National Mineral Policy 2006 - Department of Mines

addition, the minimum post-issue face value capital of the company has to be Rs 10 croreunless market makers undertake to offer buy and sell quotes for a minimum of 300 shares andto ensure that the spread never exceeds 10 per cent. QIBs include public FIs as defined inSection 4A of the Companies Act 1956, scheduled commercial banks, mutual funds, foreigninstitutional investors (FIIs) registered with SEBI, multilateral and bilateral developmentfinancial institutions (DFIs), state industrial development corporation (SIDC), venture capitalfunds registered with SEBI, and foreign capital venture capital investors registered withSEBI.7.12 It will be clear from the above that Indian laws make it very difficult for new orfreshly registered companies to list whereas prospectors would like to float project-basedcompanies and raise equity based on the risk relative to a particular project. A changedmining regulatory dispensation that permits transfer of concessions can attract stand aloneprospecting companies from Canada, Australia, and elsewhere. To encourage transfer ofprospecting technology to India-based firms there is a need to create an enabling environmentfor such firms to come up in India in the first place, probably as a JV with foreign prospectorsin the initial stages. Transparency regulations will have to be put in place wherebyprospectors who wish to raise equity from risk funds would have to share the precise natureof the geological data available with them and also enable rating agencies to spell out themagnitude of risk. Similarly, risk funds that wish to invest in prospecting ventures will needto spell out their policies in their prospectuses. In this regard, the Joint Ore ReserveCommittee (JORC) Code of the Australian Stock Exchange (ASX) is commended. The codecreates a practical but effective set of minimum reporting standards and guidelines for themining industry. The purpose of the JORC Code, incorporated into the ASX listing rules, isto ensure that mining and resource companies adhere to minimum standards in reporting ofexploration results, resources, and reserves—in other words, all the information that investorsand stockbrokers would need in order to come to an understanding of the results andestimates of the company.7.13 The ASX gives a special dispensation to mining juniors by adjusting key capitalraising settings in the listing rules with a view to reducing the cost of raising capital. Thisincludes reduction in the shareholder’s spread of IPOs, lowering minimum listing price ofstock and the percentage (15 per cent) of capital that can be raised without shareholderapproval. ASX assists to improve liquidity in junior mining stocks through investor142