[cid:image001.png@01CEC4C7.23D1A180] Wednesday, 09 October 2013 [cid:image006.jpg@01CEC4C7.2F0D4D60]
Snapshot � Company news highlights: Another good quarterly from Centamin, Press commentary on Ferrexpo raising debt, Avocet cuts FY13 production guidance, Fresnillo explosives permit reinstated, Anglo Asian Mining debt package, Alcoa SepQ3 earnings, Newcrest mining board changes, Perseus revised LOM plan, OceanaGold to acquire Pacific Rim Mining. � Commodity review highlights: Gold injects US$210m into global economy, ArcelorMittal to invest in France, Iron ore prices up slightly past the Chinese Golden Week holiday, Chilean government reviewing funding for Codelco. � Other economic news: Investors continue to exit from T-Bills, IMF cuts global growth forecasts. � African resources update: IMF downgrades SAs growth outlook again, Uganda to develop US$2.5bn refinery, Zimbabwe benchmark stocks index rises. � Market notes: Stocks fell sharply overnight in the US, with some of the biggest declines seen this year.

Markets in Asia are reflecting that in the early openings, with the downgrade to global growth for 2013 & 2014 from the IMF (now only 2.9% in 2013 and 3.6% in 2014) adding to the woes.

Of note in Europe, stocks extended 4 week lows, with the problems of the Eurozone rearing again. In commodity markets, WTI rose to US$103.68/bbl and Brent rose to US$110.28/bbl on the expectation that a solution to the current US shutdown will emerge and US demand will return.

Iron ore was virtually unchanged, up only 0.2% to US$131.70/t as the Chinese market returned after the Golden Week Holiday to low volumes.

We believe that as these volumes return, there will be a selloff in the spot price after the moves by the futures over the last week - see our futures spread monitor below.

Benchmark 3mth LME copper was virtually unchanged too at US$7,267.5/t and has in fact remained in the US$7,000-7,500/t range since August. Spot gold closed at US$1,323.51/oz but is down this morning post the Yellen news in the US.

Finally, PIMCOs Berdibek Ahmedov has become the latest to opine that the commodities super cycle is over stating that it has "mostly ended" and that spot prices will probably rise only in line with inflation.
Company News � Another good quarterly from Centamin (CEY LN), with the group likely to exceed FY13 guidance.

CEY produced 84,757oz of gold in the 3Q (in line with Investec 85koz) and is now stating that it expects to exceed its FY13 guidance of 320koz (at under US$700/oz.

The plant continues to perform very well, again exceeding nameplate capacity of 5mtpa, which points favourably towards a successful expansion.

Source: Company Investec view: CEY is doing a good job of under-promising and over-delivering.

Our analyst was already expecting CEY to exceed its guidance and had a FY13E forecast of 329koz, so we do not expect to changes our numbers.

The fourth quarter should still reflect a drop in production, as the Stage 4 commissioning starts. � Press commentary on Ferrexpo (FXPO LN) raising debt.

Yesterday afternoon, a Reuters story stated that FXPO is in the market raising around US$380m in debt led by Deutsche Bank.

The article said the loan is not secured and that US$315m has been raised already.

Source: Reuters Investec view: This story is unsurprising given that the company is looking into expansion options for its processing facilities in Ukraine.

It will update the market on formal plans in Q4 FY13 / Q1 FY14. � Avocet (AVM LN) production update.

AVM has reduced its full year gold production guidance to 125,000-130,000oz from 135,000oz.

The update follows Q3 production which came in at 31,000oz, below expectations due to lower grades and mill availability.

Cash costs for H2 FY13 are now expected to be in line with H1.

The group will release its full operational and financial results for Q3 on 30 October and will provide an update on its Tri-K project in Guinea on Friday.

Source: Company Investec view: While this news is likely to be taken as negative for AVM in the short term, positive developments in terms of processing have recently been taken at Inata for the longer term. � Fresnillo (FRES LN) explosives permit reinstated.

FRES has announced that the temporary suspension of Minera Penmonts explosives permit at Noche Buena has been lifted and operations have re-commenced at the mien.

Source: Company. � Anglo Asian Mining (AAZ LN) debt package.

AAZ has entered into a loan facility agreement for US$37m with Amsterdam Trade Bank.

The facility has a term of 58 months and attracts a quarterly interest rate of LIBOR plus 8.25%.

The money will be used to pay down an existing facility which carries a higher interest rate.

Source: Company � Alcoa (AA US) SepQ13 earnings.

Alcoa announced 3Q13 earnings of US$24m (US$0.02/share), and earnings of US$124m (US$0.11/share) excluding special items related to optimisation of upstream assets.

Earnings of US$0.11/share was better than Bloomberg consensus of US$0.05/share.

The result was despite 7% YoY lower aluminium prices and was due in part to productivity gains in Global Primary Products.

Source: Company Investec view: Alcoa reaffirmed its 7% aluminium demand growth forecast for 2013 and sees a balanced alumina and aluminium market this year.

Alcoa raised its growth expectations in the heavy truck and trailer market from 3-8% to 5-9% due to stronger demand in European and Chinese markets. � Newcrest Mining (NCM AU) announces changes to board and executive.

Peter Hay is to replace Don Mercer as Chairman when Don retires in December 2013.

Mr Sandeep Biswas has been appointed Chief Operating Officer and will succeed Greg Robinson as CEO in 2H14.

