Lihir To Raise $1.2 billion, US Blacklists Bank Over North Korea Gold

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The spot price of gold in Sydney added USD$0.90 to USD$687.95 per fine ounce yesterday. Gold miners were mixed, Newcrest (ASX:NCM) down 38c at AUD$23.24, but Lihir Gold (ASX:LHG) stable at AUD$3.36.

Lihir Gold has announced plans to undertake a major financial restructure, raising up to AUD$1.2 billion in new equity to close out its hedge book, repay its gold loan and other secured debt facilities and provide funding for future developments. Eligible shareholders will be invited to subscribe for new Lihir shares at a price of AUD$2.30.

The funds raised will be used to complete the close-out of the Company’s gold hedge contracts, totalling 934,500 ounces; the early repayment of the Company’s 480,000 ounce gold loan; the repayment of effectively all of Lihir’ss other secured debt facilities; and capital expenditure to complete the development of the Ballarat East Project.

An independent audit by Ernst & Young reveals that blocking North Korean gold sales may have motivated the US Treasury Department’s attempt to blacklist Macau’s Banco Delta Asia, McCatchy newspapers report. According to the audit, one of the most important activities the bank performed for North Korean entities was shepherding the nation’s gold into the international marketplace.

Later this week, Banco Delta Asia will face sanctions that effectively lock it out of the global financial system, though it has vowed to challenge the US decision.

India’s Economic Times reports that gold jewellery exports in India are likely to grow 40 per cent or USD$7.29 billion in 2007-08.

“The growth in gold jewellery exports can be around 40 per cent in this fiscal,” a top Gem and Jewellery Export Promotion Council (GJEPC) official said.  The sector recorded an increase of 2.74 per cent in export of gems and jewellery to reach USD$17.1 billion in 2006-07 as compared to USD$16.6 in the previous fiscal year.

IDEZ online quotes new data showing that in 2006, jewellery sales in the U.S. rose by 7.1 percent, the largest gain since 1999. However, jewellery lost market share overall, particularly in the areas of gold and diamond jewellery, which account for approximately 60% American jewellery sales, according to figures from Jewelers of America.

The Daily Reckoning Australia

The Daily Reckoning
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