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U.S. may sanction India over its Iran oil imports

Section: Daily Dispatches

By Indira A.R. Lakshmanan and Pratish Narayanan
Bloomberg News
Thursday, March 15, 2012

India has failed to reduce its purchases of Iranian oil, and if it doesn't do so, President Barack Obama may be forced to impose sanctions on one of Asia's most important nations, Obama administration officials said yesterday.

A decision to levy penalties under a new U.S. law restricting payments for Iranian oil could come as early as June 28, according to several U.S. officials who spoke on condition of anonymity because of the sensitivity of the issue.

"Given the level of trade, and in particular oil, between Iran and India, targeting an Indian entity that facilitates Iran's access to the international financial market should be top of mind for the U.S. Treasury," Avi Jorisch, a former Treasury Department official who is now a Washington-based consultant on deterring illicit finance, said in an interview.

... Dispatch continues below ...


Prophecy Platinum (TSXV: NKL) and Ursa Major Minerals
Sign Combination Agreement

Company Press Release
Friday, March 2, 2012

VANCOUVER, British Columbia, Canada -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) and Ursa Major Minerals Inc. have signed a binding letter of agreement for a business combination through a proposed all-share transaction. In doing so Prophecy and Ursa have acted at arm's length and the transaction has been negotiated at arm's length.

Prophecy will issue one common share in exchange for every 25 outstanding common shares of Ursa. Ursa options and warrants will be exchanged for options and warrants of Prophecy on an agreed schedule.

Prophecy's offer represents a value of about $0.15 per each common share of Ursa based on Prophecy's share price of $3.70 as at March 1, representing a premium of 130 percent to Ursa's March 1 closing price of $0.065.

Prophecy is to subscribe for $1 million common shares of Ursa by way of private placement financing at $0.06 per share, subject to regulatory approval. Upon placement completion, John Lee and Greg Hall, current Prophecy directors, will be appointed to Ursa's board.

Prophecy thus will become a mid-tier resource company with a robust and
diversified pipeline of platinum nickel projects, including:

-- The fully permitted open-pit Shakespeare PGM-Ni-Cu mine close to Sudbury, Ontario, infrastructure with near-term production capabilities.

-- The flagship Wellgreen (Yukon) PGM-Ni-Cu project with more than 10 million ounces of Pt-Pd-Au inferred resource. Drilling is under way and a preliminary economic assessment study is pending.

-- Manitoba's Lynn Lake Ni-Cu project with more than 262 million pounds Ni and 138 million pounds Cu measured and indicated.

For the complete announcement, please visit Prophecy Platinum's Internet site here:

The U.S. law, which targets oil payments made through Iran's central bank, applies to any country that doesn't make a "significant" reduction in its Iranian crude oil purchases during the first half of this year. If India fails to cut Iranian imports sufficiently, Obama may be compelled to bar access to the U.S. banking system for any Indian bank processing oil payments through Iran's central bank, the U.S. officials said.

While India hasn't asked its refiners to stop purchasing Iranian crude, the government has told processors in the South Asian nation to seek alternate supplies and gradually reduce their dependence on the Persian Gulf state due to increasing pressure from the U.S. in recent weeks, three Indian officials with direct knowledge of the situation said today.

India hasn't significantly cut imports this year because refiners' annual crude term deals with Iran typically run from April to March, they said. The planned reductions will start only when new annual contracts begin next month, the Indian officials said, declining to be identified because they aren't authorized to speak to the media.

India bought an average of 328,000 barrels a day of Iranian crude in the first six months of last year, making it the No. 3 buyer, behind China and Japan and ahead of South Korea, according to the U.S. Energy Information Administration. Iran is the No. 2 producer in the Organization of Petroleum Exporting Countries.

The U.S. government may not be aware that India's biggest buyer of Iranian oil, state-owned Mangalore Refinery & Petrochemicals Ltd. (MRPL), plans to import less from Iran starting next month, according to two officials with direct knowledge of the matter who spoke on condition of anonymity because they weren’t authorized to speak.

Oil Minister S. Jaipal Reddy, Finance Minister Pranab Mukherjee, and Foreign Secretary Ranjan Mathai have said India will continue to buy Iranian oil to meet its growing energy needs. While the Indian government has an excellent record of enforcing United Nations sanctions on Iran, India has objected to unilateral U.S. sanctions, according to U.S. officials.

"We abide scrupulously by UN-authorized sanctions," Indian Foreign Ministry spokesman Syed Akbaruddin said in a telephone interview. While restrictions imposed by individual countries "have an impact on commercial interactions, from a legal perspective there is nothing that binds us to follow them."

