🕐25.02.14 - 15:54 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - TUESDAY 25 FEBRUARY - RRS LN,
BLT LN, KGI LN, 1029 HK, 1818 HK, 3833 HK, 2099 HK, MSR AU, AGO AU, IAU AU, 358 HK, VALE US



[cid:image001.png@01CF3200.E158B670] Tuesday, 25 February 2014 [cid:image006.jpg@01CF3200.F47104B0]
Snapshot � Company news highlights: Randgold commences next leg of Kibali, BHP Billiton suspends Yarrie, Kirkland Lake drilling results, General Nice misses another IRC payment, Zhaojin and Xinjiang Xinxin profit warnings, China Gold management changes, Manas Resources gets government support, Atlas Iron interim results, Tujuh Bukit IPO planned � Commodity review highlights: Jiangxi Copper sees 6-7% Chinese demand growth, Vale believes nickel prices will rise � Other Economic News: China equities sink most since July 2013 as Yuan falls � African Resources Update: Platinum producers create online strike-cost counter, Africa potentially the growth engine for the next decade, Malawi corruption losses, Egypt government changes, Todays Africa proverb � Market notes: FTSE futures -9.5 points despite US markets moving back towards records highs (Dow +0.64%, S&P +0.62%) on M&A activity, strong German confidence and general sentiment that the US economy can withstand the fiscal tapering.

Asian markets are mixed (Nikkei +1.44%, Hang Seng -0.36%, ASX200 -0.12%) with the Chinese Yuan weakening as a tightening in bank lending concerns markets about the future strength of the property market and corporate earnings (Shanghai off 2.04%) . Commodity markets - gold -0.25% $1,333.67/oz, silver -0.61% $21.8430/oz, platinum -0.48% $1,433.70/oz, copper -0.62%, $3.2205/lb, nickel -0.23% $14,304.50/t, iron ore -2.04% $119.90/t, thermal coal $77.35, WTI -0.51% $102.31/bbl, Brent -0.18% $110.44/bbl, zinc +0.20% $2,045.00/t.

Dual listed - BHP -0.71% A$39.10, RIO -1.34% A$68.62.

WTI is starting to slip as speculation mounts that the commodity is overbought following the US cold snap and on concerns that crude stockpiles will expand.

Copper declined on concerns the Yuans weakness and delays in loans to the Chinese real estate market will damp demand.

Commentary also suggests that the gold rally may be excessive on expectations the Fed will keep its plans to reduce stimulus. Economic data due today:- US - House Price Index (forecast 0.3%), consumer confidence index (80.0), Richmond Fed manufacturing index (5).

Eurozone - French manufacturing confidence (forecast 100), French business confidence (95), Italian retail sales (0.0%), Italian consumer confidence (98.5).
Company News � Randgold (RRS LN) commences next leg of the Kibali production, announcing that it has now started commissioning of the sulphide circuit now started.

Production thus far has been through the oxide circuit.

Source: Company Investec view: The announcement is as expected and entirely necessary if Randgold is to produce the 550koz it is looking for from Kibali this year.

See yesterdays note on Randgolds increased dividend payout. � BHP Billiton (BLT LN) suspends Yarrie.

As part of its drive to cut costs, BLT has announced that it will suspend production at its Yarrie iron ore mine indefinitely.

BLT also confirmed an earlier announcement by contractors Macmahon Holdings that BLT would take over running of its Orebody 18, the last BHP iron ore site still run by a contractor.

Source: Reuters Investec view: This was a tiny operation and not material to BHP Billitons growth plans.

The Goldsworthy JV, of which Yarrie is a part, produced just 1.106mt in FY13A. � Kirkland Lake (KGI LN) drilling results.

KGI has been undertaking drilling close to the surface around its Kirkland Lake mine in Ontario.

Numerous drill zones have identified a third, previously undiscovered zone of continuous high grade mineralisation near surface.

Recent drilling also intersected high grade gold down to 950ft from the surface.

KGIs drilling encountered very high grades of around 50oz (1.5kg)and 7oz (217g) over 1ft intersections, and also encountered 1oz over 7ft.

These intersections were within 1000ft (c.305m) of the surface.

The company plans to announce a resource and reserve for the near surface material in the near term.

Source: Company Investec view: These drilling results are very encouraging and demonstrate that the group could have a future in near surface mining of this high grade material.

The forthcoming resource and reserve statements should give us more clarity on mining potential. � General Nice misses another payment to IRC Ltd (1029 HK).

IRC Ltd has advised that the US$20m (HKD155m) payment due from General Nice by 24 February 2014 has not been received due to a technical delay.

Source: Company Investec view: IRC Ltd has still only received c.

US$130m from the c.

US$240m share subscription announced in January 2013.

General Nice has an outstanding subscription to c.

US$78m (HKD606m) of IRC shares and Minmetals Cheerglory to c.

US$30m of IRC shares at HKD0.94/share.

General Nice has shown every intention of its willingness to complete the transaction but clearly does not have adequate resources currently.

Our analysts expect the subscription to complete by June 2014 but expect the delayed receipt of funds to adversely affect the timing of the K&S stage 2 expansion to 6.3mtpa. � Zhaojin Mining (1818 HK) profit warning.

Zhaojin has advised that it expects a substantial YoY drop in financial earnings for the year ended 31 December 2013 due to lower gold prices and inventory impairments.

Source: Company Investec view: Zhaojin reported a CY12 attributable profit of CNY1,923m.

Bloomberg consensus forecasts for CY13 are already forecasting a substantial YoY decline in earnings to just CNY968m. � Xinjiang Xinxin Mining (3833 HK) profit warning.

Chinese nickel and copper miner Xinjiang Xinxin Mining warned investors that net income for CY13 is "expected to decrease significantly" as compared to the CNY10.2m in CY12 and management expects to record a loss in the period due to lower base metal prices.

Source: Company � China Gold International (2099 HK, CGG CN) management changes.

Chinese gold producer China Gold International is reshuffling its management with Chairman Zhaoxue Sun resigning, CEO Xin Song becoming Chairman and NED Bing Liu becoming CEO.

Source: Company Investec view: Management changes such as this one are routine for Chinese state owned enterprises as management rotates between different companies. � Manas Resources (MSR AU) receives government support for its Shambesai gold project in the Kyrgyz Republic.

Kyrgyz Republic Prime Minister, Mr Jantoro Satybaldiev, has stated that he expects the local government in the Shambesai region to support and fast track development of Manas 100% owned Shambesai gold project.

Manas project has already received parliamentary support and the State Agency for Geology and Mineral Resources (SAGMR) has approved the companys 2014 working plans.

Source: Company Investec view: Shambesai has a proved and probable reserve of 2.54mt at 3.4g/t (277koz contained gold).

Manas has completed a bankable feasibility study for Shambesai and has received a mining and development license.

The company is in the process of submitting its Environmental Impact Statement (EIS) and is in discussions with parties regarding the c.

US$41m in financing required to develop the project. � Atlas Iron (AGO AU) 1H FY14 results.

Atlas Iron has reported an attributable NPAT of A$73.67m for DecH13 and an underlying NPAT, excluding the Mineral Resource Rent Tax (MRRT) benefit, of A$61.1m.

The company also sanctioned the Stage 2 development of Mt Webber to double production capacity at the mine to 6mtpa by end DecQ14.

Source: Company Investec view: Atlas is guiding for iron ore shipments of 10.2mt-10.7mt at a C1 cash cost of A$49/t-A$52/t (FOB, ex royalties).

C1 cash cost guidance implies a small increase from the A$48.4/t reported in 1H FY14. � Tujuh Bukit planning IPO for SepQ14.

