🕐17.06.13 - 10:54 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - MONDAY 17 JUNE 2013 - KYS LN,
BUMI LN, WLT US, AMS SJ, COAL IN, RIO LN, PDZ AU



[cid:image001.png@01CE6B31.69FCD570] Monday, 17 June 2013 [cid:image003.jpg@01CE6B32.2C6C8790]
Snapshot � Company news highlights: Kryso Resources delivers a resource update and maiden reserve, Bumi plc to appoint John Mazoni as Chairman, Walter Energy withdraws from debt refinancing plan, Strikes which hit Amplats are now resolved, Coal India in talks to acquire US$4bn of Australian coal assets, Rio Tinto prices US$3bn in bonds, Rio Tinto pushes for tax payment transparency, Metals Exploration raises equity, Prairie Downs management roadshow with new CEO. � Commodity review highlights: Inaccuracy exposed in Chinese industrial output statistics, 3Q13 aluminium premiums with Japanese buyers settled at US$250/t. � Other Economic News: G8 talks about mining company corruption, China debt auction fails, Senior bank debt issues slump � African Resources Update: Guinea president says Simandou target remains 2015, Tanzania to raise US$700m � FTSE futures up 18.5 points (7:20am) - European markets looking to open in the black this morning despite the weak end to trading in the US on Friday (S&P down 0.59%) thanks to the IMF cutting forecasts for economic growth in 2014 from 3% to 2.7% as an "excessively rapid and ill-designed" deficit reduction plans has hampered the "tepid" recovery in the US economy and that cuts to education, science & infrastructure spending could reduce potential growth in the medium-term.

The IMF also stated that any tapering of Fed support needed to be handled properly, as markets await the FOMC meeting details later this week.

The sentiment and direction of markets this week with remain dependent on comments from various members of the US Fed.

Asian markets are looking strong this morning - Nikkei up 2.73%, Hang Seng +1.39%, and ASX 200 + 0.71%. Commodity markets are all off this morning - gold -0.17% (US$1,388.18/oz), silver -0.43% (US$21.9955/oz), copper +0.73% (US$3.225/lb), iron ore +1.43% (US$113.60/t), platinum +0.25% (US$1,451.00/oz), WTI -0.04% (US$97.81/bbl), and Brent +0.04% (US$105.97/bbl).

Due listed - BHP AU -0.33% (A$32.80), RIO AU -0.61% (A$53.65). Economic data due today:- US: Empire state manufacturing survey, NAHB housing market index (forecast 45), G8 meeting outcome.

EU - Eurozone trade balance, Eurozone labour costs.

UK - Right move house prices.
Company News � Kryso (KYS LN) delivers a resources update and maiden reserve with SRK endorsement of the revised Pakrut development.

Overall resource quality has increased substantially, with measured and indicated resources increased by 16% to a combined 2.55moz at an average grade of 2.77g/t.

These include a maiden reserve inventory of 1.8moz at 3.0g/t, supporting the planned +18yr mine life.

The overall resource stands at 4.7moz at 2.1g/t.

SRK consulting, a renowned global mining consulting company, has endorsed the modified feasibility study, lending rigour to the revised parameters.

As highlighted previously, the expected capital cost for the Phase 1 start-up is now expected to be $177m, versus the $108m outlined in the 2010 feasibility study, partly reflecting the increase in scope from the original 2,000tpd operation to the currently planned 4,000tpd operation.

Source: Company Investec view: KYS was fully funded under the original development plans but the higher start-up capex (Phase 1 of $177m vs previous $108m) suggests a funding shortfall, which may be met by a potential alternate listing offshore (Hong Kong).

There is an additional Phase 2 capex of $47m required to get to the final production rate, which KYS expects to fund from cashflow. � Bumi Plc (BUMI LN) to appoint John Manzoni as Chairman.

The Sunday Times is reporting that former Talisman CEO and BP executive John Manzoni will be appointed chairman of Bumi Plc.

Manzoni would replace Samin Tan.

Source: Bloomberg � Walter Energy (WLT US) withdraws from debt refinancing plan.

US coal producer Walter Energy withdrew from an USD1.55bn loan refinancing due to poor market conditions.

The company was looking to refinance existing debt and has no material debt repayments until 2015.

Source: The WSJ Investec view: A warning for any mining company needing to refinance debt.

Walter shares were down 17% before being placed in a trading halt. � Strikes which hit Amplats are now resolved.

Some miners at one of Anglo American Platinums (AMS SJ) Rustenberg mines stopped 2,400 miners from returning to the surface on Friday, in a protest against the suspension of four union organisers.

The situation is now resolved.

Source: Bloomberg Investec view: The major South African platinum producers are struggling with strikes and union / labour issues at the moment.

Investors should expect continued disruption until wage negotiations which are currently underway result in an acceptable agreement. � Coal India Ltd (COAL IN) in talks to acquire US$4bn of Australian coal assts.

Coal India Ltd (CIL), 90% owned by the Indian government, is reportedly in talks to acquire two US$2bn stakes in Australian coal companies with annual output of 12mt and 16mt respectively.

CIL has supposedly sent the proposals to its foreign acquisition committee.

Source: The Economic Times Investec view: Any speculation on Coal Indias targets is likely to include Whitehaven (WHC AU) and divestments by Rio Tinto (RIO AU) including Coal & Allied and Clermont. � Rio Tinto (RIO LN, RIO AU) Prices US$3b in bonds.

