🕐10.01.14 - 11:27 Uhr

INVESTEC: INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - FRIDAY 10 JANUARY -
AMI LN, AA US, HMB LN, KOD LN, CPL AU



[cid:image001.png@01CF0DDA.5F1447F0] Friday, 10 January 2014 [cid:image006.jpg@01CF0DDA.66ADEDE0]
Snapshot � Company news highlights: African Minerals meets its FY13 production guidance, Alcoa reports DecQ13 profit of US$0.04/share, Hambledon Mining raises �1.93m, Kodal Minerals placing, Coalspur reaches agreement in relation to the Vista project. � Commodity review highlights: Chinese iron ore imports reached a record 820Mt in 2013, Chalco has sufficient bauxite stockpiles to withstand Indonesian ban, Commodity exchange traded products saw worse year on record last year, gold prices find support in morning trading from weaker US dollar, Indias environment ministry gives go ahead for Poscos US$12.6bn steel plant. � Other economic news: China becomes worlds largest goods trader, US jobless claims beats estimates. � African resources update: Japan eyes Mozambique gas supplies, Todays African proverb � Market notes: FTSE futures +25.5 points.

Mixed performance from the US markets (Dow -0.11%, S&P +0.03) as markets tread water ahead of this afternoons US non-farm payroll and unemployment data that may provide an indication of the Feds next move regarding fiscal stimulus.

Asian markets are taking the same stance (Nikkei 0.20%, Hang Seng +0.39%, ASX200 -0.23%).

The Chinese market is -0.71% as export growth slowed whilst imports accelerated indicating stronger domestic demand, however concerns over the Chinese IPO market provided too great a headwind. Commodity markets - gold +0.53% $1,234.50/oz, silver +0.80% $19.7395/oz, platinum +0.29% $1,424.00/oz, copper +0.32%, $3.3095/lb, nickel -1.30% $13,293.00/t, iron ore -0.38% $131.00/t, thermal coal $83.85, WTI +1.03% $92.60/bbl, Brent +0.50% $106.92/bbl, zinc -1.15% $2,002.75/t.

Dual listed - BHP -1.43% A$36.44, RIO -2.53% A$63.65.

Gold is trading firmer ahead of the non-farms payroll numbers this afternoon, weighing prospects for less stimulus versus more physical demand.

Copper halted its largest weekly drop since November on Chinese import data.

WTI rebounds as much as 1% amid speculation the recent drop to the lowest price in 8 months is excessive. Economic data due today: US - non-farm payrolls (forecast 197K), unemployment rate (7.0%), Nov wholesale inventories (0.4%).

Eurozone - French industrial production Nov (forecast 0.4%), French manufacturing production Nov (0.2%), Irish industrial production.

UK - Nov industrial production (forecast 0.4%), Nov manufacturing production (0.4%), construction output (0.8%).
Company news � African Minerals (AMI LN) meets its FY13 production guidance.

AMI sold 3.8mt in the 4Q13 (c.15mtpa annualised rate) taking FY13A sales to 12.1mt (Investec 12.0mt), in line with guidance of 11-13mt.

The company has not provided any production figures or any sales guidance for FY14E.

Source: Company Investec view: It is encouraging that has AMI met its sales guidance, albeit guidance that had been reduced from an earlier target of 13-15mt.

We note that 1.6mt was loaded during the dry weather month of December for a 19.2mtpa annualised rate, lending some confidence to the companys target of 20mtpa.

The company needs, however, to achieve a higher than 20mtpa rate during the dry months, in order to make up for the wet season and this should be possible as the operation is fine-tuned.

In the meantime, however, our analyst currently assumes 18mt of sales in FY14. � Alcoa (AA US) reports DecQ13 profit of US$0.04/share, excluding special items.

AA reported a DecQ13 net loss of US$2.3bn (US$2.19/share).

Excluding special items, which included a US$1.7bn impairment relating to Primary Metals, the company reported net income of US$40m (US$0.04/share), below consensus estimates of US$0.06/share.

DecQ13 net income of US$40m was below the profit of US$120m (US$0.11/share) reported inSepQ13.

Source: Company Investec view: Interestingly 80% of segment profits are now derived from the downstream value-add businesses.

EBITDA margins did improve slightly in the alumina business, increasing to US$46/t from US$44/t in SepQ13.

The aluminium business segment continues to struggle with EBITDA margins of just US$87/t, implying cash costs of c.

US$2,070/t based off a 3rd party selling price of US$2,157/t.

AA sees aluminium demand growth of 7% in 2014, 4% excluding China, after 7% growth in 2013.

The outlook for downstream segments looks better going into MarQ14 with AA guiding for after tax operating income (ATOI) increases of 8-10% in Engineered Products, 100% in Rolled Products (excluding FX and commodity price changes).

