🕐24.03.14 - 09:54 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - MONDAY 24 MARCH - CEY LN, ORM
LN, 1818 HK, 1171 HK, 1258 HK



[cid:image001.png@01CF473C.94AEFEA0] Monday, 24 March 2014 [cid:image002.jpg@01CF473C.94AEFEA0]
Snapshot � Company news highlights: Centamin good results in line, Ormonde Mining signs offtake agreement with Nobel, Zhaojin Mining and Yanzhou Coal results, Yanzhou withdraws Yancoal takeover offer, China Nonferrous Mining profits fall. � Commodity review highlights: Mines & Money Hong Kong conference this week, Palladium prices at levels not seen since 2011, Rusal and Norilsk benefit from Indonesian minerals exports ban, Boliden positive on copper outlook longer term. � Other Economic News: China flash PMI disappoints, China electricity consumption growth rate slows, Australian senate MRRT debate � African Resources Update: Zambia drops FX controls, Zimbabwe considering Implats PGM refinery proposal, Ebola outbreak in Guinea, Chan fines China National Petroleum Corp US$1.2bn, todays African Proverb � Market notes: FTSE futures down 19 points this morning.

Following a down day in the US on Friday (Dow -0.17% S&P -0.29%) European markets are set to open marginally lower this morning despite a strong lead from Asia (Nikkei +1.77%, S&P +1.69%, ASX200 +0.17%).

Asias outperformance comes off the back of weaker Chinese manufacturing data spurring speculation of a fresh round of monetary stimulus - manufacturing PMI print for March was 48.1 (an 8 month low). Commodity markets - gold -0.61% $1,326/oz, silver -0.78% $20.17/oz, platinum +0.21% $1,439/oz, copper -0.08%, $2.947/lb, nickel +1.63% $16,081/t, iron ore +0.00% $110.70/t, thermal coal $74.05, WTI -0.22% $99.24/bbl, Brent -0.29% $106.61/bbl, zinc -0.01% $1,946/t.

Dual listed - BHP +0.45% A$35.74, RIO +0.21% A$61.50.

Gold futures rose for the first time in 5 sessions on Friday in New York; China import iron ore benchmark grade was unchanged on Friday (at $110.70 a ton), according to Steel Index.

Copper inventories monitored by the Shanghai Futures Exchange fell 3,396 metric tons to 209,901 tons this week Economic data due today: US - Chicago Fed Nat Activity Index (forecast 0.10), Markit US manufacturing PMI (56.5).

Eurozone - French manufacturing PMI (forecast 49.7), French services PMI (47.5), German manufacturing PMI (54.4), German services PMI (55.5), EC composite PMI (53.2), EC manufacturing PMI (53.0), EC Services PMI (52.6).
Company News � Centamin (CEY LN) FY13A results largely in line.

The company delivered EBITDA of $234.2m (Investec and BB consensus both $237m) and EPS of (Investec 16.9cps, consensus both 17cps).

CEY ended the period with cash of $106m ($142m including receivables and investments) and no debt, again in line with expectations, although we note that purchase of property, plant and equipment of $267m was $25m higher than our analyst expected.

There was no dividend, as expected, nor a meaningful update on the on-going court issues.

Conference call at 9am.

Source: Company Investec view: The company performed very well in FY13A and FY14E should be another big year, with CEY guiding 18% higher production: 420koz at cash costs of $700/oz (Investec 416koz at $702/oz).

Consensus is looking for EBITDA of $198m and EPS of 11cps.

The Centamin share price has performed well of late, like all gold equities under our coverage, on the back of upward gold price momentum. � Ormonde Mining (ORM LN) signs binding off take agreement with Noble for concentrate from its Barruecopardo tungsten project in Spain.

Noble will purchase 100% of the concentrate produced over the initial five years of mining that would see revenues of over US$350m at a tungsten price of US$370/mtu.

Source: Company � Zhaojin Mining (1818 HK) announces CY13 attributable profit of CNY734m.

Zhaojin Mining reported a CY13 attributable profit of CNY734m, down 61.8% YoY.

The company had previously released a profit warning on 24 February 2014 guiding for a substantial decrease in earnings due to lower gold prices.

Zhaojin produced 928koz of gold in CY13, including 647koz of mine-produced gold and 281koz of third party smelted and processed gold.

The company proposed a CY13 dividend of CNY0.1/share.

Source: Company Investec view: The company is guiding for total production of 950.5koz in CY14, including flat YoY mine-produced gold of 646.8koz.

Zhaojin will invest CNY985m in CY14 implementing 34 different projects. � Yanzhou Coal (1171 HK) CY13 profit of CNY777m.

Yanzhou reported a CY13 attributable profit of CNY777.4m (IFRS) versus an attributable profit of CNY6.06bn in CY12.

