[cid:image001.png@01CE2154.27B9A390] Friday, 15 March 2013 [cid:image006.jpg@01CE2154.3E9BCB10]
Snapshot � Company news highlights: Coal of Africa bad and good news, feedback from Evolution and Kingsgate presentations in Sydney office, Sirius approvals process update, Hummingbird gets first tranche of funding, good grades for Polo Resources Komahun, new BC Iron MD, Cockatoo 1H12 results, Vale to sell coal minority interests � Commodity review highlights: BHP Billiton manganese prices lifted and coking coal rolling over, Queensland coal rail contracts, Hong Kong Mines & Money starts Monday � Other Economic News: Li Keqiang officially becomes Chinas premier � African Resources Update: SA mining production stats shows good growth in January � FTSE futures up 15 points (6:35am) - following an 84 point rise in the Dow overnight thanks to a decline in the US jobless claims added further signs the economy is well set for recovery.

Across the board European indices are also looking strong.

In Asia the MSCI Asia Pac Index is up 0.8% with Kuroda being confirmed as the governor to the BOJ setting speculation that monetary stimulus will commence within weeks. Economic data today: US CPI (forecast 0.5% MoM and 1.9% YoY), industrial production (forecast 0.4%).

EU-Eurozone CPI (forecast 0.4% MoM, 1.8% YoY).
Company News � Coal of Africa (CZA LN) 1H13A results make grim reading...

Reported result was a loss of $111.7m (14.4cps) vs.

1H12A loss of $74.7m (13.4cps).

The result included a $50m impairment of the Mooiplaats mine (strike action, continued losses) and $22.1m of non-cash FX translation charges.

Operating cash outflows were $31.9m and investing outflows $44.1, offset by $71.4m of net equity proceeds (bolstered in the 2H13 with the extra $80m placement from Beijing Haohua (BHE)).

CZA ended the period with cash of $18.3m (before the $80m of BHE equity) and current borrowings of $44.0m.

Source: Company ...but some good news.

The coal at CZAs key growth project, Makhado, has been verified as good quality hard coking coal, by respected consultancy, Wood Mackenzie.

It has also confirmed that the project has the potential to produce 2mtpa of hard coking coal and 3mtpa of thermal coal.

The DFS has had more work done on it and is now due for release in the June quarter 2013.

Source: Company Investec view: The Makhado DFS review has presumably been driven by recent board appointments, who have added a new level of rigour to the company.

The results are an important positive for the company, while there remain significant permitting, BEE structuring and financing hurdles to follow, before construction commences.

BHE should be a valuable partner in this regard.

In the meantime, focus needs to remain on stemming the cash bleed from the existing operations, with restructuring/divestment options being pursued. � Evolution Mining (EVN AU) breakfast at Investec Sydney.

The new Chief Geologist Roric Smith is impressive and has already hired a chief geophysicist from Newmont, and a new geochem specialist.

In his view, there is a good chance of transformational discoveries across their acreage, but this will require new approaches.

EVN is on target to spend $40m on exploration and resource drilling.

The Company reiterated MarQ13 guidance of 85-90koz, reflecting a return a grade of c1.1g/t at Edna May, and wet weather at Mt Rawdon.

We still expect production at the upper end of guidance.

We are mindful that the lower gold production this quarter will result in higher C1 costs.

We estimate A$847/oz, up 11% versus A$764/oz in the prior quarter.

Depending on one-off pumping costs at Mt Rawdon, costs could be higher (there is currently 20m of water in the bottom of the pit).

Currently rated Buy with a NPV of A$1.60/share.

Source: Company, Investec view � Kingsgate (KCN AU) lunch at Investec Sydney.

The second half looks to be an improvement on the first although it looks like we will have to wait for the June quarter for Challenger to be up to full speed.

Trial mining of the high grade Q prospect material in the Northern pit sees mill feed grade at Chatree above resource grade at present.

While recoveries are expected to remain relatively low over the next 15-18 months, guidance should be met at Chatree although at the low end of guidance at Challenger.

The prospect of a Thai IPO for a 51% interest in the Chatree mine appears to be moving ahead, with likely conclusion before the end 2013.

Source: Company, Investec view � The wives of the team at Investec Sydney would not allow them to host a dinner.

Source: Investec London � Sirius Minerals (SXX LN) York potash project approval process continues.

The North Yorkshire Moors National Park authority has requested additional information in order to continue with SXXs planning application.

SXX must submit this information before 3 April in order for the authority to meet the proposed decision date of 21 May.

The Ministry of Defence has raised a holding objection over RAF Fylingdales, which is adjacent the project.

Source: Company � Hummingbird (HUM LN) gets first tranche of royalty funding.

HUM has received the first US$5m tranche of the previously announced US$15m financing agreement from Anglo Pacific.

(APF LN).

The 2nd tranche is payable on completion of either 25,000m of infill drilling or a scoping study on the Dugbe 1 Project (due shortly), while the 3rd tranche is due once both requirements have been completed.

Source: Company � Polo Resources (POL LN) announced good grades at Komahun.

POL has completed and received assay results from the 29,100m 2012 drilling programme on its 90% owned Nimini gold project in Sierra Leone, and has commenced a 20,000m 2013 programme which should be completed in March.

The 2013 programme will focus on identifying near surface strike extensions of Komahun.

The group intends to release an updated mineral resource estimate in June 2013 and to complete a PEA by the end of 2013.

Examples of the final set of 2012 drill results released today are as follows: 33.0g/t over 4.76m from 417m, 8.36g/t over 2.96m from 540m and 8.32g/t over 6.85m from 400m depth.

Source: Company Investec view: We believe that Nimini is one of POLs key investments and todays drilling results further demonstrate the potential in the Komahun area.

Clearly, some of the intersections are deep, so we also look forward to seeing the results of POLs 2013 drilling programme which should focus on nearer surface targets. � BC Iron (BCI AU) appoints new Managing Director.

Finance and Executive Morgan Ball has been selected to replace Mike Young as managing Director when he steps down on the 10th of May.

Details of the new employment arrangements are still being determined, and replacements for the Finance Director position are being considered.

Mike Young will remain on the Board as a non-executive director.

Source: Company. � Cockatoo Coal (COK AU) DecH12 results.

Operating profit of ~$20m, but NPAT loss of A$10.4m.

Cash at year end was A$12.6m, with borrowings of A$100m maturing in Jun 2013.

Source: Iress. Investec view: Difficult market for Cockatoo.

The Baralaba mine generated positive cashflow of ~$400k in the half, with the company currently in discussion around funding the proposed mine expansion to ~3mtpa, a tricky proposition at current profitability.

Debt of A$100m matures 28th June, so the company once again faces short term funding uncertainty (although if now has a track record for extending its debt with support of Korean backers. � Vale (VALE US) looking to sell minority stake in Belvedere and Eagle Downs coal projects in Queensland.

Source: WSJ Investec view: Having only just acquired AQAs 24.5% of Belvedere, Vale have now appointed advisors to sell a minority stake in the asset, along with Eagle Downs.

Belvedere is a deep, large capex, high opex greenfield project and unlikely to be developed without a material change to coal market prospects.

Eagle Downs is currently under construction (in 50:50 JV with AQA).

Also question marks over AQAs ability/willingness to fund Eagle Downs A$640m estimated capex, given capital demands in the Pilbara.

Unlike Belvedere, Eagle Downs is a proper mining prospect, and in a different market it would be a very easy sale.

Given the troubled JV relationships it might be easier to sell 100% than a minority interest
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Commodities News � BHP Billiton (BLT LN) 46% lumpy ore Manganese price lifted to US$5.90 per 1% of Mn.

BHP has notified that manganese ore to be loaded in April (destined for China) will be priced at US$5.90/%Mn, rather than the US$5.85/%Mn announced on 1 March.

This results in a price increase of US$0.25/%Mn against the March shipments.

Source: Tex Report. � BHP Coking coal monthly settlement.

BHP Billiton is understood to have settled its monthly-priced tonnages for April delivery in most major markets at rollover pricing from March levels US$ at $172/t-$173/t for premium Peak Downs), amid continued delays in quarterly benchmark settlements for the April-June (Q2) period.

Source: Inside Coal � Aurizon (AZJ AU) completes Queensland coal rail contracts approaching 100mtpa.

The latest rail contract with Xstrata (XTA LN) covers 14.6mtpa of Rolleston thermal coal (from Dec 2014) to Gladstone, Queensland.

XTA is ramping Rolleston up from the 6.5mt exported in FY12.

Together with Newlands, Collinsville and Oaky Creek, this takes AZJs coal contracts with XTA to 31mtpa.

AZJ also recently completed long-term contracts with BHP Billiton (BLT LN) and its partners for 65mtpa of coal transportation in Queensland.

Source: TEX Report � Hong Kong Mines & Money.

Asias largest conference for mining juniors kicks off on Monday with 1,014 mining and investment companies registered.

Source: Investec
Other economic news � Li Keqiang officially becomes Chinas premier.

Li Keqiang has officially been appointed as Chinas premier by the National Peoples Congress.

Li succeeds Wen Jiabao.

Source: Bloomberg
African Resources update � SA mining production stats shows good growth in January.

A look at SA mining production stats published on 14 March by Statistics South Africa highlights strong January production growth in iron ore at +33% yoy, Manganese ore at +20% with coal and PGMs relatively flat at +4% and +2% respectively.

Comparing the whole of 2012 with 2011 iron ore was up 16%, PGMs down 12%, Gold down 14% with coal and manganese ore flat at +3% and +2% respectively.
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