Mr Biswas was previously CEO of Pacific Aluminium, a subsidiary of Rio Tinto.

NCM also announced SepQ13 gold production of 587koz at cash costs of US$718/oz and all0in costs of $1,001/oz.

The companys FY14 guidance remains unchanged at 2.0-2.3moz.

Source: Company � Perseus (PRU AU) revised LOM plan.

Perseus Mining has advised that a statement detailing the revised Life of Mine plan for Edikan will be released on Tues 15th October.

The LOMP has been devised to, among other things, minimise investment in FY14, give priority to cash generation over marginal gold production, preserve capacity to expand pits at a higher gold price and use revised technical parameters reflecting actual experience.

Source: Company � OceanaGold (OGC AU) to acquire Pacific Rim Mining (PMU CN).

OceanaGold will acquire Pacific Rim Mining paying 0.04006 OceanaGold shares for each Pacific Rim share.

The offer values Pacific Rim at C$0.06/share (C$10.2m), a 50% premium to the 20 day VWAP.

Source: Company Investec view: Pacific Rims primary asset is the El Dorado project in El Salvador which has a 1.56moz gold resource.

The offer values Pacific Rim at US$7/oz of gold equivalent resources.
[cid:image007.png@01CEC4C7.2F0D4D60] Commodities News � Gold injects US$210bn into global economy.

Recent research has revealed that the global gold industry contributed more than US$210bn to the worlds economy in 2012, equivalent to the GDP of Ireland, Czech Republic or Beijing, said PwC.

The study takes into account the whole value chain from mining equipment supply to consumer demand.

Gold provided 36% of all Tanzanian exports and 26% of Ghanas exports.

Source: Mining Weekly � ArcelorMittal to invest in France.

ArcelorMittal, the worlds largest steel producer, is to invest EUR92m to renovate one of three blast furnaces in Dunkerque, France.

Source: Reuters � Iron ore prices up slightly post the Chinese Golden Week holiday.

Iron ore prices were up 0.2% to US$131.70/t (62% Fe, CFR China) post the week long holiday in China.

Source: Bloomberg � Chilean government reviewing funding for Codelco.

The Chilean government is reportedly reviewing funding for state owned copper producer Codelco.

Codelco had planned to invest US$4.5bn in 2013 but has had to reduce this to US$4bn.

The Chilean government has said Codelco must first source capital from the private markets.

Source: Reuters Investec view: Codelco produced 758kt of copper in 1H13 and plans to invest US$4-5bn pa over the next few years to increase production to 2mtpa.
Other economic news � Investors continue to exit from T-Bills.

The US governments short term borrowing costs rose sharply yesterday as concerns mounted about turmoil in the financial markets if the debt ceiling is not raised later in the month.

Source: FT � IMF cuts global growth forecasts.

The IMF has downgraded global growth forecasts in 2013 to 2.9%, 0.3% lower than its July forecast.

Global growth in 2014 has been downgraded from 3.8% to 3.6%.

The IMF did however upgrade UK growth to 1.4% in 2013 (0.9% previously).

Source: Reuters
African Resources update � IMF downgrades SAs growth outlook again.

The International Monetary Fund (IMF) has again lowered its 2013 GDP growth forecast for South Africa, attributing the revision to persistent labour tensions, and weak investment and confidence levels.

It is now forecasting a modest 2.0% expansion in 2013, having forecast 2.8% in April and 3.0% back in October 2012.

The IMF has also lowered the 2014 growth outlook to 2.9%, from an earlier estimate of 3.3%.

SAs performance stands in stark contrast to the rest of sub-Saharan Africa, where growth remains robust and is projected to increase from about 5% in 2013 to 6% in 2014.

Source: MiningWeekly � Uganda to develop US$2.5bn refinery.

Uganda is looking for a lead investor to develop a US$2.5bn oil refinery.

The facility is proposed to have a capacity of 60,000 barrels/ day.

The move comes just weeks after Uganda issued its first production licence to China National Offshore Oil Corp.

Source: Bloomberg � Zimbabwe benchmark stocks index rises.

Zimbabwes benchmark stocks index rose for a 16th day, the best performance in a year, as investors believe that Mugabe will put policies in place to support economic growth.

The countrys economy is forecast to expand by 5% in 2013 and by 5.7% in 2014.

Source: Bloomberg
Investec Global Natural Resources Research Team: UK Hong Kong South Africa Hunter Hillcoat Tel: +44 (0) 20 7597 5182
Matthew Whittall Tel: +852 3187 5075
Albert Minassian Tel: +27 (0) 21 416 1454
Marc Elliott Tel: +44 (0) 20 7597 5189
Leavitt Pope Tel: +852 3187 5074
Louise Collinge Tel: +44 (0) 20 7597 5779
Investec Global Natural Resources Sales Team: UK Hong Kong South Africa Jamie Campbell Tel: +44 (0) 20 7597 5038
Will Robbins Tel: +852 3187 5098
Hayden Smith Tel: +27 (0) 21 416 1401
USA Thomas Lawrence Tel: +1 212 2595604
Alistair Roberts Tel: +852 3187 5097
Investec Commodity Hedging Team: http://treasury.investec.co.uk/products-and-services/commodities.html UK Callum Macpherson Tel: +44 (0) 20 7597 5070
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