🕐14.03.13 - 09:27 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - THURSDAY 14 MARCH 2013 - CKA
AU, ANTO LN, CEY LN, HZM LN, BWD AU, OCG AU, RXM AU, AQG AU, FMG AU, ROL AU



[cid:image001.png@01CE2089.79943ED0] Thursday, 14 March 2013 [cid:image006.jpg@01CE2089.E4F51B40]
Snapshot � Company news highlights: Investec initiates on Cokal, Antofagasta round table, Centamin 2013 guidance, Positive drilling from Horizonte, no agreement for Blackwood Corp, OceanaGold first Didipio concentrate transported, revised Rex Minerals development plans, Fortescue increases resources, Robust Resources drill results � Commodity review highlights: Brazil iron ore exports up 36% but rebar and iron ore prices falling, US thermal coal exports up 55%, China planning on increased aluminium and zinc purchases � Other Economic News: tightening concerns in China, Eurozone industrial output contracts � African Resources Update: Strikes still a focus in SA, China eyeing more DRC JVs
Company News � Investec initiates on Cokal Ltd (CKA AU).

Cokal has a 77mt (100%) coking coal resource at its 60%-owned BBM project in Central Kalimantan, Indonesia.

Based on prefeasibility studies, management plan to construct a 2mtpa ROM (100%) mine at initial capex of just USD50m (100%) with first production possible in mid-2014 and cash costs of USD68/t (excl royalties) in the first five years.

Source: Investec � Antofagasta (ANTO LN) feedback from analyst round table in London yesterday.

A key point that seemed to come out was that growth is not completely dead.

While ANTO impaired Antucoya and is still reviewing it, this appears to reflect prudence, rather than an admission that it is dead: the more detailed the engineering work, before going to tender, the less likelihood of capital blow-outs thereafter (ANTO hinted in any case that the increase in Antucoya capex may be moderate: total $1.86bn vs.

pervious $1.7bn).

The ANTO project teams must now focus on costs and deliverability, not scale.

Economic parameters of new projects are not all ANTO looks at: it also considers what the completion is bringing on at the same time.

ANTO is speeding up studies on its growth options, so that it is prepared if the cycle turns, while monitoring what is available for JV or acquisition (noting that M&A is not part of its current growth strategy).

Source: Company, Investec � Centamin (CEY LN) 2013 guidance.

CEY is guiding production of 320koz at cash costs of $700/oz..

The Stage 4 expansion has experienced some delays and the final capex estimate has been increased from $288m to $325m (+13%).

Source: Company Investec view: Mixed impact vs.

our expectations.

Our analyst had been assuming higher FY13E production, but at higher costs while he had already incorporated a 30% capex contingency (i.e.

was assuming capex of $357m). � Positive drilling results from Horizonte Minerals (HZM LN) in Brazil.

HZM has released additional infill drilling results from its 100% owned Araguaia nickel project in Para state, Brazil.

Examples of intersections are: 7.61m at 1.8%Ni from 5.45m depth, 10.09m at 1.43%Ni from 8.88m depth, 8.26m at 1.62%Ni from 9.35m depth.

5,500m of the 7,000m programme have now been drilled and once the programme is completed and the results analysed, the group aims to lift its inferred resource into the indicated category.

Source: Company � Blackwood Corp (BWD AU) No agreement in money owed by Mulsanne Resources (Tinkler Group vehicle).

Nathan Tinkler has today faced examination in the NSW Supreme Court in relation to Mulsannes failure to complete its agreed A$28.4m investment in BWD.

In response to commentary in the Australian print media, BWD yesterday issued a statement confirming that despite discussions with Mulsanne, the Company has not received an offer capable of acceptance in respect of either a takeover offer or other control proposal.

Media commentary suggests the hearings are unlikely to be finished today, and are also reporting that Mr Tinkler offered A$15m in real estate as security on the BWD shares.

Source: Iress, AFR. Investec view: Tinkler agreed to a A$28.4m placement in coal junior BWD in May 2012, priced at a 50% premium to 5 day VWAP, using Mulsanne Resources as a vehicle.

Mulsanne Resources failed to meet this commitment and BWD applied to the NSW Supreme Court to have Mulsanne Resources liquidated.

The examination of finances may act as a catalyst with regard to the Tinkler Groups 19% holding in Whitehaven Coal (WHC AU). � OceanaGold (OGC AU) Copper gold concentrate transport to port re-starts.

The Didipio project has produced 9,000t of copper concentrate so far, with approximately one third currently at port and two thirds at the mine site.

The first shipment of concentrate is expected in April.

Source: Iress Investec view: No change to FY13 guidance of 15-18kt Cu in concentrate (although not all reporting to the P&L).

Transport to port was suspended while negotiations over Excise Tax (2% of revenue) and interpretation under the FTAA agreement (including whether payment would be made to local or federal government) now apparently resolved.

With OGC the first mining project operating under an FTAA, similar "clarifications" will likely be required as each initial milestone is reached. � Rex Minerals (RXM AU) Lower capital and increased production for Hillside Additional met test work has increased copper recoveries to 88% (from 85% in PFS) and gold recovery to 84% (82% in PFS).

Combined with a new open pit design and multiple ore stockpiles the average grade 0.6% copper in years 3-10, plus gold and iron by-product credits.

Copper production of 80ktpa is expected over that period (~115ktpa Cu-eq), up from an average of 70ktpa in the PFS.

Combined start-up capital savings in the BFS is expected to be significant, and "meaningful discussion on project funding proposals are ongoing.

The project remains on track for 2014 construction with production start-up in 2015.

Source: Iress Investec view: We were somewhat disappointed by the value of Hillside post the PFS, so improvements of operating parameters in the final project design are very welcome.

While start-up capital is clearly a big issue in project funding, LOM capital requirement may be a bigger determinant of value.

LOM capital in the PFS was closer to A$1.2b than the headline A$900m start-up capital. � Alacer Gold (AQG AU) announces yearend financial result.

Full year gold production amounted to ~420koz, in line with 2011, whilst attributable gold production was down 7% on the previous corresponding period.

Cash costs were up 24% on 2011 at $803/oz ($650/oz 2011).

Following a $490m impairment charged in the DecQ12, AQG posted an attributable net loss of $386m, reducing their pre-impairment profit of $118.6m (2011: $75.2m).

Source: Company � Fortescue Metals (FMG AU) increases Nyidinghu resource to 2.46b tonnes.

FMG has announced an increase of 450mt at Nyidinghu, bringing the total resource estimate to 2.46b tonnes, at a cut-off grade of 52% Fe.

Whilst obviously pleased with the upgrade, FMG has indicated they expect the resource will ultimately exceed 3b tonnes, providing the Company with a number of attractive future development options.

Source: Company. � Robust Resource (ROL AU) releases drill assays from the Batu Hitam West project (Romang Island).

Of the 21 drill holes completed, the Company hit potential economic mineralisation in 20.

Results included: 78.6m @ 0.36g/t Au, 26g/t Ag (0.91g/t AuEq) including 8.3m @ 0.73g/t Au, 169g/t Ag (4.33g/t AuEq) from 14.8m; 38.2m @ 0.53g/t Au, 42g/t Ag (1.42g/t AuEq) including 5m @ 1.23g/t Au, 168g/t Ag (4.79g/t AuEq) from 16.9m; 96.7m @ 0.52g/t Au, 16g/t Ag (0.86g/t AuEq) including 6.5m @ 2.41g/t Au, 24g/t Ag (2.92g/t AuEq) from 4.5m.

In addition, the Company reported that the Oxide Project Scoping Study is nearing completion.

Source: Company.
[cid:image007.png@01CE2089.E4F51B40]
Commodities News � Brazil iron ore exports for Jan13 at 24.7mt, up 35.6% YoY.

Over half (54.2%) went to China, followed by Japan (8.8%) and the Netherlands (4.6%).

Source: TEX Report � US thermal coal exports for January up 55% YOY to 3.0mt.

Source: TEX Report Investec view: While these are tiny volumes in a global seaborne thermal coal trade of 0.7bntpa, we note that around 75% the volumes went to Europe, which was the traditional market place for South African coal.

Exports of US coal, once destined for domestic consumption but recently displaced by gas, are partly to blame for the collapse in thermal coal prices, with South African API4 spot coal now at $84/t, down from $110/t a year ago. � Rebar, iron ore cratering.

Shanghai rebar futures are plummeting today with the May contract falling 2.4% to CNY3,748/t.

This is the lowest level since 14 December 2012 and follows a 0.8% fall yesterday.

Iron ore is similarly gloomy, falling USD4.40/t on Wednesday to USD139/t.

Source: Bloomberg Investec view: The market is becoming increasingly concerned that China will enact further property cooling measures in our view.

We believe iron ore is likely to fall further and forecast a USD133.75/t average iron ore price in 2013.

Iron ore inventory cycles typically last c.

40 days suggesting the current destocking cycle wont end until the end of March. � Chinas State Reserve Bureau to buy 300kt aluminium and 50kt zinc.

The China Securities Journal is reporting that Chinas State Reserve Bureau plans to buy 300kt aluminium and 50kt zinc this week citing unidentified smelting companies.

Source: Bloomberg
Other economic news � Tightening concerns in China.

Peoples Bank of China governor Zhou Xiachuan said China should remain on higher alert for inflation and may need to make policy adjustments to stabilise prices.

This followed a ten month high in Chinas CPI of 3.2% in February.

Source: Xinhua � Eurozone Industrial output contracts.

Industrial production from all 17 Eurozone countries fell by 0.4% in January.

The drop exceeded economists consensus estimate of a fall of 0.1%, and was related to reduced durable goods and machinery production.

This data is tied in closely to the rate of joblessness which hit new highs in January.

Source: FT
African Resources update � Strikes continue to be the central focus in SA resource space.

Despite a respite for producers as Anglo Americans (AAL LN) Kleinkopje workers returned to work, discussions continue at Exxaro (EXX SJ) over bonus pay disputes, while at Eskoms Medupi plant (the feeds off EXXs Grootegeluk GMEP project) erupted again on Tuesday after only one day of all the staff being back on site, when workers protested over not receiving the return to work bonus promised by contractors.

Source: MiningMX Investec view: According to MiningMX construction work at the plant is yet to resume fully after more than seven weeks of labour disruption.

Eskom is in a race against time to bring Medupi into operation by December to relieve South Africas constrained power situation.

We expect labour discontent will continue to disrupt mining in SA for the foreseeable future. � China resources firms eye tie-ups, Africa for growth - BOCI.

Chinese firms are opting for joint ventures over M&A to limit costs in the face of fragile global growth, a Bank of China International official said on Wednesday.

They are now prioritising stable -- if slower -- growth, through ties with local partners, and Africa is squarely in focus.

BOCI states that the biggest attraction is asset quality, with the DRC hosting numerous high quality assets that warrant the risk involved.

BPCI is the investment banking arm of state-backed Bank of China, the countrys No.4 lender by market value, with a market cap of $130bn.

Source: MiningWeekly
Investec Global Natural Resources Research Team: UK Australia Hong Kong South Africa Hunter Hillcoat Tel: +44 (0) 20 7597 5182
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Investec Global Natural Resources Sales Team: UK Australia Hong Kong South Africa Jamie Campbell Tel: +44 (0) 20 7597 5038
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