Rio has US$1bn of 3-year fixed rate bonds (1.375% coupon), and US$1.25b 5.5-year fixed rate bonds (2.25% coupon), together with US$750m floating rate 2 and 3 year notes paying US$ LIBOR plus 55 and 84 points respectively.

Source: Company � Rio Tinto (RIO LN) pushes for tax payment transparency.

RIO CEO, Sam Walsh, attended a pre-G8 Summit event hosted by David Cameron and Nick Clegg in London on Saturday.

Sam called for businesses to be more transparent about their tax affairs: as "a company that publishes a breakdown of the global taxes we pay every year, we are fully supportive of the efforts to spread this kind of good practice more broadly," he said.

RIO was awarded PwCs Building Public Trust award for the Best Tax Reporting in the FTSE 100 in 2011, and was deemed the second most transparent major company (behind Statoil) in Transparency Internationals July 2012 report on corporate reporting.

Source: MiningNews � Metals Exploration (MTL LN) raises equity.

MTL has issued 189m new shares at 7p/share.

The shares will trade tomorrow.

The company now has 1,158m shares on issue.

This follows an announcement on 5 June that only 5.2m new shares were to be issued following a small fundraising.

Source: Company � Prairie Downs (PDZ AU) Management roadshow with new CEO.

We hosted new CEO, Ben Stoikovich, in the Sydney office today.

Mr Stoikovich has a background as a mining engineer, with underground coal mining experience, working in NSWs Illawarra coalfields before moving into the world of investment banking, Ben is well placed to oversee the key technical and financial aspects of the Lublin Coal project, which continues to look a standout project in our view.

Source: Company Investec view: Recent work by PDZ shows that the Lublin coal project is likely to enjoy a significant cost advantage when considered on a CFR basis into Europe, with neighbouring Bogdanka mine continuing to refute the assumption that deep mining is synonymous with high costs.

PDZ are working to capture the value of the 1.6bt Lublin thermal coal resource (with further potential seen in the basin), conscious of the strategic appeal of the asset to other European producers and end users.

While the market currently takes a dim view of unfunded projects, PDZ has a class project that will be built (the cost advantage and European demand outlook ensures that) in our view and the value will slowly be recognized.

The recruitment of Mr Stoikovich gives confidence the company will be able to advance the Polish project, without falling foul of technical, cultural or financing traps that can derail juniors.
Commodities News � Inaccuracy exposed in Chinese industrial output statistics.

Chinas National Bureau of Statistics has exposed falsified industrial data from the town of Henglan in Guangdong, where 2012 industrial output was found to be only CNY2.2bn, not the CNY8.5bn reported by local government officials.

The discrepancy was discovered by spot checks by the National Bureau of Statistics, which found that a number of enterprises counted by local officials had stopped production, relocated or been dissolved.

Source: Global Times Investec view: Stories like this serve to raise questions about the quality of data from China. � 3Q13 aluminium premiums with Japanese buyers settled at USD250/t.

A major producer and a Japanese buyer have reportedly agreed to a USD250/t premium for aluminium.

The premium is the amount above the LME price for immediate delivery.

The 3Q13 premium is flat versus the USD248-250/t in 2Q13.

Source: Metal Bulletin Investec view: Premiums are important in the context of an aluminium price of just USD1,810/t.
Other economic news � G8 talks about mining company corruption.

World leaders gathering for the G8 conference in Northern Ireland are proposing a requirement that companies disclose all payments to foreign governments.

This is aimed at exposing corruption, and comes after the recent issues raised by ENRC and a firm backed by Israeli billionaire Beny Steinmetz.

Source: Bloomberg � China debt auction fails.

Chinas Ministry of Finance sold only RMB9.53bn of government bonds on Friday, well below the RMB15bn offered.

Interest on the 273 day bills was 3.76%, above the 3.14% yield on similar debt currently in the market.

Source: Forbes Investec view: Ongoing concerns of liquidity tightening in China.

SHIBOR rates remain above 7%. � Senior bank debt issues slump.

European banks issuance of senior debt has fallen to the lowest levels in over 10 years.

This year, the EU banks have issued US$132m in senior debt, down from US$158bn last year.

This is due to investors believing they will end up taking losses as regulators demand greater protections for taxpayers and depositors.

Source: FT
African Resources update � Guinea president says Simandou target remains 2015.

Guinean President, Alpha Conde, denied on Friday there had been a change to expected start-up timing for Simandou.

This follows Mines Minister, Mohamed Fofanas, comments last week that the $20bn project would miss its 2015 target.

"For me, the target is still 2015," Conde said at a meeting in London, ahead of a G8 summit.

"If it turns out to be impossible, we have to be realistic.

But we should keep our long-term perspective".

Source: MiningWeekly Investec view: Conde has his voting public to consider, so needs to remain upbeat, while Fofane can afford to be more realistic.

Our RIO analyst recently pulled back his forecast capital spend on Simandou, on the expectation that the project is still a considerable way away from development, with RIOs iron ore expansion focus firmly on the Pilbara. � Tanzania to raise US$700m.

Tanzanias finance ministry said it plans to raise up to US$700m through selling debt to selected investors and commercial bank loans.

The money is to be used to make electricity supplies more reliable and to improve infrastructure.

Source: Bloomberg
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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