The latest shipping data shows India and South Korea sharply increased oil purchases from Iran in January, according to a report released yesterday by the International Energy Agency in Paris. China halved its imports from Iran, from 550,000 barrels a day in December to 275,000 barrels a day in January, following a dispute over pricing terms that has now been resolved, the report said.

The new U.S. law targeting Iranian petroleum transactions doesn't specify by what percentage a nation must reduce its Iranian oil imports to qualify for an exemption from sanctions. U.S. officials, speaking on condition of anonymity, said they are looking for cuts of around 15 percent in volume, though they might consider whether buyers have extracted significant price discounts, thereby depriving Iran of revenue.

Mangalore Refinery may cut its contract to 6 million metric tons, or 120,000 barrels a day, in the year ending March 2013, which would be a 15 percent cut from the previous year, one of the people with knowledge of the planned reductions said.

The U.S. has offered India help in brokering deals with alternative suppliers including Iraq and Saudi Arabia, which has offered to replace any shortfall, according to U.S.
and Indian officials.

Envoys from the White House, the State Department, the Treasury Department, and the U.S. Embassy in India have had numerous conversations with Indian counterparts since Congress began debating the sanctions measure that Obama signed into law Dec. 31.

Nancy Powell, the Obama administration's ambassador-designate to India, testified before Congress last month that if confirmed, she would be "spending a great deal of time" working with India on Iran sanctions issues. She quoted Mathai, who came to Washington for meetings last month, as saying India is working to diversify its sources of petroleum and reduce its dependence on Iran to no more than 10 percent of its total oil imports.

"That would be a very good sign," Powell said.

U.S. and European Union sanctions are already disrupting Iranian crude shipments to global refiners, contributing to a 16 percent advance in London-traded Brent this year. Brent oil for April settlement fell $1.25, or 1 percent, to end the session at $124.97 yesterday on the London-based ICE Futures Europe exchange.

The EU decided two months ago to embargo Iranian oil imports effective July 1. Last year, the 27-member EU was collectively the No. 2 importer of Iranian oil, taking 18 percent of Iran's crude exports. Faced with a shrinking pool of buyers, Iran last month offered India additional crude supplies on revised terms.

China's Ministry of Foreign Affairs has criticized sanctions on Iranian oil. China's crude imports from Iran hit their lowest level in five months in January, customs data show, as the country's biggest buyer, China International United Petroleum & Chemical Co., known as Unipec, delayed signing a new contract because of a dispute over payment terms. Unipec cut its 2012 term contract purchases by 15 percent from 2011, though the payment dispute has since been resolved.

For their part, Japan and South Korea are seeking exemptions from the new U.S. sanctions. If both nations can demonstrate a significant reduction in their purchases by the end of June, their banks would escape penalties, according to two U.S. officials involved in the talks.

Japan is seeking to reduce its crude purchases from Iran by at least 11 percent, according to a Japanese government official interviewed Feb. 21. The three largest Japanese buyers of Iranian crude are Showa Shell Sekiyu KK, JX Nippon Oil & Energy Corp., and Cosmo Oil Co.

The South Korean government has said it will make a decision on cutting Iranian crude imports by the end of June. South Korean officials denied reports saying they had already proposed cutting imports by 15 percent to 20 percent.

The White House doesn't want to punish Japan, South Korea, or India, critical U.S. partners in trade and security and important regional counterweights to the rise of China, U.S. officials said. Still, the president has limited leeway to grant exemptions under the law, and so far India hasn't demonstrated reductions, they said.

Mark Dubowitz, the executive director of the Foundation for the Defense of Democracies in Washington and an adviser to the administration on sanctions, said India shouldn't assume it will avoid sanctions unless its refiners demonstrably reduce imports over the next three months.

There's no reason "why India should be given a free pass as the EU, Japan, and others significantly reduce the scale and scope of their Iranian trade," he said in an interview. "No country should be confident that it will not be the target of U.S. sanctions."

Other analysts said Indian officials have responded to U.S. pressure by quietly pressing state-run refiners to switch to alternative sources, and they expect the U.S. to reach an accommodation with the world's most populous democracy.

"It's highly unlikely that the U.S. would sanction India on this issue. The Iran issue is an irritant at best," Harsh V. Pant, a specialist on India and Iran at King's College London, said in a telephone interview.

The Iranian central bank sanctions that Obama signed into law Dec. 31 are part of a larger effort to deprive the Persian Gulf country of its leading source of revenue and complicate Iran's commercial ties with the outside world. The U.S. and the EU have piled on new sanctions since November in an effort to pressure Iran to abandon any work it may be conducting to acquire a nuclear weapons capability. Iran insists that its nuclear program is strictly for civilian energy and medical research.

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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: