[cid:image001.png@01CF5240.4AAEADA0] Monday, 07 April 2014 [cid:image002.jpg@01CF5240.4AAEADA0]
Snapshot � Company news highlights: Exploration results from Aureus, Sierra Rutile Q1, Universal Coal makes first sale, credit approval for CuDecos project, Freeport and Vale close to getting Indonesian CoW extensions � Commodity review highlights: Port Hedland iron ore exports up 27% MoM, NewGold platinum ETF exceeds 1moz, high cost producers feeling copper price squeeze � Other economic news: Suggestion that current China stimulus not enough, Asia developing economies to grow at slower pace, Coal India receives firm interest in asset sell-down, another Chinese carbon trading scheme underway, majority of Australian resource companies under financial stress, commodity prices weigh on WA mining index � African resources update: Nigeria now Africas largest economy, Zimbabwe facing deflation, Todays African proverb � Market notes: FTSE futures -44 points this morning.

A weaker day expected from most European markets today following the fall in US markets on Friday (Dow -0.96% S&P -1.25%) following a slightly weaker than expected non-farms payroll print and a 2.6% fall on the Nasdaq on valuation concerns.

Asian markets are all down (Nikkei -1.69%, Hang Seng -0.65%, ASX200 -0.17%) with technology stocks tumbling on fears that valuations are unrealistic.

Chinese markets are closed for tombs sweeping day. Commodity markets - gold -0.17% $1,301.20/oz, silver -0.37% $19.8896/oz, platinum -0.66% $1,441.30/oz, copper -0.48%, $3.008/lb, nickel +0.52% $16,345.00/t, iron ore +0.17% $115.70/t, thermal coal $73.40, WTI -0.39% $100.75/bbl, Brent -0.80% $105.87/bbl, zinc +0.99% $1,997.75/t.

Dual listed - BHP +0.03% A$37.74, RIO +0.36% A$63.95.

Brent drops as Libyan rebels agree to open 2 ports with two more expected to open a month later, gold holds up following Fridays US jobs data miss and copper futures fall for the 3rd day on Chinese demand concerns despite earthquakes in Chile forcing some temporary halts from major producers. Economic data due today: US - consumer credit (forecast $14bn).

Eurozone - EU Sentix investor confidence (forecast 13.9), Italian report on balance sheet aggregates.
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Company news � Continued positive exploration results from Aureus (AUE LN).

The company has announced the further Ndablama extension drilling results, confirming that the mineralised system continues at least 250m down dip of the current resource (currently 451koz at 2.1g/t inferred).

A total of 50 diamond drill holes for 10,000m are planned in this exploration phase.

Source: Company Investec view: The resource is located 40km NE of the New Liberty project could eventually provide a feed source for the New Liberty plant.

While the drill results thus far are not of the same tenor as New Liberty, they are reasonable, especially given that associated capital requirements will be significantly lower. � Sierra Rutile (SXX LN) Q1 operational update.

During Q1 FY14, SXX produced 28,200t of rutile, representing a 12% increase on Q1 FY13.

6,900t of ilmenite was also produced, 23% higher than Q1 FY13.

Q1 FY14 operating costs were US$539/t, compared to US$595/t during H2 FY13.

At 31 march, the group had cash of US$15m.

Sales were above production in Q1, reducing inventory.

Source: Company Investec view: This operational update looks solid to us, with production in line with guidance. � Universal Coal (UNV AU) makes first sale.

Universal Coal has delivered first coal from its 2.4mtpa (run-of-mine) Kangala coal mine in South Africa to ESKOM.

First export sales are targeted for July 2014 after the dense medium separation wash plant to upgrade coal quality is commissioned.

Kangala has a 2mtpa offtake agreement with Eskom and a further 100ktpa offtake agreement with Exxaro (EXX SJ).

Source: Company Investec view: Universal Coal will next develop the export-focused Roodekop mine which is contiguous to Exxaros New Clydesdale Colliery (NCC).

Universal Coal has already announced a deal to acquire NCC from Exxaro which will accelerate development of Roodekop. � Minsheng Banking approves credit facility for CuDecos (CDU AU) Rocklands copper project.

Minsheng Banking Corporation has approved a US$65m credit facility for CuDecos Rocklands copper project.

The effective interest rate on the facility is c.

5.75% pa.

Source: Company Investec view: CuDeco had applied for a US$100m credit facility from Minsheng so the company will still need to secure an additional US$35m for development of the rail load facility in Cloncurry and the port loading and storage facilities in Townsville. � Indonesian government nearing contract of work extensions for Freeport (FCX US) and Vale (VALE US).

The Indonesian government is nearing the final stages of negotiating contract of work (CoW) life extensions with Freeport Indonesia and Vale Indonesia for two periods of 10 years (20 years total) according a senior government official.

As part of the deal, the government will now only require Freeport to divest 30% of its shares and Vale to divest 40% of its shares as opposed to the 51% previously mooted.

A deal could be finalised this year prior to the change in government.

Source: Kompas Investec view: CoW extension and the ability to retain controlling interests in their mines would be a huge positive for Freeport and Vale in our view, although the devil will be in the details and the companies may be required to build a new copper smelter within Indonesia as part of the deal.

Finalisation is an urgent matter given Freeports CoW and Vales CoW respectively expire in 2021 and 2025 and the companies require contractual certainty prior to making large investments.
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Commodities news � Port Hedland iron ore exports up in March 2014.

Iron ore exports from Australias Port Hedland increased 27% MoM to 27mt in March.

Source: Bloomberg Investec view: The pick-up in iron ore shipments is despite Chinese port inventories of 107.65mt. � NewGold Platinum debentures ETF now tops 1Moz.

Absas NewGold Platinum Debentures Johannesburg ETF, now approximately a year old, exceeded 1Moz of platinum on Friday, equating to ZAR15.6bn.

Source: MiningMX � Falling copper prices put pressure on high-cost miners.

According to the FT, at current copper prices, analysts estimate that 10% of global copper miners are losing money as it estimates the 90th percentile at US$6,613/t.

Copper prices are now cUS$6,622/t.

According to commodities consultant CRU the last time this situation was similar was in 2004 and the copper price was then below US$3,000/t.

Source: FT
Other economic news � Suggestion that Chinese stimulus package not enough.

Chinese ADRs fared poorly on Friday as concerns remain that the governments mini-stimulus isnt enough to support growth at ~7.5%.

China is closed today for Qingming Day, so we wont see the read-through today.

However there may be news-flow on potential further easing, with the PBoC expected to cut the RRR after stating at its 1Q monetary policy committee meeting on Thursday that it will "keep moderate liquidity".

Source: Investec Hong Kong � Asia developing economies to grow at slower pace due to China.

China is set to expand at 7.6% this year, down from 7.7% which was projected in October 2013.

In its East Asia and Pacific Economic Update, the World Bank said that Developing East Asia is now expected to grow at 7.1% in 2014, down from 7.2% as previously estimated.

Source: Bloomberg � Coal India Ltd (CIL) receives firm interest in sell down of assets.

State-owned CIL has reportedly received at least 60 proposals to buy equity in its offshore projects, including from Rio Tinto (RIO LN).

India has been trying to cut its dependence on coal imports by buying stakes in overseas assets, but it is now looking for assistance from foreign firms to develop these assets.

Source: Live mint & WSJ � Another Chinese carbon trading scheme about to get underway.

Pollution remains a focus issue with Hubei reportedly becoming the 6th province to launch a pilot carbon trading program, with 324Mt of CO2 quotas for 2014 set and 138 companies "selected" to participate.

Source: Bloomberg � Majority of Australian resource companies under financial stress.

A report from research house Lincoln Indicators states that more than 4 in every 5 market ASX listed miners are in a state of "marginal or distressed" financial health and that investors should brace themselves for weak quarterly production updates in April.

The report looked at the profitability, cash flow, liabilities and assets of 700 mining and another 250 energy companies, with just 8% of mining companies found to be financially strong or satisfactory Source: Perth Now � Lacklustre commodity prices weigh on WA-listed miners.

The market capitalisation of Western Australian listed companies, which made up the Deloitte Index, decreased by 1.6% during March, to close at A$151.2bn.

Source: MiningWeekly
African resources update � Nigerian economy bigger than South Africas.

Nigeria overtook South Africa to be Africas largest economy and the 26th largest in the world after the government released updated figures that nearly doubled GDP estimates.

As a result of a statistical revision, Nigerian GDP for 2013 was US$509bn, 89% higher than previously stated.

South Africas 2013 GDP was US$372m.

Source: FT � Zimbabwe economy faces deflation.

According to Zimbabwes Finance Ministry, the Zimbabwean economy is suffering from a slump in consumer spending and will probably be beset by deflation in the coming months.

Consumer goods sales fell by 30% in February and revenue collection fell by 10% in the same month to US$248m.

Source: Bloomberg � Todays African proverb.

"If you cure a monkey of its toothache it is your maize farm that suffers".

Source: BBC
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