http://www.postcourier.com.pg/20120301/thhome.htmEuropean BCL...

http://www.postcourier.com.pg/20120301/thhome.htm

European BCL shareholders to stop short-selling of shares

THE European shareholders of the Bougainville Copper (ESBC) have sent out a warning to declare war on short selling of shares in the Bougainville Copper Limited.
President of the ESBC, Axel Sturm, sent out the warning from Andorra yesterday.
“We want to stop fraudulent manipulation in BOC/BOU1 shares,” Sturm said.
Bougainville Copper shares are supposed to have a fair value of A$30 to A$50 (K66.83 to K111.38). The exact price, of course depends on the actual market prices of copper, gold, silver and molybdenum.
“On the other hand BCL is highly vulnerable to market manipulation: less than 30 per cent of BCL are in free float (the international mining giant Rio Tinto owns 54 per cent and the state of Papua New Guinea 19 per cent).
For several months now the share price of BCL (BOC/BOU1) has been pushed down heavily by short sellers,” Mr Sturm said.
“Since the beginning of 2011 it has been more than 60 per cent after all”
He said this is despite the fact that today’s news flow from Bougainville is more promising than ever.
The Australian Securities Exchange ASX has reacted to this by improving short selling rules. Since August 23rd, 2011 no more short selling in BOC shares was reported.
“Therefore we ask all shareholders BCL to put their shares at a high price (A$25 to A$30) for sale,” he said.
“This will prevent custody banks from using these shares for un-authorized lending to short sellers.
“Short selling generated huge losses in Bougainville Copper shares within the last year.
“As a result of short selling the share price plunged under A$ 1 since January 2011.
“This happened although all news flow from Bougainville had been very positive during that period.
“The green light for re-opening our Panguna mine is a question of a couple of months only.”
He said that this “ban”, however, is undermined by U.S. and other traders and successfully circumvented.
Giving its background, Mr. Sturm said a majority of the stocks held by private investors is deposited with custodian banks.
They register those shares in the share register (under so-called custodian banks) who then lend on our shares for short sales against a fee without the owner’s knowledge.
“In this context even the Australian Stock Exchange is powerless because this business is conducted in a semi-legal but grey area and therefore very difficult to prove,” he said.
“There are only two ways to prevent that our shares will be used for unauthorized short selling.
“The first is a nominated entry in the Bougainville Copper register.
“The second is a sell order that will block the shares for on- lending.
“However, since the entry into the register of shareholders is boycotted by the overwhelming number of custodians in order to maintain this revenue stream, the last resort that remains is to place a sell order with an extraordinary high limit.
“This limit should be as high as possible so that the probability of an actual sale is highly unlikely.”