🕐28.09.12 - 12:54 Uhr

INVESTEC: AFRICAN MINERALS LTD - PRODUCER RECOGNITION STILL TO BE EARNED - BUY



African Minerals Ltd (AMI.L) Investec Securities Price: 296p | Target: 486p | Rec: Buy While the spot iron ore price appears to have stabilised around current levels of US$100/t, it is interesting to note that the differential between the 58% Fe product (AMI’s benchmark) and 62% Fe product has narrowed considerably, presumably as China reduces steel production and sources lower-grade, less productive iron ore.

Meanwhile AMI’s share price continues to track only in line with that of its peer group, gaining no recognition for its producer status.

We expect to see a rerating as production ability is demonstrated in FY13. * We have updated our earnings assumptions to reflect AMI’s 1H12A results and its current production guidance of 5-6mt for FY12E.

Our revised FY12E forecasts, however, no longer reflect operating earnings since AMI is capitalising all production revenues and costs until FY13E.

* We now assume iron ore sales of 13.3mt in FY13E, down from our previous estimate of 16.0mt, as we allow additional time for the new wet screening plant and associated infrastructure to ramp up.

We have sales of 18mtpa flat from FY14E onwards, which is conservatively below AMI’s target of 20mtpa.

In line with this, we forecast operating costs reducing from the 1H12A levels of US$70/t to US$37/t in FY13E and US$32/t in FY14E, versus AMI’s target of under US$30/t.

AMI intends to provide an operations update and production guidance for FY13E during the 4Q12. * We note that our revised earnings forecasts are subject to further changes in the next fortnight as we review our forward commodity price assumptions.

* As a consequence of the above, our target price for AMI, which is based on an equity diluted NPV valuation, has reduced from 507p per share to 486p per share. To access the full note please click here Analyst: Hunter Hillcoat To receive further information or change your Research Preferences please email: South Africa or United Kingdom IMPORTANT NOTICE: This communication forms part of an electronic communication sent to the intended recipient (or such persons authorised representative) for their sole use and is subject to important legal and regulatory restrictions, qualifications and disclaimers ("the disclaimer") that may be accessed and read by clicking on the following hyperlink:http://www.investec.co.uk/about-investec/what-we-do/investment-banking/investec-securities/company-research/morning-meeting-comments.html or copying the address into your Internet browsers address bar.

If you cannot access the disclaimer, please obtain a copy thereof from us by sending an e-mail to in the case of SA or in the case of UK: The disclaimer is deemed to form part of the information in this communication.

This communication is confidential for the information of the addressee only (or such persons authorised representative) and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Investec Securities Limited.

In particular, the Investec Group of companies does not allow the redistribution of this report to non-professional investors and cannot be held responsible in any way for third parties who effect such redistribution.

If you are not the intended recipient of this e-mail (or such persons authorised representative), then: (a) please notify the sender of this e-mail immediately by return e-mail, facsimile or telephone and delete this message from your system; (b) you may not print, store, forward or copy this message or any part thereof or disclose or cause information in this message to be disclosed to any other person.

The information in or attached to this e-mail message is confidential and may be subject to legal privilege and client confidentiality.

Nothing in this message constitutes an offer, warranty or representation from us.

While we are entitled to rely on and hold you to your offers, warranties, representations or other statements made in or attached to this message, our employees or representatives may not conclude agreements or otherwise bind our company via e-mail.

We cannot be held liable for any harm or loss resulting from malicious software code or viruses in this message or attachments, including data corruption resulting therefrom.

None of our employees or representatives are permitted to send unsolicited messages ("spam") and our company cannot be held liable therefore.

If you regard this message as spam, please inform us immediately by sending an e-mail to in the case of SA or in the case of UK: Unless otherwise agreed: (a) We are only deemed to have received an e-mail once we have confirmed receipt thereof to you; (b) We are deemed to have sent an e-mail once reflected as “sent” on our e-mail server.

If this message contains offensive, derogatory or defamatory statements or materials, it means the message has been sent outside the sender’s scope of employment with us and only the sender can be held liable in his/her personal capacity.

Our corporate information and names of our office bearers can be accessed by sending an e-mail to in the case of SA or in the case of UK: This disclaimer applies to our original message, any attachments and all subsequent messages or attachments we may send. ________________________________ Before acting on this e mail or opening any attachment please read the disclaimer which can be accessed at http://www.investec.com/global-email-disclaimer Investec Bank plc is authorised and regulated by the Financial Services Authority.

Calls may be monitored and recorded. This e-mail has been scanned for viruses by MCIs Internet Managed Scanning Services - powered by MessageLabs.

For further information visit http://www.mci.com Investec Bank plc Registered office: 2 Gresham Street, London, EC2V 7QP Company No: 00489604 Incorporated in England and Wales
-------------------------------------------------------------------------------- CONFIDENTIALITY NOTICE AND LEGAL LIABILITY WAIVER: The content of this email and any attachments are CONFIDENTIAL and may contain privileged information.

If you are not the addressee it may be UNLAWFUL for you to read, copy, distribute, disclose or otherwise use the information contained herein.

The content of the message and or attachments may not reflect the view and opinions of the originating company or any party it is representing.

If you are NOT the intended recipient then please email back to ------------------------------------------------------------------------------------






Products & Services | Jobs