EU may criminalize commodities price distortion


Then all they'd have to do is find someone willing to enforce the law.

* * *

By Barbara Lewis
Thursday, July 26, 2012

BRUSSELS, Belgium -- Manipulating international commodity benchmarks such as Brent crude oil would be a criminal offence, punishable by jail, under a set of reforms the EU Commission has proposed in response to the rigging of a major interest reference rate.

The commission, the EU's executive arm, announced on Wednesday plans to tighten supervision of financial benchmarks after a scandal involving interbank lending rate Libor, used to set prices for trillions of dollars of financial products.

The benchmarks the commission wants to make more "reliable, transparent, and credible" also include commodities such as gold, cocoa, and Brent crude.

It would become an offence to transmit false or misleading information, provide "false or misleading inputs, or any action which manipulated the calculation of a benchmark," if the European Parliament and 27 EU member states endorse the proposals.

... Dispatch continues below ...


Sona Discovers Potential High-Grade Gold Mineralization
at Blackdome in British Columbia -- 13.6g over 1.5 Meters

From a Company Press Release
November 22, 2011

VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling.

"We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company."

Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered.

For the company's complete press release, please visit:

Although not cited specifically, that could include false reporting to oil price reporting agencies like Platts, the leading assessor of benchmark prices for physical Brent and other cash oil markets.

The proposals could be agreed quickly, possibly by the end of the year, as amendments to existing proposals on regulating market abuse.

Under the draft proposals, traders on over-the-counter physical markets and the price assessment agencies -- who collect information on physical trades that help to set benchmark values -- stand to come under greater scrutiny.

Individual EU member states would still be allowed to decide what penalties to set for offences, but it would no longer be possible for them to take a soft stance.

Sanctions have to be "effective, proportionate, and dissuasive," the commission said.

For years, national regulators have turned a blind eye to trading practices, especially in over-the-counter deals, that have pushed up or pulled down reference prices such as Brent. The benchmark is used for pricing more than two-thirds of the world's crude oil.

"By imposing criminal sanctions for serious market abuse throughout the EU we send a clear message to deter potential offenders -- if you commit insider dealing or market manipulation you face jail and a criminal record," the EU commissioner for the internal market, Michel Barnier, said.

"These proposals will heighten market integrity, promote investor confidence and level the playing field in the internal market."

Traders have long argued there is no need for increased regulation of commodity dealing, which they say are rooted in the physical realities of supply and demand, in contrast to major financial markets.

"Physical oil trading is a complex issue," said a senior oil market source, who would only comment on condition of anonymity. "We don't want to have to justify every transaction to a regulator who doesn't understand the nuance of the business."

Another senior oil executive drew a contrast between the oil trade and Libor.

"We're dealing with a liquid, real material. People do not get together to decide the price every day," he said. "And the price-reporting agencies quote a representative, fair value of what has been done."

* * *

Join GATA here:

Toronto Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
Toronto, Ontario, Canada

New Orleans Investment Conference
Wednesday-Saturday, October 24-27, 2012
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:

Or by purchasing a colorful GATA T-shirt:

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit:


Prophecy Platinum Announces Wellgreen Preliminary Economic Assessment:
38% Pre-Tax IRR, $3.0 Billion NPV, and a 37-Year Mine Life

Company Press Release

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) reports the results of an independent NI 43-101-compliant preliminary economic assessment for its fully owned Wellgreen nickel-copper-platinum group metals project in the Yukon Territory.

The independent assessment, prepared by Tetra Tech, evaluated a base case of an open-pit mine (with a mining rate of 111,500 tonnes per day), an on-site concentrator (with a milling rate of 32,000 tonnes per day), and an initial capital cost of $863 million. The project is expected to produce (in concentrate) 1.959 billion pounds of nickel, 2.058 billion pounds of copper, and 7.119 million ounces of platinum, palladium, and gold during a mine life of 37 years with an average strip ratio of 2.57.

The financial highlights of the preliminary economic assessment, shown in U.S. dollars, are as follows:

Payback period: 3.55 years
Initial capital investment: $863 million
IRR pre-tax (100% equity): 38 percent
NPV pre-tax (8% discount): $3 billion
Mine life: 37 years
Total mill feed: 405.3 million tonnes
Mill throughput: 32,000 tonnes per day

Prophecy Chairman John Lee says: "We are pleased with the preliminary economic assessment results. The numbers indicate that Wellgreen is one of most exciting mineral projects in the Yukon. The company is drilling to upgrade and expand the resource base. The infrastructure is excellent as the project is only 1,400 meters in altitude and 14 kilometers from the paved Alaska Highway, which leads to the Haines deep seaport. Discussions are under way with support from local stakeholders regarding permitting and logistics."

For the complete press release, please visit: