[cid:image001.png@01CF8C5F.0B402A50] Friday, 20 June 2014 [cid:image006.jpg@01CF8C5F.183EBBE0]
Snapshot � Company news highlights: Investec initiation of coverage on Tharisa, research note on London Mining, Bellzone provides update on Forecariah, Energy Resources of Australia updates Ranger 3 Deeps resource, Kimberley Diamonds realises record rough diamond prices, China Hongqiao prices US$400m of senior notes � Commodity review highlights: LME zinc prices at highest levels in 16m, gold spikes above US$1,300/oz, JSW Steel plans to import iron ore in 2014 � Other economic news: Caterpillar Asia sales fall on back of mining cutbacks, looming threat of defaults on Chinese property trust loans � African resources update: Angolan and Mozambican gas should be examined a power supply sources for SA, SA mines have worlds highest tuberculosis (TB) rate, todays African Proverb � Market notes: In Asia, markets are taking a pause after yesterdays strong moves.

Australia is slipping as the heavyweight miners, most notably BHP Billiton and Rio Tinto, drop after their decent moves yesterday and on a stronger A$.

In China, the local papers are speculating that additional "minor stimulus measures" will be announced in the coming days.

Moodys has stated that the governments plans to reform SOEs will not end the implicit government guarantees, with many still likely to continue receiving "relatively cheap" funding. Commodities.

Gold rose the most since September as the dollar weakened post the Feds comments on interest rates and as there was massive hedge fund short covering in the US overnight.

Mysteel has stated that the risk of spill over into iron ore from Qingdao port-financing will actually be limited as 70% of port inventory is owned by steel mills, not traders so will consumed and not over-collateralised. Data due: UK - Public Finances May (no fcst, -GBP10.6bn prev); Public Sector Net Borrowing May (GBP12bn fcst, GBP9.6bn prev), US - Markit US Manufacturing PMI June (56.0 fcst, 56.4 prev); Existing Home Sales May (4.73m and 1.7% MoM fcst)
Company news � Investec initiation of coverage on Tharisa (THA SJ).

Tharisa is an emerging producer of chrome concentrate and PGMs in a c.

60/40 ratio by revenue.

Currently in ramp up phase, it is targeting average steady state production of 1.85Mtpa saleable chrome concentrate and c.

144kozpa PGM in 2016.

Our analyst calculates solid upside at targeted output and at Investec price and cost assumptions, while recognising that ramp up will be gradual and partly contingent on R&D, noting the considerable operating leverage of the company.

Source: Investec Investec view: Tharisa listed on the JSE on 10 April 2014 at ZAR38/share raising ZAR500m.

For more detail on the company please see Albert Minassians initiation report: A promising new chrome PGM play dated 19 June 2014. � Research note on London Mining (LOND LN).

Update note post commodity price review.

Our analysts recently lowered near-to-medium term iron ore forecasts by a modest $10/t, but this has resulted in a significant reduction in earnings forecasts and valuation for LOND: FY15E/16E EPS down 65%, NPV down 50%, with the severe impact reflecting the currently high cost base.

Source: Investec Investec view: LOND is doing the right thing on the ground, but will be struggling against the iron ore price.

It is in active discussions with a potential investors/strategic partners and given that it is an established operation, we believe there is a better than average chance it will do a deal.

Our analyst notes that we can derive a spot NPV equivalent to the current share price by assuming a flat 6mtpa production until the end of 2019, without committing any further capital than necessary to get to this rate. � Bellzone (BZM LN) provides update on Forecariah.

The Forecariah JV in Guinea has shipped 268kt of iron ore so far in 2014, with a further 68kt ready for shipping.

BZM reports, however, that JV is currently in dispute with the contracted barge operator (trans-shipper), regarding issues raised by management on safety, efficiency and charges.

The JV management is in discussions with the trans-shipper but does not expect to make shipments until the dispute is resolved.

BZM has also announced that a legal case that had been brought against the JV by a former contractor has been formally dismissed with costs.

Source: Company Investec view: The Forecariah JV is seen as demonstration of a "licence to operate" in Guinea as the company seeks a strategic partner to assist in development of its flagship Kalia project.

It therefore has little economic benefit to the company, which announced recently that it was funded to continue operations until August, following a �1.1m placement to major shareholder, China Sonangol, which now holds 29.9% of BZM. � Energy Resources of Australia (ERA AU) updates Ranger 3 Deeps resource.

ERA has updated its resource for Ranger 3 Deeps following completion of 68% of its underground drilling program.

The updated resource is 11.9mt at 0.274% U3O8 (32,620t of contained U3O8) versus the previously reported estimate of 10.14mt at 0.33% U3O8 (33,297t of contained U3O8).

Source: Company Investec view: The drilling program is part of the Ranger 3 Deeps underground mine prefeasibility study.

Whilst the resource estimate has seen a reduction in contained U3O8, resources previously categorised as indicated have been reclassified and distributed across the measured, indicated and inferred categories.

A final resource estimate is expected to be completed in 4Q14 along with the prefeasibility study. � Kimberley Diamonds (KDL AU) realises record rough diamond prices in auction.

Kimberly Diamonds achieved a price of US$209.21/ct at an auction in Antwerp for its Ellendale rough diamonds.

This compared to achieved prices of US$185/ct in June 2013 and US$207.33/ct in March 2014.

Source: Company � China Hongqiao (1378 HK) prices US$400m of senior notes at 7.625%.

Chinese aluminium producer China Hongqiao has priced US$400m of five year senior notes at 7.625%.

The notes are rated BB by S&P as well as Fitch and proceeds from the raising will be used to refinance existing indebtedness and general corporate purposes.

Source: Company
[cid:image007.png@01CF8C5F.183EBBE0] Commodities news � LME zinc prices at highest levels in 16 months.

Zinc prices closed yesterday at US$2,142/t as LME inventories fell to 674kt.

Source: Bloomberg Investec view: Companies with significant zinc exposure include MMG Ltd (1208 HK) and China Polymetallic Mining (2133 HK). � Gold spikes above US$1,300/oz.

Gold posted its biggest one day rise in nine months and traded through US$1,300/oz to as high as US$1,322/oz, up from US$1,272/oz, following dovish statements by the US Federal Reserve.

Source: Reuters � JSW Steel (JSTL IN) plans to import iron ore in 2014.

JSW Steel, Indias third largest steel producer, plans to buy as much as 6mt of iron ore from overseas to supply up to 25% of its requirements due to worsening availability of iron ore in India and lower seaborne iron ore prices.

Source: Bloomberg Investec view: JSW imported almost no iron ore in 2013 so this is potentially a significant change in policy for a major Indian steel mill.

India becoming an iron ore importer would be positive for the seaborne iron ore market but prices will be continue to be dominated by the much larger Chinese market.
Other economic news � Caterpillar Asia sales fall on back of mining cutbacks.

Caterpillar (CAT US), the worlds largest maker of construction and mining equipment, reported a steepening decline in retail machine sales in in the Asia-Pacific region, with dealer sales down 30% YoY in the three months through May.

Sales slid 25% YoY in the three months through April.

Global sales slid 12% in three months through May.

Large mining- truck sales in the first quarter were down about 80% from their 2012 peak.

Source: Bloomberg � Looming threat of defaults on Chinese property trust loans.

Chinese property trusts must repay 203.5bn yuan ($32.7bn) in 2015, according to a Chinese research firm, almost double the 109bn yuan due this year.

The trusts channel funds from wealthy individuals to smaller builders that have trouble obtaining financing elsewhere, This increases the risk that trust loan defaults will rise substantially, particularly as the real estate market cools and developers suffer from weak sales.

Source: Bloomberg
African resources update � Angolan, Mozambican gas should be examined a power supply sources for SA.

In response to President Zumas announcement, in his state of the nation address, that the government intends progressing with more nuclear energy, the Cape Chamber of Commerce and Industry has stated that SA should instead look to the use of gas produced by Angola and Mozambique.

The Chamber pointed to the time and cost to build nuclear power stations, stating that gas-power capital costs were much lower and could be built in 2-3yrs compared with 8-10yrs for nuclear.

Source: Business day � SA mines have worlds highest tuberculosis (TB) rate.

The SA Health Minister has stated that for every death of a mineworker due to accident, there are nine who die of TB.

There are apparently almost 42,000 cases of active TB in SA mines every year (8% of the national total), the highest incidence in any working population in the world.

In 2009, there were 167 fatalities due to mining accidents, but 1,598 TB fatalities.

The gold mines are reportedly the most affected.

Source: MiningWeekly, Sapa � Todays African Proverb.

The shea butter laughs at the salt when it rains, forgetting that the sun will soon shine".

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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