🕐22.02.13 - 10:27 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - FRIDAY 22 FEBRUARY 2013 - BUM
I LN, TIG AU, HZM LN, CNR LN, ORM LN, SVST LI, NEM US, RSG AU, LYC AU, NCR AU



Friday, 22 February 2013
Snapshot � Company news highlights: BUMI voters reject Rothschild proposal, Tigers Realm raises $21m, Horizonte FY12A, Condor completes 2nd stage of �10m raising, Ormonde plans to divest copper project, Severstal budgets $40m for Putu in 2013, Newmont Q4 beats analyst expectations, Resolute and Lynas results, Nucoal update � Commodity review highlights: Gold and nickel recover, zircon production cuts, Indian coal project approval process improves � Other Economic News: Australia faces $6bn shortfall, Chinese home prices continue to rise � African Resources Update: Zambia revokes Chinese mine licence, SA mining companies-unions-government sign accord, Kenyan election-related violence, Eskom partly closes nuclear facility � FTSE futures - up 26.5 points (7am) - poor data out of the US and more uncertainty regarding monetary stimulus pushed the Dow down a further 47 points.

Federal Reserve presidents from Dallas and St Louis signalled their support for scaling back QE3 however the S&P500 managed to close ahead of the 1,495 technical support barrier.

Gold (US$1,585.44/oz) bounced off the US$1,550/oz technical support that led to a strong recovery across the board on ASX gold stocks.

There are missed views in the market on gold where poor economic data from the US, debt ceiling issues rearing their head, and further Eurozone issues (particularly the Italian election) still have the potential to drive the yellow metal higher against the threat of a reduction in US monetary stimulus. Eurozone business conditions continued to suffer watering down hopes of an emergence from the recession.

PMI weakness is keeping the chance of an interest rate cut alive.

Economic Data Today: - US - House price index MoM - survey 0.6%, new home sales - survey 380K, durable orders - survey -4.7%
Company News � Rothschild proposals rejected in Bumi Plc (BUMI LN) at EGM.

19 of 22 resolutions proposed at an extraordinary general meeting called by Nat Rothschild were rejected in a shareholder vote, although there was a significant protest vote including 43% of shares voting to remove Bumi Plc Chairman Samin Tan.

The Bumi Plc board indicated it will now prioritise the separation of Bumi Plc from the Bakrie Group and Bumi Resources (BUMI IJ) and restructuring of the board following the EGM.

Rothschild refused to confirm that he would support the boards plan to sever ties with the Bakries, noting that the deal would need 75% of the shareholder vote to proceed (Rothschild and his allies reportedly control around a 30% voting stake).

Source: Company, press articles Investec view: We suspect that most investors will simply want to see an end to this saga.

The direction being pursued by the board will leave the company in control of 85% of Berau Coal, which is aiming for production of 30mtpa.

Bumi will still therefore be the largest pure coal play on the LSE, not necessarily a positive in the current thermal coal market, but a strategic position nonetheless,.

� Tigers Realm Coal (TIG AU) completes A$21.2m raising at A$0.20/share.

The placement price was a 7.3% discount to five day VWAP.

Proceeds will be used to fund Amman drilling and technical studies (A$6.9m), Amaam North drilling and technical studies (A$9.5m) and other corporate costs (A$4.8m).

Source: Company � Horizonte (HZM LN) final results reflect an active year with significant progress at its flag ship Araguaia project in Brazil publishing a 39.3mt at 1.39% indicated resource with 60.9mt at 1.22% inferred.

Considerable metallurgical test work has also been completed indicating that the ore body lends itself to pyro metallurgical processing.

At the end of the year the company held GBP5.9m in cash having completed a GBP5.2m financing in June.

The company is in the process of awarding a PFS contract to advance the project with an updated resource for end of 2013.

Source: Company Investec View: Araguaia looks like one of the more interesting nickel projects around and the metallurgical results have been encouraging.

The company still has a lot of work ahead of it and will require additional funding to take it through the BFS, however, we note that major investor Teck Resources that should reduce the financing risk provided that continued feasibility work yields positive results. � Condor Gold (CNR LN) completes �2m underwritten placing, as part of the �10m subscription agreement with Regent Pacific Group (0757 HK) that was announced last week.

Regent currently holds 3.6m shares or 9.5% of the company, and has agreed to subscribe for a further 1.875m shares subject to the confirmatory due diligence.

Source: Company � Ormonde (ORM LN) plans to divest La Zarza.

ORM has entered into a binding option agreement with Nueva Tharsis SA to divest its interest in the copper project to an unnamed party, subject to due diligence.

ORM acquired the project from Nueva Tharsis in 2007 and still owes it EUR1.3m.

The divestment would remove this obligation and allow ORM to focus on its flagship Barruecopardo tungsten project and on advancing its emerging gold projects.

Source: Company � Severstal (SVST LI) plans to invest US$1.3bn in 2013, including $40m for Putu.

Severstal plans to invest $1.3bn in 2013 to support its long-term growth strategy, including $704m in Russian Steel, US$525m in Resources and US$107m in North America.

Investments in greenfield mining projects will not exceed US$46m, including $40m to be invested in the feasibility study for the Putu project in Liberia.

Source: TEX Report � Newmont Mining (NEM US) Q4 earnings beat analysts estimates with net income at US$673m versus a US$1.03bn loss a year ago.

EPS excluding exceptionals stood at US$1.11/share.

Sales however were down 11% to US$2.48bn (annual at US$9.9bn).

