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Australia seeks closer currency ties with China

Section: Daily Dispatches

By James Glynn and Caroline Henshaw
The Wall Street Journal
Thursday, July 5, 2012

SYDNEY -- Australia will step up its campaign to boost economic ties with its largest trading partner China when Treasurer Wayne Swan heads to Beijing next week hoping to secure a deal to make the Australian dollar the third currency to be directly convertible with the yuan.

Mr. Swan will lead a forum in Hong Kong on Wednesday on the internationalization of the yuan -- a strategy pursued by China to ease away from dependence on the U.S. dollar as a reserve currency -- before heading to Beijing for more direct discussions with officials.

"Internationalization of the yuan is clearly in the interests of Australian businesses and the broader Australian economy, which is why we've been taking action to promote and deepen the market in yuan/Australian dollar transactions," Mr. Swan said.

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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:

Last month China surprised markets by making the Japanese yen the second directly convertible currency behind the U.S. dollar. Direct conversion would slash costs for importers and exporters dealing with China by avoiding the added burden of converting through an intermediary currency.

China has been moving in a steady trajectory to liberalize the yuan as it has grown to become the world's second-largest economy after the U.S.

Beijing aims to have 30% of foreign trade settled in yuan by 2015, a threefold increase from current levels, and has been working to establish international trading hubs beyond Hong Kong to increase global liquidity in its currency.

The Reserve Bank of Australia and the People's Bank of China signed a 30-billion Australian dollar (US$30.1 billion) currency swap line in March in a bid to support liquidity in Australian dollar/yuan trades -- the only Western economy along with New Zealand to have done so -- but until now Australia has lagged behind London and Singapore in the race to become an international yuan trading center.

Bankers say it could also encourage more Chinese investment in Australia's resources industry. China is Australia's largest trading partner, accounting for about 60% of its exports, largely raw materials such as iron ore and coal. Trade between the two countries reached an eight-month high of A$11.1 billion in May, according to government statistics.

The Australian dollar is a "natural" candidate to be paired with the yuan due to the countries' close trading ties, said Li-Gang Liu, head of Greater China Economics at Australia & New Zealand Banking Group Ltd. Such a liberalization could see 10% of commerce between Australia and China settled in yuan within two years as the offshore yuan market doubles in size, he added.

Some Australian companies already have begun settling trade in yuan. Last year Fortescue Metals Group Ltd. made its first yuan-denominated transaction in China in a step toward settling iron-ore contracts in the local currency. HSBC Holdings estimates that only 7% of Australian businesses are ready to use the yuan to settle trades, compared with 48% of their Chinese counterparts.

Mr. Liu said the technical architecture is in place to allow Australia's major cities, Sydney and Melbourne, to become hubs for trading the yuan should Beijing further relax controls on the Chinese currency.

"If you were to see the Australian dollar and Renminbi (yuan) quoted in the near future, [importers and exporters'] willingness to use their own currency to settle trade will increase a lot," he said. "This kind of development hinges on market development."

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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: