[cid:image001.png@01CF23DB.27E9D6C0] Friday, 07 February 2014 [cid:image006.jpg@01CF23DB.36AAFFE0]
Snapshot � Company news highlights: Aquarius Platinum H1 FY14E results, China Minmetals nearing agreement to buy Glencore Xstratas Las Bambas project, No blasting at any of Harmonys gold mines for 24 hours, Guildford Coal formally commissions Baruun Noyon Uul. � Commodity review highlights: Chinese rebar futures down 1% after CNY holiday, Copper poised for weekly advance as China returns from holidays, Iron ore derivatives trading continues to increase. � Other economic news: ECB resists calls for cut in interest rates. � African resources update: South African January coal exports, Todays African proverb. � Market notes: The best day in the US this year as a drop in applications for unemployment insurance and some decent corporate earnings boosted confidence.

The Vix Index dropped 11% to 17.84 as a result.

The market awaits the US non-farm payrolls and unemployment rate numbers which will be released today. European markets also rose after the ECB and BoE kept rates on hold.

Elsewhere, the IMF commented on the Greek economic situation, stating that it is still waiting for specific proposals from the eurozone on how Greeces funding gap will be covered, before the IMF sends representatives over. In Asia, markets are rocketing in early openings, with Japan racing ahead on a weaker Yen.

In Australia, all eyes will be on the RBA monetary policy comments and any insight into the views on rates vs the currency, particularly after one of the board members stated overnight that the currency is still too strong.

China returns to the trading day after the week long Chinese New Year celebrations.

Futures are pointing to a higher open, particularly after the strong moves in the Chinese ADRs overnight.

Elsewhere in the local papers, expectations are that CPI in January may have risen by 2.3% YoY, there is talk that the government is looking to set up a deposit insurance system this year and that private investors will be allowed to establish rural commercial banks. In the commodity markets, gold futures were little changed ahead of the non-farms payroll print today.

Iron ore fell for the 2nd day, down 1.14% to US$121/t on a strengthening US dollar.

3mth LME copper rose 1.3% in the first positive day in 9 sessions.

Finally, in a pre-budget submission in Australia, the Minerals Council of Australia has called for a "new national compact" between business, government and the broader community to further deregulate the economy and slash compliance costs as it forecasts that 229 minerals mining and infrastructure projects up to feasibility stage, with a total potential value between A$228-268bn, are at risk.
Company news � Aquarius Platinum (AQP LN) H1 FY14E results.

During H1 FY14E, AQP produced 217,000oz 3E PGM from its Kroondal mine in South Africa.

Mimosas output for H1 was 109,000oz 3E PGM.

The company owns 50% of both mines.

The group has reported H1 revenue of US$113m vs our estimate of US$121m.

We estimated a net loss per share of 1c, and the group has reported a loss of 5c.

The group ended the period with cash of US$83m.

Source: Company Investec view: Given that the group reported an interim loss of 39c/share (adjusted, to -12c/share) during the same period last year, operational progress clearly is being made.

But our question remains is the progress sufficient to warrant the refinancing of the US$300m convertible debt at the end of next year when the platinum pricing environment remains weak, the fate of Mimosa lies largely in the hands of the Zimbabweans and Kroondal has a relatively short mine life (c.9 years).

The sale of the non-core assets announcement was certainly encouraging, and there are other non-core assets which still lie within the company.

However, we would be surprised if selling these other properties would negate the need for a refinancing.

We retain our view that this company would benefit from a tailwind in the platinum market before it looks to repay its debt. � China Minmetals nearing agreement to buy Glencore Xstratas (GLEN LN) Las Bambas project.

Bloomberg is reporting that China Minmetals is leading a consortium including Citic Metal and China Reform Holdings that is nearing an agreement to purchase Glencore Xstratas Las Bambas copper project in Peru for close to USD6bn citing people with knowledge of the matter.

Source: Bloomberg Investec view: It is not clear whether a bid for Las Bambas would be from MMG Ltd (1208 HK), Minmetals listed vehicle, or directly from the parent Minmetals.

MMG Ltd has not commented on whether or not it is bidding for Las Bambas.

We do not believe MMG can pay the rumoured USD5bn-USD6bn for Las Bambas without a significant equity raising and/or a partner given its already high debt levels, although deferring the troubled USD1.5bn Dugald River zinc-led project would potentially free up some capital.

There is also the possibility that Las Bambas could be acquired by MMGs parent Minmetals and injected into MMG Ltd at a later date.

See Marc Elliott and Albert Minassians note With or without Las Bambas dated 30 January 2014 for further details from Glencore Xstratas perspective. � No blasting at any of Harmonys (HAR SJ) gold mines for 24 hours.

All of Harmonys gold mines embarked on safety shifts with effect from the night shift last night.

The decision follows the recent deaths at Doornkop, one fatality at the Kusasalethu in the North West Province and another at Joel in the Free State.

Source: Company � Guildford Coal (GUF AU) formally commissions Baruun Noyon Uul.

Mongolian coal miner Guildford Coal received notification from the Mongolian government that its Baruun Noyon Uul coking coal mine has been formally commissioned, allowing the company to begin sales once its coal transportation contractor is granted the necessary permits.

Source: Company Investec view: GUF is on the cusp of achieving its target of first sales from Baruun Noyon Uul in MarQ14.

We think the economics of Baruun Noyon Uul are likely to be marginal unless GUF can market its coal as a hard coking coal, which is questionable in our view, given the current low pricing environment for coking coal products on the Mongolia/China border.

SouthGobi (1878 HK), whose mine is closer to the border than GUF, realised mine gate prices of just USD37.50/t for its premium semisoft coking coal and USD21.67/t for its standard semisoft coking coal in SepQ13.
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Commodities news � Chinese rebar futures down 1.0% after CNY holiday.

May rebar futures fell to CNY3,412/t, down 1.0%, in early trading on the Shanghai Futures Exchange after the market reopened following a one week closure for the Chinese New Year holiday.

May iron ore futures also dropped, falling 0.8% to CNY859/t (c.

USD121/t ex VAT).

Source: Bloomberg � Copper poised for weekly advance as China returns from holidays.

Copper rose for a second day, heading for a weekly advance, as stockpiles declines and biggest user China returned from its Lunar New year holidays.

The contract for delivery in three months on the LME climbed by 0.2% to US$7,143/t.

Source: Bloomberg � Iron ore derivatives trading continues to increase.

Iron ore price benchmark price setting firm The Steel Index has stated that 33mt of iron ore futures and derivatives traded during January, a new record.

Source: Bloomberg Investec view: Its remarkable how far the trading of iron ore has progressed in the last five years since the benchmark pricing system ended.
Other economic news � ECB resists calls for cut in interest rates.

Yesterday, the European central bank disappointed investors eager for more action to counter the rising threat of deflation in the region, holding interest rates and offering few hints towards loosening monetary policy.

Source: FT
African resources update � South African January coal exports.

During January, South Africas Richards Bay Coal Terminal exported 4.6Mt of coal in January compared with 6.8Mt in the previous month.

Source: Mining weekly. � Todays African proverb.

"The snake is like a rope but nobody uses it to tie a parcel".

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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