[cid:image001.png@01CE520C.8329E850] Thursday, 16 May 2013 [cid:image006.jpg@01CE520C.97864F50]
Snapshot � Company news highlights: Antofagasta Q1 results, Lonmin miners back to work, New World Resources Q1 results, Vedanta results to 31 March, Anglo Pacific interim statement, Vedanta full year results, Ormonde Mining option expires, ATH Resources business to be wound up, China VTM takeover voted down, China Gold International March FY13 results, Jiangxi Copper parent buying shares on market, Brockman Mining submits rail infrastructure Access Proposal. � Commodity review highlights: World Gold Councils Q1 2013 review out today, iron ore into China prices fall, China copper production up, Australian semi-soft export prices weaker in Q1, WAs Anketell Point port project gets conditional federal approval � Other economic news: China retains pol position of being the largest holder of US treasuries � African resources update: Tanzania may sell US$2bn of Eurobonds, Transnet reaches two year agreement over wages � FTSE futures off 5 points (7am) - overnight US markets pushed further into record territory with the Dow closing up 60.44 points (0.40%) and the S&P up 8.44 points (0.51%) after weak manufacturing data reinforced hopes of continued stimulus.

Despite the gains, economic data was a mixed bag.

NY Feds Empire State Manufacturing index was -1.43 in May vs est of 4.

Aprils PPI was down 0.7% MoM and missed estimates as well.

This was the biggest decrease since Feb.

2010.

PPI ex.

food, energy was up 0.1% MoM and matched expectations, but Aprils IP was down 0.5% and missed estimates.

Motor vehicle output fell 1.3%, reversing last months 2.3% gain.

Asian markets - Nikkei -0.51%, Hang Seng +0.28%, ASX 200 -0.50%.

The Japanese economy reported annualized GDP of 3.5% as consumer spending and export gains (aided by the weak Yen) outweighed weak business investment. Commodities prices this morning - gold flat (US$1,393.30/oz), silver +0.23% (US$22.66/oz), platinum -0.57% (US$1,482.30/oz), copper -0.11% (US$3.2615/lb), iron ore -1.33% (US$126.40/t), nickel -1.35% (US$14,857/t), zinc -1.38% (US$1,802.75/t), WTI -0.60% (US$90.06/bbl) and Brent -0.45% (US$103.21/bbl). Economic data due today: US - CPI (fcast -0.3%), continuing claims (fcast 3000k), housing starts (fcast 970K), building permits (fcast 941K), Philadelphia Fed (fcast 2.0), initial jobless claims (fcast 330K); EU - Eurozone CPI (fcast -0.1%), Draghi speaks at Tunin Book Fair. Company News � Antofagasta (ANTO LN) quarterly financials following on from solid quarterly production update.

Group EBITDA at US$782m down 29% YoY reflecting the higher operating costs and reduced revenues from weaker commodity prices received.

The company remains in good shape financially with net cash of US$4,014m and net cash of US$2,415.8m.

Attributable share of net cash stood at US$2,626.1m at the end of March, up a bit from US$2,636m at the end of December.

The numbers do not reflect the c.

US$900m to be paid out in dividends.

Source: Company Investec view: The quarterly financials appear reasonable highlighting the strong balance sheet, although the lower EBITDA highlights the worsening commodity prices with average received copper price at 341c/lb versus 429.6c/lb the previous year (327c/lb currently) and that ANTOs faces rising costs across its assets. � Lonmin (LMI LN) miners reported to be returning to work last night as union leaders called off the two day strike with AMCU president asking its workers to return to work.

The strike follows a killing at the weekend of an AMCU regional leader, as well as two NUM members in separate incidents as the two unions clash, with AMCU now by far the majority union demanding greater recognition.

Source: Business Report Investec view: The strike action shouldnt have a material impact on output but does highlight the volatile situation at the platinum mines as we enter a period of wage negotiations, although LMIs wages are settled in September, after the other miners. � New World Resources (NWR LN) Q1 results.

The group reported revenue of EUR240m, and a loss of 31c/share.

Cash costs are EUR86/t.

Net debt is EUR643m - the groups debt facility has been pushed out and waivers agreed for financial covenants.

NWR has cash of EUR193m and a further EUR100m available under RCF.

NWR plans to save EUR100m this year by measures including selling thermal coal stockpiles, reducing salaries by 10% and cutting admin charges.

The group also plans to divest its coke business.

In Fy13, the group targets coal production of 9-10Mt and coke production of 800,000t.

Source: Company Investec view: Given the challenging thermal and coking coal pricing environment, this group is in financial difficulty, having generated a negative EBITDA in Q1.

The coal production guidance given today is a reduction from the10-11Mt given in the FY12 results presentation. � Anglo Pacific Group (APF LN) interim statement, with A$4.2m received from the key Kestrel Royalty on sales of 796kt of coal, up substantially qoq, although against a weaker commodity price.

The Amapa iron ore royalty generated GBP0.5m, although cashflows are to be interrupted due to damaged shipping infrastructure.

The El Valle mine also generated GBP0.6m in the quarter as the mine ramps up.

Cash at the end of the period stood at GBP17.7m putting the company in a solid financial position and will support the planned dividend payment of 5.75p/share for the final dividend totalling GBP6.3m.

Source: Company Investec view: The current market conditions are likely to be providing APF with additional royalty opportunities to review as junior miners struggle to secure capital with equity prices at distressed levels.

The current royalty cashflows are reflecting the market commodity prices and some production issues at the mines, however, the benefit of the royalty structure is that cashflows may be delayed, but not fundamentally changed long term, albeit potentially suffering the nearer term weakening in commodity prices. � Vedanta (VED LN) full year results to 31 March 2013.

VED has reported revenue of US$15.0bn, up 7% YoY.

