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(Correcting that the company achieved its budget and not its target)
LONDON (Alliance News) - Wishbone Gold PLC on Thursday said its margins have been under pressure in 2016 due to changes to import rules by the world's largest purchaser of gold, India.
Shares in Wishbone were down 18% at 0.675 pence on late Thursday.
Precious metals exploration firm Wishbone said volumes were good in 2016, and said it achieved its budget of exceeding 25 kilos of gold committed and sold per week by the end of the year. Shipments commenced in August and peak trading was in December when 105 kilos of gold were committed and sold during the month.
"The company's target for the year was 100 kilos per week while the budget was 25 kilos per week. The budget has thus been exceeded while the target was missed by the failure of one supplier to ship on time. There is no reason to believe that these shipments will not take place in the future," said Wishbone.
However, Wishbone said its margins were under pressure during the year, citing changes to India's import rules, which provide a premium for gold shipped to and processed in certain economic zones.
Later Thursday, Wishbone said the rebate has "not directly affected Wishbone's margins but has affected the overall market by ensuring more gold went to India than previously.".
Early estimates for 2016 suggest India remains the world's largest ultimate purchase of gold in the world followed by China, which is the world's largest producer.
Wishbone said it plans to continue its reverse integration by assisting with equipment purchases in 2017, which should further cement ties with suppliers and expects ongoing developments in projects in Honduras and Ghana should move forward.
"Overall this has been a transformative and successful year for Wishbone. The gold market remains extremely strong in volume terms which makes us believe that the oft quoted decline in production is failing to monitor the small producers which is our target supplier market," said Chairman and CEO Richard Poulden.
"The traffic is inexorably east with small premiums over the world spot price appearing from time to time in India and Hong Kong," Poulden added. "Wishbone's strategy remains unaltered: trading with steady reverse integration upstream to tie-in suppliers. This has worked thus far and the Board expect it to continue to do so."
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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