Aussie mining firm to sell shares in India

Citigold allies with local firm to offer direct investment avenue.

Hemant Shah buys gold for investment purposes. Lately, he has found a lucrative option in exchange traded funds as gold prices have zoomed and it is easier to deal in paper gold.

Soon, Shah could diversify his gold portfolio, irrespective of the fluctuations in the yellow metal's prices, by buying shares of an international gold mining company.

Citigold Corporation, an Australian gold mining firm, is partnering a financial securities and brokerage house to promote its equity in the Indian market.

Investors could now directly buy shares of Citigold Corporation, which are listed on the Australian, Dubai and Frankfurt stock exchanges.

The move assumes significance as the investment demand for gold is picking up in India, the world's largest consumer of gold. The company also plans to mine gold in India at a later time.

A source close to the development said, "Mining companies have been focussing on institutional channels to attract investments. This will be the first time that a gold company listed abroad is actively promoting its equity to Indian investors ."

The trading would be undertaken in accordance with the Reserve Bank of India's policy to allow Indians to invest up to $200,000 abroad. According to the source, while ETFs offer 10-30 per cent returns, the mining stocks are projected to give 30-50 per cent returns in the long term as the company continues to grow."

Citigold Corporation was listed on the Australian Securities Exchange in 1993 and entered the Dubai International Financial Exchange last year. The source informed that there was greater liquidity on the Australian exchange with an average 6 million shares traded per day.

Since last year, the company started gold production from Charters Towers goldfield in north eastern Australia. It has produced approximately 8,000 ounces till December 2007 with plans to achieve an output of 100,000 ounces a year.

Citigold Corporation has also shown interest for mining operations in India but is awaiting the final outcome of the proposed new mining policy.

"We have interests in working in India and are still in negotiations with two to three business houses. We expect this to be finalised this year," said the source.

The long delayed new mining policy is expected to attract FDI of Rs 5 lakh crore within five to six years of introduction.