EBITDA was US$4.9bn, up 21% YoY.

Underlying EPS is US$1.33, down 6% YoY.

The group has declared a final dividend of 37c.

Source: Company � Ormonde Mining (ORM LN) option expires.

ORM has announced that the option with Nueva Tharsis to divest the La Zarza copper project has not been exercised.

Discussions with third parties continue.

Source: Company � ATH Resources (ATH LN) business to be wound up.

The directors of Aardvark TMC, the groups main trading subsidiary, concluded yesterday that the company would be wound up.

Source: Company Investec view: The group cites significant restoration liabilities of the company and failure to secure funding for new mines given weak thermal coal prices as the reason for the companys demise.

We believe that raising debt to maintain dividend payments will not have helped the company either. � China VTM (893 HK) takeover offer voted down.

Shareholders of iron ore miner China VTM voted down a buyout offer by a party in concert with controlling shareholder Trisonic to take the company private at HK$1.93/share by a large margin with just 26.2% of shares voting for the deal as compared to a 75% threshold required.

Source: Company Investec view: This comes as no surprise to us and we previously highlighted that we believe the offer, which valued China VTM at a c.

8x trailing PE despite the company being in a net cash position, might be insufficient to secure shareholder approval.

With shares trading down to c.

HKD1.65/share, we see value.

China VTM had c.

USD310m of cash and time deposits on the balance sheet as at December 2012, nearly � of its market cap, giving the company scope to pursue acquisitions and/or capital returns. � China Gold International (2099 HK, CGG CN) MarQ13 results.

Chinese gold and copper miner China Gold International reported MarQ13 earnings of US$15.1m, down 28% QoQ and up 12% YoY.

Gold production at CSH was 32koz, down 4.9% YoY, and cash costs fell to US$812/oz, down 4.7% YoY.

Jiama copper production rose to 3.1kt, up 62% YoY, and cash costs after byproduct credits declined to US$1.63/lb, down 21.6% YoY.

Expansion programs at both mines are ongoing and capex was US$110m in the quarter.

Source: Company Investec view: Importantly, China Gold International maintained 2013 production guidance for 145koz gold at CSH and 26.5mlb copper from Jiama at despite the landslide at the Jiama mine, which resulted in 83 fatalities, given there was minimal impact to production facilities. � Jiangxi Copper (358 HK) parent buying shares on market.

Jiangxi Copper Corporation, the parent company of listed company Jiangxi Copper Company Ltd, purchased 1.58m shares on market in Hong Kong increasing its ownership to 38.45% from 38.41%.

Jiangxi Copper Corporation commented it intends to increase its shareholdings by up to 2% in the next twelve months.

Source: Company � Brockman Mining (BRM AU) submits rail infrastructure Access Proposal.

BRM has submitted an Access Proposal to gain access to part of the below-rail infrastructure owned by The Pilbara Infrastructure Pty Ltd ("TPI"), a subsidiary of Fortescue Metals Group.

BRM is seeking to negotiate terms of access with TPI, including price, subject to floor and ceiling costs to be published and approved by the Western Australian Economic Regulation Authority.

BRM does not seek access to TPIs above-rail services, as haulage services would be provided by an experienced haulage operator.

Source: Company Investec view: This may cloud Fortescues near term plans to sell a portion of The Pilbara Infrastructure.
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Commodities News � World gold councils Q1 2013 review out today.

Global first quarter gold demand was 963t, equating to US$50.5bn of value.

Tonnage was 13% lower YoY as strong growth in consumer demand for gold jewellery, bars and coin was exceeded by substantial net outflows from gold ETFs.

Source: World Gold Council � Iron ore into China prices fall.

62% iron ore to Chinese port Tianjin fell by 1.3% to US$126.40/t yesterday.

The benchmark price has lost 20% since 20 February when it reached a 16 month high of US$158.90/t.

This meets the common definition of a bear market.

Concerns on the slowing Chinese economy are to blame.

Source: Bloomberg. � China copper production up, analysts think the metal will fall 16% by September.

Chinas refined copper production rose 14% YoY in April to 558,000t.

Technical analysis has demonstrated that the copper price is poised to fall 16% by the end of September as it completes an "Elliot Wave" correction.

Source: Bloomberg � Australian semi-soft export prices weaker in Q1 of CY13.

The average exports price received for semi-soft coking coal in Mar13 was A$113/t, taking the MarQ13 average to A$113/t, down 11.5% on the DecQ12 average of A$127/t.

In contrast, the thermal coal export price for Mar13 was A$97/t, in line with the MarQ13 of A$97/t, down only 1% on the DecQ12 average of A$98/t, highlighting the weakness in semi-soft pricing.

Source: Tex Report � WAs Anketell Point port project gets conditional federal approval.

Federal environment minister Tony Burke has stated that subjects to the conditions (of which there are 45) the project could go ahead without unacceptable impacts on the environment.

The port development plan includes API constructing a 15km shipping channel, jetties and associated shore-based infrastructure including a desalination plant, power plant and road and rail links.

Source: Courier Mail
Other economic news � China retains its pole position of being the largest holder of US treasuries that fell 0.1% in March to US$1.25trillion; whist Japan reduced its stake by 0.05% to US$1.1 trillion.

Source: Bloomberg
African Resources update � Tanzania may sell US$2bn of Eurobonds should it obtain its first sovereign credit rating by the end of September according the deputy finance minister.

The proceeds would be used to build roads, boost power generation and refurbish the rail infrastructure.

Rwanda issued US$400m in Eurobonds last month with a 6.875% yield.

Source: Bloomberg � South African rail company, Transnet, has reached a two year agreement over wages with unions for an 8.5% across the board increase this financial year and 9% next.

Source: Engineering News
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