In CY13 Yanzhou produced 73.8mt of raw coal and 67mt of saleable coal, and sold 0.61mt of methanol.

Yanzhou reported a cost of sales of CNY263.7/t in CY13, down 16.1% YoY, and an average selling price of CNY523.5/t.

Source: Company Investec view: Yanzhou is guiding for CY14 sales of 105mt, including 36mt of third party traded coal and sales of 15.3mt from Yancoal Australia (YAL AU).

The methanol sales target is 960kt. � Yanzhou Coal (1171 HK) withdraws Yancoal (YAL AU) takeover offer.

Yanzhou Coal has indicated that it will no longer pursue the indicative non-binding takeover proposal for Yancoal Australia that it announced on 9 July 2013.

Source: Company Investec view: Withdrawal of the takeover offer isnt surprising given media reports that Yancoal shareholder Noble Group (NOBL SP) believed Yanzhous proposed price was too low. � China Nonferrous Mining (1258 HK) profit falls in CY13.

Zambian copper miner China Nonferrous Mining reported attributable net income of US$67.3m in CY13, down 31.7% YoY, on revenue of US$1.74bn, up 13.8% YoY, as copper sales grew 27.6% YoY to 238kt due to increased production from the start of the Huachin and Muliashi heap leach projects.

The company continued to invest heavily in growth with US$268m of capex during CY13 over a number of mine and smelting expansion projects.

Source: Company
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Commodities News � Mines & Money in Hong Kong.

Hong Kong will host its 7th annual Mines & Money conference this week.

Source: Investec � Palladium prices at levels not seen since 2011 in light of supply concerns due to on-going strike action in South Africa and the tensions between Russia and the West over Crimea.

Furthermore the launch of South African ETFs may trigger additional demand.

Palladium ETFs hold around 1.634moz of metal Source: Thomson Reuters � Rusal (486 HK) and Norilsk Nickel (MNOD LI) to benefit from Indonesian minerals export ban that was implemented in January.

Both companies stated to the government over a 6 month lobbying campaign that they would only invest in the country if bauxite and nickel ore exports were banned in line with planned policy.

Last year the companies had been fearful that the policies would be watered down.

Chinese and Russian firms and pledging significant investment into the country, with an MOU signed with Rusal to build an alumina smelter in West Kalimantan for US$3bn.

Source: Thomson Reuters � Boliden (BOL SS) positive on long term copper trend expecting a supply deficit to evolve in two years time.

The company indicates that profits on smelting are too weak currently.

Source: Bloomberg Other economic news � China flash PMI disappoints.

The flash HSBC China manufacturing PMI was 48.1 for March, beneath the consensus estimates of 48.7 and Februarys 48.5 reading.

A reading below 50 indicates Chinas manufacturing sector is contracting.

Source: Bloomberg � China electricity consumption growth rate slows.

Data from Chinas National Energy Administration showed that the rate of electricity consumption growth slowed to 4.5% YoY in January and February 2014.

Electricity use by secondary industry usage grew 4.3% YoY to 582bn kWh while tertiary industry usage grew by 5.0% YoY to 109bn kWh.

Source: Xinhua � Australias Senate MRRT debate.

Australias Senate has launched into a debate today over bills repealing the countrys Mineral Resources Rents Tax (MRRT) as its first order of business.

Finance Minister Mathias Corman recently said "we always said our two priorities in terms of legislation was to scrap the carbon tax and the mining tax".

Source: Mineweb
African Resources update � Zambia drops foreign exchange controls.

On Friday, Zambia announced it had scrapped foreign exchange regulations in a dramatic move to reassure investors and stabilise its tumbling currency.

One of the regulations revoked prevented businesses in Zambia paying for goods and services in dollars.

The other regulation, which was adopted in May, forced companies to repatriate foreign currency earned from exports back into Zambia.

Copper accounts for about 70% of Zambias export earnings.

Source: FT � Zimbabwe considering Implats proposal on Impala Platinum (IMP SJ) refinery.

According to Zimbabwes mines minister, Zimbabwe is considering a proposal for the construction of a platinum refinery from IMP.

The government has shortlisted two companies to set up the refinery, which mining companies say will cost up to US$3bn, equal to almost 30% of Zimbabwes GDP.

The platinum companies have been given two years to set up a refinery or face a ban on unrefined exports.

Source: Miningweekly � Ebola outbreak in Guinea has killed 59 people and may have spread to Sierra Leone.

Source: Thomson Reuters � Chad fines China National Petroleum Corporation SU$1.2bn for environmental damages and demands that the company takes steps to repair all damage and future damage caused through pollution of the Bongor Basin.

Source: Thomson Reuters � Todays African proverb.

"Its only on the day the frog dies that you can measure its length".

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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