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Rama gold move may bring heavenly return

SHAREHOLDERS in Australian Indian Resources subsidiary Rama Mines are expected to realise their investment when Rama lists a gold company on the Bombay Stock Exchange (in Mumbai) in March next year.

The listing, the culmination of six years’ work by AIR, will be the first gold exploration company on the 5,900-company BSE, which boasts 556 foreign institutions among its 40 million investors.

AIR is ready to commence drilling on its granted mining leases near the Kolar goldfields and will transfer these to the Indian company.

In addition to helping establish a laboratory in Bangalore for the analysis of drilling samples, AIR is encouraging a WA drilling company and Australian engineers to set up operations there.

With nickel and zinc interests also in India, AIR intends to construct processing facilities as well, dependent on a commercial find.

India imports 825 tonnes of gold per year and produces no nickel or platinum group elements and AIR chairman and executive director Charles Devenish says the upside for both India and companies prepared to develop and support mining industries there is enormous.

Mr Devenish says AIR, which has operated an office in Bangalore for seven years and will set up another office in Mumbai early next year, is willing to support other Australian companies interested in tapping into the huge Indian market.

AIR corporate and finance director Sandeep Lakhwara says the BSE is a sophisticated market, the oldest exchange in Asia.

With online transactions, weekly settlements, a well-regarded regulatory regime, no restrictions on the repatriation of capital for foreign companies taking over an Indian company, and greater liquidity than the Australian Stock Exchange, Mr Lakhwara believes the BSE offers significant opportunities for Australian companies.

A Rama Mines public offer from April this year added 69 new investors to the company and raised $1 million.



Getting the right advice on the role of research

The stockbroking world is one of the most heavily regulated working environments, yet new industry guidelines have refocused attention on market research in this competitive environment. Gary Kleyn reports.

DJ Carmichael analyst Peter Strachan knows only too well that working together with corporate advisers and the dealing desk is part and parcel of being in the stockbroking game.

“My research is used primarily as a marketing tool for the sales desk,” Mr Strachan said.

“As part and parcel of a company’s initial public offer, we will undertake that we will continue to do research on them, but what that research says is up to the researcher.

“Our product is designed to provide product for the dealings desk for them to sell. The brokage that they write is on the back of research that we analysts do.

“It becomes very difficult for an analyst to issue a sell on a company that the corporate guys have a relationship with.”

Other analysts approached by Business News spoke of times when their independence was threatened.

One analyst, who asked not to be named, said there was, at times, pressure on research recommendations.

“If a company rings up and says that they don’t like so-and-so’s research the analyst may be pressured to alter his recommendation. You either buckle and keep your job or you tell them no and leave,” the analyst said.

Another confirmed that stockbroking heads were known to “go hard” on analysts if a relationship existed with the company.

Securities Institute of Australia company reporting sub-committee member James Falkiner knew the game only too well as a former institutional equities analyst.

“When I was a banking analyst I would have direct contact from senior executives of companies that I would cover that would involve those executives trying to get you to present a different view,” he said.

With these issues in mind, the Securities Institute of Australia (SIA) and the Securities and Derivatives Industry Association this month released Best Practice Guidelines for Research Integrity.

Included are 10 recommendations they hope will address some of the concerns investors may have with the current arrangements in stockbroking firms, and help the industry stay one step ahead of the regulatory requirements policed by the Australian Securities and Investment Commission.

The SIA believes the new guidelines will raise standards in the industry by establishing and maintaining a culture that enhances the integrity of the market by helping manage potential conflicts of interest that may influence research and investment recommendations.

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