The owners of the Tujuh Bukit copper/gold project in Indonesia are looking to raise up to US$75m at a market capitalisation of at least US$800m according to Provident Capital Partners Gavin Caudle.

The company plans to start mine construction later in 2014 with first gold production in 2016 and a copper project built subsequently.

Source: Reuters Investec view: Tujuh Bukit is the project that Intrepid Mines (IAU AU) recently gave up all rights to in a project dispute settlement brokered by Saratoga Capital and Provident Capital.

Interestingly, the US$80m paid to Intrepid for 15% of the project implies a pre-money valuation of c.

US$500m.
[cid:image007.png@01CF3200.F47104B0]
Commodities News � Jiangxi Copper sees 6-7% Chinese copper demand growth.

The Vice President of Chinas largest copper smelter, Jiangxi Copper (358 HK), has said that he expects the countrys refined copper demand to increase by 6-7% during 2014 to as much as 9.52Mt.

Chinese refined copper demand was 8.9Mt last year.

Source: Bloomberg � Vale believes nickel prices will rise.

According to Vale (VALE US), the worlds second largest nickel producer, nickel will climb significantly in 2015 and may advance to over US$20,000/t in the next few years because of Indonesias ban on ore exports.

Source: Bloomberg Investec view: While there will be a certain amount of Vale "talking its own book" in these comments, we believe that the Indonesian ore export ban has the potential to change the face of the nickel mining industry and this should be positive for non-Indonesian nickel producers.
Other economic news � China equities sink most since July 2013 as Yuan falls.

The Yuan has depreciated 0.3% against the dollar, a small move compared to other currencies, but its biggest drop since April 2012.

Equities fell as some investors linked the weakened currency to a less optimistic economic outlook, with property developers seen most at risk.

Data yesterday showed slowing new home price growth in January in Chinas first-tier cities, after local governments implemented measures to rein in escalating property values and banks tightened lending.

Source: Bloomberg
African Resources update � Platinum producers create real-time, online counter highlighting the AMCU strike cost.

The counter, developed on behalf of Lonmin (LMI LN), Anglo American Platinum (AMS SJ) and Impala Platinum (IMP SJ) can be seen at www.platinumwagenegotiations.co.za Current lost revenues stand at ZAR5.1bn (US$465m), with lost employee earnings standing at ZAR2.3bn.

Source: MiningWeekly � Africa potentially the growth engine for the next decade.

According to World Bank data, 7 of the top 10 fastest-growing economies over the next 10 years are projected to be in Africa.

According to the International Monetary Fund, GDP in sub-Saharan Africa is expected to increase 6.1% this year, up from a projected 5.6% while investment is to rise to 23.2% of GDP (22.8% last year).

Standard Chartered forecasts growing trade between Africa and China to rise from $0.2tn in 2012 to $1.7tn by 2030.

Source: Bloomberg � Malawi loses �19m to corruption in 6 months.

According to a report into allegations of massive fraud at the heart of the government, Malawi lost more than �19m to corruption in a six month period.

The scandal has tarnished the presidency of Joyce Banda and caused western donors to suspend aid to the country.

Source: FT � Egypts interim government resigns.

Egypts interim Prime Minister Hazem Beblawi has unexpectedly announced the resignation of his government, saying that the decision was taken in light of the current situation in the country which includes a series of strikes.

Since July, more than 1,000 people have been killed and thousands of others detained in a crackdown on the Muslim Brotherhood.

Source: BBC Investec view: This news is somewhat relevant to miner Centamin (CEY LN) which produces its gold solely in Egypt.

The company has arguably suffered an Egyptian discount for some years now, although operations have been largely uninterrupted by the unrest.

Centamin has made modest steps to diversify its risk outside of Egypt, having invested in projects in Ethiopia and is in the process of acquiring Ampella Mining (AMX AU) which operates in Burkina Faso. � Todays African proverb.

"You see an adult chicken at the market and you eagerly go for it; if it was of any value would the owner sell it?" 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
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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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