Monday, 28 January 2013
Snapshot � Company news highlights: New World Resource quarterly update, Aureus Mining improves project economics, Mineral IRL to raise C$32m, Beacon Hill increases resource, Hidili mines disrupted, China Precious Metals ups output, China Polymetallic initiation of coverage. � Commodity review highlights: Russia and Kazakhstan increase gold reserves, Indian buying brought forward by higher taxes, copper prices pick up, Chinese rebar prices slip, Queensland rail systems close due to flooding, Indian coal imports rise sharply, China produced 1.31bn tonnes domestic iron ore. � African news highlights: Amplats to revisit restructure plan, Zimbabwe constitution could allow Robert Mugabe to extend rule, forces advance in Mali. � FTSE futures up 19.5 points (7am) - Another good lead from the Dow on Friday (closing up 71 points).

Markets remain optimistic, Chinese industrial companies profit rose for the 4th month and the Japanese Cabinet office forecast real GDP at 2.5% to 31st March 2014, up upgrade from 1.7%.

This helped to support the copper price (US$3.662/lb) in addition to drops in inventory levels in both London and Shanghai.

Gold (US$1,661.4/oz) buoyed by news that Russian and Kazakhstan governments expanding their reserve holdings by 2.1% and 1.7% respectively according to the IMF as stimulus measures world-wide continuing to prompt concerns about inflationary impacts.

Iron ore remained stable at US$148.60/t but could come under pressure this week as steel reinforcement bar futures in Shanghai drop 0.5% to US$652/t as concerns mount that inventory level are starting to climb aggressively (up 4.17% week on week) as we move closer to the week-long Chinese new year holiday starting Feb 9th.
Company News � New World Resources (NWR LN) 4Q12 update and FY13 pricing.

In FY12A NWR sold 5.0mt of coking coal (average price EUR124/t), 4.7mt of thermal coal (average price EUR74/t) and 555kt of coke (average price EUR289/t).

As previously announced, NWR expects improved FY13E coal production of 10-11mt and coke production of approximately 800kt, with broadly flat mining unit costs.

It has settled forward pricing for the 1Q13: coking coal EUR103/t and coke EUR253/t, while the average price for 2013 thermal coal deliveries has been settled at EUR 60/t (19% decrease).

Source: Company Investec view: The lower thermal price settlement is indicative of the market generally, with thermal spot prices remaining weak globally.

South African and Australian spot prices currently range between US$87-US$91/t. � Aureus Mining (AUE LN) metallurgical test work completed aimed at improving operating parameters of proposed New Liberty mine have returned successful results.

Potential gold recoveries to increase to over 93%, leach residence times halved to 24 hours and cyanide consumption down by a third.

The results should lead to lower operating costs (current estimate US$685/oz) and possibly a fall in capex from US$155m.

Source: Company Investec View: We await for updated cost estimates from the company, and final debt financing package for the building of the mine.

The company recently raised US$80m equity for the financing of the project.

Stock should trade higher in response to todays news. � Minera IRL (MIRL LN) C$32m fund raise planned to fund on-going work at the companys different projects.

The moneys to be raise will not be sufficient to get either Don Nicolas or Ollachea into production but are required for their advancement.

Source: Company � Beacon Hill (BHR LN) resource increase.

BHR has lifted its Minas Moatize coking coal resource by 31%, to 86.8mt, 88% in the measured and indicated categories.

It ends releasing a reserve statement in the 1Q13.

Source: Company � Hidili (1393 HK) mines disrupted.

Chinese coking coal miner Hidili indicated that its mines in Guizhou province have been closed for inspection following an accident at a coal mine unrelated to Hidili.

Management expect production will be resumed around the start of February resulting in a loss of 100kt of production.

Source: Company � CITIC Resources (1205 HK) subscribes to Coppabella & Moorvale JV shares.

Chinese resources company CITIC Resources will exercise its rights to subscribe to shares in the Coppabella & Moorvale JV, which produces PCI and is majority owned by Peabody (BTU US), being sold by Sojitz.

CITIC Resources currently owns 7% of the JV and its ownership could increase to as much as 14% at a cost of HKD913m depending on whether other JV partners subscribe to Sojitzs shares.

The transaction values Coppabella at c.

USD1.65bn on a 100% basis and 9.4x 2011 earnings.

Source: Company � China Precious Metals (1194 HK).

Chinese gold miner China Precious Metals Resources Holdings announced it increased production to c.

120koz gold in 2012, up 37% YoY from 87.5koz in 2011, due to successful ramp up of new mines and the acquisition of the Hengyi mine.

Source: Company � China Polymetallic Mining (2133 HK) initiation of coverage.

Investec initiates coverage of China Polymetallic Mining, please contact for details.

Source: Investec
Commodities News � Russia and Kazakhstan lift gold holdings in an effort to diversify reserves.

Russian lifted its gold reserves 2.1% in December to 957.8t taking full year increase to 8.5% and Kazakhstan added 1.7% the same month to 115.3t taking full year increase to 41%.

Countries bought 373.9t in the first 9 months of 2012 according to the World Gold Council, with full year additions expected to be toward the bottom end of 450-500t.

Source: Bloomberg � Indias gold imports in January are expected to be up 33% as buyers stock up ahead of the import taxes to be applied.

The imports are set to be absorbed next month when demand typically improves due to marriages.

Source: Bloomberg. � Copper up in response to signs of growing demand from China and Japan with Chinese industrial companies profits rising for a fourth month in December giving confidence in the recovery.

LME stock piles were off 0.6% on Friday to 343kt.

Source: Bloomberg � Chinese rebar prices down from 6 month high on concerns of inventories building up.

Prices currently reported at around US$652/t with inventory estimated at around 6.26mt.

Spot iron ore prices in China are reported to be steady at around US$148.6/t.

Source: Bloomberg � Queensland rail systems closed due to flooding.

Heavy rains have caused a number of the Queensland coal railways to close.

The Blackwater and Moura railways remain closed while the Newlands and Goonyella railways have been reopened following closures.

Source: Bloomberg � India coal imports rise 45% YoY in December.

India imported 14.2mt of coal in December 2012, up 45% YoY, according to data from Interocean.

This comprised of 12.1mt of thermal coal and 2.1mt of coking coal with 10.4mt was sourced from Indonesia.

Source: Bloomberg � Chinas produced 1.31bnt of domestic iron ore in 2012.

This was a 14.5% increase on 2011 and is a new record.

Source: TEX Report Investec view.

While an impressive number, ore grades are as low as 17% with much of the production coming from high cost underground operations.

We expect Chinese domestic production over the next five years to fall from current levels of c.350mtpa (on a 62% Fe equivalent basis) to c.150mtpa, as this high cost domestic ore is displaced by cheaper, better quality imported ore.

� Chinas 2012 chrome ore imports down 1.5% YoY.

2012 imports of ore totalled 9.3m tons, down 1.5% from on the record 2011 level.

Imports of the ore in December was 724,072 tons, up 11.2% on November (which was the lowest month in 2012), with an average December unit price of US$199.58/ton, up 1.1% from November.

Source: TEX Report
African Resources Update � Amplats may revisit restructure plan.

Anglo Platinum (Amplats, AMS SJ) met on Thursday last week with the labour unions and the department of mineral resources (DMR).

Zingaphi Jakuja, spokesperson for the DMR, declined to comment on a local newspaper, City Press, article on Sunday (January 27) in which she was quoted to have said that Amplats may seek to mitigate the effects of the restructuring proposal.

A formal pronouncement will be made on Monday (January 28) by the stakeholders.

Source: fin24, MiningMX Investec View: Amplats has been under intense political pressure, following its announcement that it intended to cut back 400,000oz/pa of production, impacting approximately 14,000 workers, despite the companys claim that the workers would be relocated.

A retreat by Amplats would likely have a negative impact on the PGM prices, and therefore on the sector as a whole.

� Zimbabwe new constitution could allow Robert Mugabe to extend his rule.

The new constitution is set to limit a president for two terms, however it is not retro-active which would likely allow Mugabe to stay in power.

Source: Bloomberg � French and Malian forecast were reported to be heading to Timbuktu yesterday with little resistance met so far.

Source: Bloomberg
Investec Global Natural Resources Research Team: UK Australia South Africa Hunter Hillcoat Tim Gerrard Albert Minassian Tel: +44 (0) 20 7597 5182 Tel: +61 (0) 2 9293 2168 Tel: +27 (0) 21 416 1454
Marc Elliott Colin McLelland Tel: +61 (0) 2 9293 2140
Tel: +44 (0) 20 7597 5189

Simon Haggarty Tel: +61 (0) 2 9293 2462
Investec Global Natural Resources Sales Team: UK Australia South Africa Jamie Campbell Rod Clarkson Hayden Smith Tel: +44 (0) 20 7597 5038 Tel: +61 (0) 2 9293 2278 Tel: +27 (0) 21 416 1401
Matt Martin USA
Tel: +61 (0) 2 9293 2168 Thomas Lawrence
Tel: + 1 212 2595604

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