising was in part due to current market conditions.

Discussions with parties interested in providing equity are ongoing, according to the company, and no fresh commitments will be entered into until the equity issues are resolved.

Magnesium International directors have agreed to switch their employment to a consultancy basis and finance director Peter Sydney-Smith has stepped down but will remain as a non-executive director of the company.

Despite the bad news, Magnesium International reaffirmed its commitment to the Sokhna project in Egypt and said it is in early stage discussions with potential partners for the project.

The company has been trying to reduce the capital cost of the Sokhna development to $500 million for a two-stage development, though the estimates provided to the company for its bankable feasibility study late last year remain unclear.

The first phase of Sokhna will involve the development of a magnesium mine, smelter and alloy plant with output capacity of 54,000 tonnes per annum of high-quality magnesium alloy (HQMA). Phase two involves doubling plant capacity to 108,000tpa.

Cash operating costs for the project have been forecast at US60c per pound of HQMA.

The stock hit a high of $1.91 in December last year.