Gunns Limited (GNS) said its proposed Bell Bay Pulp mill remained on track to begin construction once financing was secure. Despite the news Gunns shares were down more than 10%.
Chairman John Gay said media reports claiming the mill was not proceeding were inaccurate.
"Contrary to the reports, the company is continuing to progress with the project, we are continuing to work hard to satisfy federal government environmental approvals and to secure financing," he said.
"Final federal government approval is expected in January 2009 with construction to commence on financial close."
Mr Gay said in the past weeks the company had continued to progress discussions with potential joint venture partners for the mill.
"Our discussions have been positive and are continuing on a basis which is consistent with our objective of reaching agreement on key terms early in the 2009 year," Mr Gay said.
"The company is working towards a financing structure which will not require additional equity to be raised from shareholders."
Mr Gay said the mill would comply with the most stringent environmental standards of any industrial project in Australia.
"This has been a comprehensive process and represents a new international benchmark in good and sustainable environmental outcomes," he said.
"The mill has been designed to use plantation fibre, and our goal is to progressively increase the plantation sourcing to reach 100%."
Mr Gay said as announced at the recent AGM, negotiation of a plantation sale transaction is proceeding with the gross proceeds of this transaction expected to be about $170 million.
At 1427 AEDT, Gunns was down 12.5c or 11.9% at 92.5c.