"I still believe there is a glimmer of hope out there but it just needs to be run by somebody that knows what they're doing. These people just obviously do not know how to mine sapphires and I just don't think they know how to mine at all."

The remote Queensland town of Sapphire is up in arms over a mining company that recently listed and is already in trouble. Katrina Nicholas reports on claims that ASIC should be taking action.

ROSS GREENWOOD: Corporate Australia tends to focus on the big end of town, but with almost eighteen hundred companies listed on the stock exchange there are many whose operations never make the headlines. Katrina Nicholas travelled to the gem fields of central Queensland to file this report on Australia mining, a small cap miner in the spotlight for all the wrong reasons.

KATRINA NICHOLAS: Out here everyone believes they'll strike it rich, the grey nomads have up stumps and downed tools, making fossicking their way of life. But it's not only the small timers chipping away. These gemfields are home to the big end of town too, but in sleepy sapphire, they've never seen a fight like this.

LES HAYES, former mine manager, Australis: We want our money George, everybody wants their money.

'No comment.'

LES HAYES: Come on, you're a public company you shouldn't be doing this, you are trading insolvently if you've got no money.

'We're not going away George we're staying here.'

KATRINA NICHOLAS: The company at the centre of this dispute is Australis mining. Its life as a listed company is short ­ it made its stock exchange debut in March ­ but already its list of enemies is long.

LES HAYES: Who do we go to if we can't go to our own government authority to look after us people, and the public's money, with a public company, public money and they are trading insolvently as far as I'm concerned. If they had money they could come and pay us now and this wouldn't have happened, it would be all over. They've never had a good reputation for paying.

KATRINA NICHOLAS: Creditors of Australis are angry they haven't been paid. But most aren't surprised. Les Hayes was until a few weeks ago Australis's mine manager.

LES HAYES: Years ago I managed a mine for Great Northern mining and I was approached then by Elias Christianos to go and manage a mine for him, and I said no I was happy where I was, and I left Great Northern and we bought this business here, family business, and Eli kept on ringing me and badgering me, will you come and run my mine for me, and I told him when you get some money I'll come and do it.

KATRINA NICHOLAS: By Eli, Hayes means Elias Christianos, Australis mining's biggest shareholder. He owns 55 per cent of the group through a Malaysian-based holding company.

LES HAYES: I still believe there is a glimmer of hope out there but it just needs to be run by somebody that knows what they're doing, these people just obviously do not know how to mine sapphires and I just don't think they know how to mine at all.

KATRINA NICHOLAS: ASIC searches show Christianos has been involved in a string of failed mining companies. He's also been bankrupt, and served time in jail for perjury and attempting to pervert the course of justice. Gil smith did most of the concreting for Australis's mine, and is some $21,000 out of pocket.

GIL SMITH, concreter: Being a concreter I was nearly first out there and I thought well, there's no problem here I'll get paid, because I'm in early in case they did go down, but five, nearly six months now and I just get excuses, excuses, excuses. I can't understand how ASIC let them float a company with the record they've already had, I mean gee ... wow.

KATRINA NICHOLAS: Neither can Les Hayes, whose complaints to Australia's corporate regulator have so far fallen on deaf ears.

LES HAYES: Well it appears to me that I've got two battles on my plate here, I've got a battle with Australis mining and I also have a battle with the Australian government that ASIC are sitting on their hands, I've lodged a complaint with ASIC, on Australis, and they sent me a letter saying yes we've received your complaint, they sent me a pamphlet saying yes your complaint does matter and then they send me another letter saying no we're not going to do anything.

KATRINA NICHOLAS: ASIC declined to comment publicly about Australis however sources close to the organisation say it is keeping an eye out. That's little comfort for those shareholders who helped Australis raise $4 million earlier this year by buying shares at 20 cents apiece. When Australis first released its prospectus it was forecasting this mine would make a $2.5 million net profit for the 05 financial year, fast forward a few months and that was revised downwards to $1.8 million, now shareholders have been told they can expect a $2.4 million net loss. It appears most of the $4 million raised has already been spent. More than $100,000 went to repay a loan to Australis's CEO, Anthony Damianos while another some $340,000 went to Ted Tzovaras, an Australis director and long time family friend of the Christianos's.

KAY DANES: We took it on face value that he was a lawyer of some reputation and he was there to represent us and do the best that he could for us.

KATRINA NICHOLAS: He acted for Kay and Kerry Danes, the couple goaled in Laos in 2000 on gem stealing charges. The couple eventually received a presidential pardon but for them, the battle continues.

KAY DANES: I really have no idea where that money has gone and that's why I've been trying ever since I came home to learn where that money went, how it was dispersed, how it was spent.

KATRINA NICHOLAS: Questions are also being raised over the quality ­ and quantity ­ of the sapphires unearthed by Australis. The prospectus said it would produce 2.5 million grams of sapphires by June. Earlier this month it told investors just 47,000 grams, or 2 per cent of that amount, had been discovered.

LES HAYES: I used to call it dizzy dirt, the dirt would go from one place to another and you know every time you pick up a metre of dirt that costs you in excess of $1, and if you pick it up from here and put it over there and then you pick it up from there and you put it over there, and then you move it all around the countryside, it gets dizzy and it costs you over $1 every time you pick it up, and they moved it, they moved it heaps of times.

KATRINA NICHOLAS: Australis has its mining headquarters here in Sapphire but despite repeated attempts by Business Sunday to get executives to come and talk to us, all offers have been declined. We did manage to get Elias Christianos on the phone, who promised an interview back in Sydney. That was also cancelled, as were several further attempts, leaving Australis creditors and shareholders wondering just what will become of the Christianos's latest venture.

ROSS GREENWOOD: And Business Sunday has since learned ASIC has received several more complaints about Australis' tardiness when it comes to paying creditors.