Upstream alumina shipments will fall 95kt QoQ in MarQ14 and aluminium shipments by 20kt.

180kt of aluminium smelting capacity remains under review.

AA remains hugely leveraged to aluminium prices with the company estimating a US$100/t change in aluminium prices to have a US$240m earnings impact. � Hambledon Mining (HMB LN) raises �1.93m through the issuance of 98m new shares at 1.975p.

The funds are to be used for general working capital purposes.

Total shares following the placing will be 1,661m.

Source: Company � Kodal Minerals (KOD LN) placing.

Recently floated KOD has announced that it has raised an additional �1.25m by placing 100m new shares at 1.25p/share with new and existing shareholders.

The proceeds from the placement will be used to accelerate and extend the original work programme already in place.

Source: Company Investec view: This small company has had a successful introduction to AIM, having listed on 30 December 2013 with its phosphorous project in Norway and raised �1m at a price of 0.7p/share.

Just 11 days later, it has now raised additional funds at almost double that. � Coalspur (CPL AU) reaches agreement in relation to the Vista project.

CPL has announced that it has reached agreement with the Alexis Nakota Sioux Nation in relation to the development of the Vista project in Alberta, Canada.

This will now allow the Alberta Energy Regulator to make a decision on the projects approval.

Source: Company Investec view: Vista phase 1 is expected to produce 6mtpa of thermal coal with capex estimated at c.

C$458m.

Cash costs are expected to be just C$59.50/t in the first 5 years.

Project commissioning is targeted for 2015.
[cid:image007.png@01CF0DDA.66ADEDE0] Commodities news � Chinese iron ore imports reached a record 820mt in 2013, according to Bloomberg, citing government customs data.

Meanwhile total iron ore inventories at Chinese ports have risen for a third week to 87.5mt, the highest level in almost a year, placing downward pressure on prices (62% fines now at $131/t CFR).

Source: Bloomberg Investec view: Iron ore is the multi-billion dollar uncertainty for the major producers in 2014.

The strength of Chinese steel production and iron ore imports in the 2H13 caught several market commentators off-guard.

With robust supply growth expected this year, the price by the end of the year remains hugely uncertainty: we note that the broker range in iron ore prices is over $30/t, clearly a significant difference when forecasting the earnings of the major mining companies. � Chalco has sufficient bauxite stockpiles to withstand Indonesian ban.

The largest producer of aluminium in China states that it has ample bauxite stockpiled (some reports suggest five months supply), ahead of a ban on exports of unprocessed ore from set to take effect from Jan 12.

China reportedly received about 71% of its imports of bauxite from Indonesia.

The company state that is does intend to build a processing facility in Indonesia, to satisfy the governments conditions.

Source: Bloomberg � Commodity exchange traded products (ETPs) saw worse year on record last year with outflows totalling US$42.9bn, with gold ETPs accounting for US$40bn of the outflow.

Decembers total outflow came to US$5.4bn of which gold accounted for US$3.6bn.

Source: Thomson Reuters � Gold prices find support in morning trading from weaker US dollar ahead of US payroll numbers.

Source: Thomson Reuters � Indias environment ministry finally gives go-ahead for Poscos US$12.6bn steel plant, although costs are up US$600m due to a request for "social commitments".

The 12mtpa steel plant in Eastern Odisha state has been stuck for over 8 years due to delays over getting clearances and acquiring land.

The first phase of the plant is due for commissioning sometime in 2018.

Source: Thomson Reuters. Investec view: The long delays and increased costs of developing this major facility highlight the challenges of operating in India.
Other economic news � China becomes worlds biggest goods trader.

China became the worlds largest trader in goods for the first time last year, overtaking the US for the entire year and ending the year with record trade figures in December.

The total value of Chinas imports and exports in 2013 was US$4.16tr, a 7.6% increase from a year earlier.

Source: FT � US jobless claims beats estimates.

The number of Americans filing new claims for unemployment benefits last week fell by 15,000 to 330,000, below the 335,000 which economists had forecast.

This is a positive indication that the US economy continues to improve.

Figures are seasonally adjusted.

Source: Reuters.
African resources update � Japan eyes Mozambique gas supplies.

In the first visit to Africa from a Japanese leader in 8 years, Shinzo Abe has undertaken a 3 country visit to the continent.

He may seek to secure natural gas supplies from Mozambique, after the Fukushima disaster.

Mozambique plans to build four LNG units with total capacity of 20Mt/year by 2018.

Source: Bloomberg � Todays African proverb.

"When a cockroach wants to die, it goes inside a palm oil bottle".

Source: BBC
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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