Cash costs across the group are expected to rise from all in cash costs (including sustaining capital) at US$1,149/oz in 2012.

The company sees output for this year at 4.8-5.1moz versus 5moz last year.

The companys CFO will be stepping down.

Source: Bloomberg & Company Data � Resolute Mining Limited (RSG AU) 1H13A results.

Gold production for the half year was 222,943oz (1H 2012: 185,072oz), with revenue increasing by 14% to $334.1m (1H 2012: $293.0m).

Average cash costs were $787/oz (1H 2012: $741/oz).

NPAT attributable to members increased by 86% to $96.1m (1H 2012: $51.6m), including a $12.6m unrealised FX gain on intercompany balances with subsidiaries.

Source: Company � Lynas reports last HY result as a non-producer of rare earths.

Net loss before tax of A$64.6m, with the company ending 1H13 with A$226m in cash and borrowings of $399m.

In Nov12 the first containers of concentrate from Australia arrived at the processing facility in Malaysia and fed into the rotary kilns.

Since then, the LAMP operations have been ramping up with LYC announcing in early January 2013 that the cracking and leaching units had been successfully commissioned.

With these activities complete, the facility has commenced its scheduled ramp up to its full Phase 1 production capacity.

Source: Company � NuCoal Resources Ltd (NCR AU) response to media speculation.

NCR notes that the Mt Penny Exploration Licence currently being investigated by Independent Commission Against Corruption (ICAC), as part of Operation Jasper, is unrelated to NuCoal or its Doyles Creek Mine (DCM).

Operation Acacia, which will examine the circumstances surrounding the awarding of EL 7270 to DCM in 2008, will commence on 18 March 2013.

NCR has indicated that in the meantime, it is business as usual, and that it will continue to comply with all of the legal requirements of the exploration licence under the NSW Mining Act.

Source: Company
Commodities News � Gold prices to recover having hit lowest level since July yesterday at US$1,555/oz.

Gold came under pressure as minutes from the Fed Open Market Committee meeting indicated that several policy makers said the pace of the US$85bn monthly bond purchases should be varied.

ETF holdings of gold fell 1.3% yesterday to 2,562.68t.

Source: Bloomberg � Nickel prices rise after longest losing streak since October as orders to remove metal from warehouses have increased.

Source: Bloomberg � Zircon production cuts by major producers could remove 1.4mt of supply or 35%.

Iluka plans to cut output by 36% this year and Rio last week suspended its Richard Bay Minerals zircon and rutile operations in South Africa.

Source: Bloomberg � Indian government sets up Cabinet Committee on investments (CCI) allowing approval of coal projects.

The committee has approved 6 of 40 proposed coal projects as part of a process (albeit slow process) to fast track coal investments.

12 other coal projects have been prioritised with the combined capacity to produce 37mtpa.

The government has also eased rules governing environmental and forest clearances to facilitate exploratory drilling.

Source: Mining Weekly
Other economic news � Australia faces revenue shortfall of around A$5.9bn as high dollar and lower commodity prices impact revenues.

Expected revenue over the 2012-13 period has been revised down by A$25bn since the 2010 election.

Prime Minister Gillard has seen support fall in recent weeks down by 5 percentage points to 44%.

Source: Bloomberg � Chinese home prices rose in most cities for a third month adding pressure on government to tighten policy to prevent an asset bubble as the economy rebounds.

53 of 70 cities surveyed saw prices rise versus 54 last month.

Source: Bloomberg
African Resources update � Zambia revokes Chinese mine licences.

Zambia has revoked licences for the Chinese-owned Collum Coal mine, over poor safety and environmental compliance and failure to pay mineral royalties.

The government will continue running the mine until a suitable investor is found.

The mine had been shut down on previous occasions to allow changes to be made, but the owners had not done so.

Collum had also failed to declare its mineral production as required under Zambian law.

Source: Miningnews Investec view: We see this as a positive, with the Zambian government being proactive in ensuring that mining operations in its country follow acceptable standards.

Companies that comply with the standards, which are no more demanding than those applied in most western counties, need not be concerned. � South African mining companies signed an accord with unions and the government aimed at ending months of disruptions.

Four unions signed the accord including the NUM, however, rapidly growing union AMCU has not signed and requested more time to consult with members.

Mining accounts for two thirds of South African exports and directly employs 500,000 people.

Source: Bloomberg � Violence in Kenya takes place ahead of elections in two weeks to pick new leaders for the first time since 2007, when the elections led to clashes that killed over 1,000 people.

People tend to vote in ethnic blocs which can lead to violence.

In order to reduce the threat of violence, the judiciary, election commission and the structure of government has been changed with many new positions created.

Source: Bloomberg � Eskom shuts down one of its two units at its Koeberg nuclear plant due to an electrical fault that is putting strain on power supplies in the country which the company reports as being extremely tight currently.

Source: Engineering News.
Investec Global Natural Resources Research Team: UK Australia Hong Kong South Africa Hunter Hillcoat Tel: +44 (0) 20 7597 5182
Tim Gerrard Tel: +61 (0) 2 9293 2168
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Colin McLelland Tel: +61 (0) 2 9293 2140
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Simon Haggarty Tel: +61 (0) 2 9293 2462
Investec Global Natural Resources Sales Team: UK Australia Hong Kong South Africa Jamie Campbell Tel: +44 (0) 20 7597 5038
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Will Robbins Tel: +852 3187 5098
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