Gold scrap scarcity hobbles Indian refineries

Section:

Gold Refineries' Operating Capacity Declines

By Dilip Kumar Jha
Business Standard, New Delhi
Sunday, February 27, 2011

http://www.business-standard.com/india/news/gold-refineries/-operating-c...

MUMBAI -- The operating capacity of domestic gold refineries reached alarmingly low levels due to scarcity of scrap. Currently domestic gold refineries are operating between 25-30 per cent of their installed capacity as against 35-40 per cent around the same time last year.

"Used gold sales have declined steadily in the last one year as consumers are holding jewellery in anticipation of higher prices. Total recycled gold supply plunged to 89 tonnes in 2010 as compared to 122 tonnes in the previous year," said Ajay Mitra of the India and Middle East office of the World Gold Council.

Despite availability of other raw materials like "gold powder" and "dore bar" (raw gold), refineries can rely only on used gold from domestic sources for melting into coins and bars for further processing.

... Dispatch continues below ...



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Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon

Company Press Release, January 18, 2011

VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.

PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.

Following the transaction:

-- Prophecy will own approximately 90 percent of PCNC.

-- PCNC will consolidate its share capital on a 10 old for one new basis.

-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.

-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.

Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.

For the complete announcement, please visit:

http://prophecyresource.com/news_2011_jan18.php



Gold powder cannot be imported due to security and storage reasons. Import of "dore bar" also faces high customs duty, which is unviable. Hence, domestic refineries generally procure used gold from local jewellers for running their operations.

The situation, however, is unlikely to change for domestic refineries at least for one more month. With the beginning of festival season in the south, especially in Kerala and Chennai, used gold sales increase. The April-May holiday season in the south coincides with Akshaya Tritiya, the most religious festival for buying gold. Also, during this period, most of non-resident Indians bring huge amounts of gold jewellery from abroad for sale in local markets, which increases availability tremendously.

"Therefore, we hope that gold scrap availability will rebound in early April which would encourage higher capacity utilisation of refineries," said James Jose, managing director of Chemmanur Gold Refinery Ltd.

"Lower capacity utilisation will surely hit refineries' topline and bottomline. But we are used to it. This has been the scenario for the last couple of years. Hence, we have re-adjusted ourselves to cope with this situation," he added.

The next season for higher used gold availability in India is December-January, which ended this year on a disappointing note due to volatile prices.

In the last budget, basic customs duty on gold ore and concentrates was reduced from 2 per cent ad valorem to a specific duty of 140 rupees per 10 grams. The excise duty on refined gold made from such ore or concentrate was reduced from 8 per cent to a specific duty of 280 rupees per 10 grams. The import duty on raw gold was cut from over 400 rupees per 10 grams to 280 rupees per 10 grams. But an excise duty of 140 rupees per 10 grams was also levied. In effect, the overall duty was raised to 420 rupees per 10 grams, as against 300 rupees per 10 grams on pure gold.

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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

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

http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf