[cid:image001.png@01CED6D8.FC3EFEF0] Friday, 01 November 2013 [cid:image006.jpg@01CED6D8.FC7A8150]
Snapshot � Company news highlights: Glencore approved for JSE listing, Barrick Gold to raise over US$3bn in equity and shelve Pascua-Lama, PanAust to acquire major interest in Frieda River, Adaro downgrades guidance, Bumi quarterly shows significant loss, Tiger Resources raises A$42.5m, Continental and Metminco quarterly updates, Altona raises �835k. � Commodity review highlights: Gold falls to near 2 week low, Indias policy of cutting gold imports hits jobs, India top buyer of Indonesian coal, base metals up on positive economic data � Other Economic News: Chinas official October PMI at 51.4 � African Resources Update: Lonmin receives notice of strike action, DRC army continues to hunt rebels, Zimbabwe court rules that it is not a crime to insult Mugabe � Market notes: FTSE futures +19 points this morning, US down (Dow -0.47%, S&P -0.38%), Asian markets mixed (Nikkei -0.88%, Hang Seng +0.23%, ASX 200 -0.26%).

European markets are looking to open up slightly this morning as some encouraging data comes out of China with manufacturing PMI beating estimates (51.4 vs.

51.2 official and 50.9 vs.

50.7 HSBC) providing further evidence of stabilisation.

In Europe, the Euro is under pressure as slowing inflation and record jobless rates puts pressure on the ECB to cut rates further. � Commodity markets - gold +0.28% (US$1,326.70/oz), silver +0.17% (US$21.9505/oz), copper +0.64% (US$3.3215/lb), iron ore +0.53% (US$131.90/t), platinum +0.54% (US$1,456.20/oz), WTI +0.15% (US$96.52/bbl), and Brent +0.36% (US$109.23/bbl).

Dual listed - BHP AU -0.35% (A$37.53), RIO AU -0.70% (A$63.54).

Iron ore rose slightly to US$131.90/t, with ANZ stating that despite weaker steel futures, spot is reflecting some restocking activity for at-port stockpiles in China.

Strangely enough, this contradicts a Bloomberg report that shows that iron ore inventories are near their highest levels since December of 2012.

Worth watching for details from the PBoC on potential inflationary cooling and liquidity reducing measures, as there is concern that steel demand could soften further.

Gold posted its biggest loss in almost 3 weeks and silver had the largest slump in more than 1 month on concern over Fed stimulus coming soon.

December gold futures fell 1.9% to US$1,323.70/oz, after hitting a session low of US$1,318.79/oz.

As expected, stocks are getting crushed this morning.

Oil prices fell again amid rising stockpiles in the US and a tepid picture for economic growth.

December WTI fell to US$96.38/bbl and December Brent fell to US$108.84/bbl. � Economic data due today: US - PMI (forecast 51.1), ISM manufacturing (55), ISM prices paid (55), total vehicle sales (15.45m).

Eurozone - Spanish unemployment, Irish consumer confidence, Greek manufacturing PMI. Company News � Glencore (GLEN LN) receives approval for secondary listing on the JSE.

Glencore has received approval from the Johannesburg Stock Exchange (JSE) for a secondary listing which will take place on 13 November 2013 with the share code GLN.

Source: Company Investec view: Glencores primary listing will remain the London Stock Exchange.

Glencore will also retain its Hong Kong Stock Exchange listing although this has been fairly unsuccessful with recent (15 day) average volume of just c.

37k shares per day. � Barrick Gold (ABX US) to shelve Pascua-Lama and raise funds.

ABX announced yesterday that it would stop development at Pascua-Lama, which has been plagued by political opposition, permitting issues, labour unrest and cost overruns.

In addition, ABG announced that it plans to raise US$3bn through the issue of 163.5m new shares at a price of $18.35/share.

The proceeds could total approximately US$3.45bn if the over-allotment option is fully exercised, and will be used to pay down debt.

Source: Company, Reuters Investec view: The Pascua-Lama decision has come as a surprise to the market, given that ABX had already spent cUS$5bn on the challenging project.

Clearly, the fall in the gold price which we have seen in 2013 will not have aided economics for the development project. � PanAust (PNA AU) to acquire majority interest in Frieda River project.

PanAust will pay Glencore US$75m for an 80% interest in the Frieda River copper/gold project in Papua New Guinea as well as a 2% net smelter return royalty of up to US$50m.

PanAust will also subscribe for shares equivalent to 7.5% of the issued capital in Highland Pacific, Glencores JV partner with a 20% interest in the Frieda River project.

Source: Company Investec view: As part of its due diligence PanAust completed a scoping study into a 24mtpa conventional open pit and flotation operation with the potential to produce >100ktpa copper and 160koz pa gold over a >18 year mine life at a cash cost of c.

US$1.25/lb copper after gold by-product credits.

Capex estimates are currently US$1.5-1.8bn. � Adaro (ADRO IJ) downgrades 2013 EBITDA guidance.

Adaro reported record SepQ13 coal production of 13.73mt (55mt annualised), up 2% QoQ, with most of the volume growth coming from the Wara mine.

The company remains on track to meet 2013 production guidance of 50-53mt with 38.67mt produced as at the end of 9M13.

Cash costs in 9M13 were down 9% YoY to US$34.68/t excluding royalties, (US$41.37/t incl royalties) and the company has maintained CY13 cash cost guidance of US$35-38/t (excl royalties).

Lower cash costs have been due to lower strip ratios with the company guiding for an average strip ratio of 5.75x in 2013 versus 6.4x in 2012.

Adaro reported 9M13 earnings of US$183m (US$69m in SepQ13) and EBITDA of US$626m.

CY13 EBITDA guidance has been revised down to US$750-900m from US$850-1,000m due to continued weak coal prices.

Source: Company Investec view: Adaro has done a good job in reducing strip ratios and cash costs to maintain production volumes.

Whilst cost reductions have not been enough to offset weak coal prices the company remains cash flow positive with cash increasing to US$618m as at the end of September.

Adaro expects coal demand from India to improve in DecQ13 post the monsoon which resulted in strong hydro generation in SepQ13.

YtD 21% of Adaros sales are to India. � Bumi Resources (BUMI LN) SepQ13 result.

Bumi Resources reported a loss of US$377.5m for the 9 months until the end of September (a SepQ13 loss of US$55.5m).

Source: Company Investec view: Bumi reported an operating profit of US$215.8m for 9M13 but earnings were adversely affected by interest payments of US$449m, a US$94m loss on derivative transactions and a US$119m loss on foreign exchange.

Interest payments should however reduce in future periods following Bumis announced restructure of its US$1.3bn loan from China Investment Corporation (CIC). � Tiger Resources (TGS AU) raises A$42.5m from share placement.

Tigers Resources has raised A$42.5m from a share placement at A$0.34/share.

The placement will provide working capital flexibility and cover any additional payments to Gecamines (the JV partner in the Kipoi Copper Project in the DRC) and the vendors of the project.

Source: Company � Continental Coal (COOL LN) Quarterly report.

During the quarter, COOL has produced ROM coal of 651,000t, representing a 20% increase on 2012.

Penumbra ramp up is on track to achieve design capacity in November 2013.

Vlakvarkfontein is on track to meet its production and cost guidance.

During the quarter, the mining right for De Wittekrans was awarded, and optimisation work has resulted in lower start-up capex and peak funding, which is now estimated at US$35m.

The group is in discussions to refinance its convertible debt, which matures between November 2013 and February 2014.

Source: Company Investec view: Penumbras ramp up is positive news for the group, as is the reduced initial capex figure for De Wittekrans. � Metminco (MNC LN) quarterly update re-iterates findings at Los Calatos project that would be a large scale low grade open pit and underground operation.

The company is also advancing its Mollacas project with metallurgical test work in progress.

At the end of the period, the company had A$9.4m in cash and is looking at funding options to advance its asset base.

Source: Company Altona Energy (ANR LN) fundraising.

ANR has completed a placing of 59.7m shares to Wintask Group at 1.4p/share.

This raises �835,800.

Wintask Group is 100% owned by Mr Qinfu Zhang, A Chinese national and Chairman of the Hailang Group.

In addition, MD, Chris Schrape, has stepped down from his role.

Source: Company
[cid:image007.png@01CED6D8.FC7A8150] Commodities News � Gold near 2 week low, falling sharply yesterday in response to stronger US economic data and a firming in the US$.

An improving economy is supportive to tapering the US$85bn monthly bond purchases.

Concerning physical demand, China bought over 100t of gold from Hong Kong for a fifth straight month keeping it ahead of Indian demand.

Source: Thomson Reuters � Indias policy of curbing gold imports has prompted jewellery manufacturers and retailers to talk of cutting jobs.

Gold is in strong demand locally with little available to support leading to a US$130/oz premium to the global bullion price.

Around 15m people work in jewellery manufacturing with another 1m in sales, of which a quarter may lose their jobs.

Source: Thomson Reuters Investec View: Indias poorly conceived policy of limiting gold imports to help balance the budget appears to be having unexpected negative repercussions. � India resumes status as top buyer of Indonesian coal.

India imported 6.7mt of Indonesian coal in September, up 30% from August but still below a record high of 7.8mt in July 2013.

Source: Inside Coal Investec view: This is welcome news to coal producers, particularly low-CV Indonesia coal miners, that India is now more aggressively buying coal again after stepping out of the market due to rupee weakness.

YtD India has imported 60.2mt of coal from Indonesia, up c.

20mt YoY. � Copper trading up on positive economic data from China.

Other base metals are also reflecting gains.

Source: Thomson Reuters
Other economic news � China official manufacturing PMI 51.4 in October.

The official China manufacturing PMI was 51.4 for October, above Bloomberg consensus of 51.2 and September level of 51.1, indicating that Chinas manufacturing sector is expanding.

Source: Bloomberg Investec view: This is a good reading indicating that Chinas manufacturing section has recovered from a slowdown earlier this year and suggests that Chinas leadership has scope to implement reforms, particularly in the financial system, to shift China towards a more domestically driven economy.
African Resources update � Lonmin (LMI LN) received wage dispute from dominant union AMCU raising the threat of strike action at the companys operation.

Smaller union Solidarity is also reported to have rejected Lonmins wage offer of 6% for skilled workers and 7% for entry level workers.

The threat of serious strike action appears to be gathering momentum across the PGM industry.

Platinum miners have been offering wage increases of 7-8% versus AMCU demanding more than a doubling of wages for entry level workers.

AMCU is also threatening strike action at gold miners, however, it holds a considerably less influential position in the gold industry.

Source: Thomson Reuters & Mining Weekly Investec View: Ironically it is more surprising that growing pressure for serious strike action in the PGM sector hasnt come sooner.

Wages still have to be finalised at the majority of PGM miners and AMCU forced major increases last year out of the miners and clearly aims to do this again.

Unfortunately for the miners, demand is not particularly strong and therefore not supportive of a material increase in platinum prices currently. � DRC army hunting M23 rebels along the border with Rwanda and Uganda having driven them from towns held in a 20 month rebellion.

The rebels at their peak occupied the regional capital Goma.

Source: Thomson Reuters � Its not a crime to insult Mugabe.

Zimbabwes highest court has declared unconstitutional a law which makes it a crime to insult the president, after at least 80 cases have been filed under the law in recent years.

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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