[cid:image001.png@01CE3CD4.0BDDC660] Friday, 19 April 2013 [cid:image006.jpg@01CE3CD4.6F5667B0]
Snapshot � Company news highlights: Anglo American delivers a mixed Q1 result, Rio Tinto highlights progress at OT, Simandou, Sirius Minerals plans challenged by Cleveland Potash, MMG not impacted by DRC copper and cobalt concentrate export ban, Bathurst Resources appeal on interim decision lodged, Oz Minerals quarterly preview, Discovery Metals quarterly production � Commodity review highlights: Coking coal prices still under pressure, Chinese owned Yancoal reports weakened demand in Chinese coal market, Copper declines, Bullion declines have encouraged jewellery buying � Other economic news: China may widen yuan trading band, Mexican lawmakers approve 4% mining royalty � African resources update: Vale in Mozambique protests � FTSE futures up 16.5 points (7am): Positive start to the day expected despite the 0.67% fall on the S&P overnight following weaker than expected results from United Health and EBay and disappointing US leading indicator and Philadelphia Feb numbers.

IBM missed estimates for the first time since 2005 leading the tech sector down (Nasdaq down 1.2%).

Asian markets are looking strong this morning (Nikkei up 0.79%, Hang Seng up 1.32%, and ASX200 up 0.19%) after the Chinese State Information centre said the economy may rebound in the 2nd & 3rd quarters. G20 Finance Ministers are gathering in Washington today for the second day of discussions to support global economic growth, reports from yesterday indicated the Japanese policy measures went unopposed driving the Yen lower. Commodity markets are mixed - copper off 1.09% to US$3.184/lb but precious metals rebounding nicely - gold up 2.37%, silver up 2.43%, platinum up 1.09%. Company News � Anglo American (AAL LN) delivers a mixed Q1 result.

The platinum division delivered a good performance, in line with 1Q12 but up 40% from the 4Q12 as the previously strike-impacted operations ramp up.

Iron ore at 10.3mt was relatively weak, down 12% YoY and down 2% on the 4Q12.

Met coal delivered a good performance but thermal coal was weaker YoY and versus the 4Q12.

Source: Company Investec view: Overall, this appears to be just an adequate quarterly.

While platinum delivered a good performance this is a low profitability segment at the moment.

Nickel was down substantially (-45% vs.

4Q12), partly due to guided closure, partly metal run-out at furnace) but this is a small contributor to earnings so not too important.

Iron ore production appears light but we note that but export sales are running at a good rate. � Rio Tinto (RIO LN) highlights progress at OT, Simandou.

While government issues are hampering two of Rio Tintos (RIO LN) major growth projects, Oyu Tolgoi and Simandou, CEO Sam Walsh, addressing Rios London AGM overnight, said positive progress is being made on each.

While the Mongolian government is seeking a larger share of Oyu Tolgoi profits, Walsh states that what was important was getting funds flowing to the country, with the project expected to account for around 36% of Mongolias GDP.

Walsh acknowledged there were still issues surrounding the binding investment agreement, but that discussions were "constructive".

Walsh also acknowledged the complexity of issues in Simandou, highlighting that there were two critical issues to resolve with the Guinean government: the investment agreement and how the Guinean government was going to fund its share of development.

Despite speculation that RIO had abandoned the project or slowed work, Walsh noted the progress being made on the ground, stating that RIO had to date invested $2.3bn in the project ($1.3bn on the mine and $1bn on infrastructure).Source: MiningNews � Sirius Minerals (SXX LN) plans challenged by Cleveland Potash GM.

The owner of nearby Boulby Potash mine, Cleveland Potash, says the polyhalite substance which Sirius plans to produce would be a "niche product" and that the "market is incredibly slow and incredibly small".

This week, Cleveland Potash has revealed its �300m development plan which would extend workings and create a new mine for the next 40 years, opening reserves and increasing potential.

Source: FT � MMG (1208 HK) not impacted by DRC copper and cobalt concentrate export ban.

Base metals miner MMG, which is owned by China Minmetals, has commented that its Kinsevere mine isnt impacted by an order from the DRCs Mines Ministry banning exports of copper and cobalt concentrates as it produces a fully refined copper cathode product.

Source: Company Investec view: Companies exporting copper concentrates from the DRC include Tigers Resources (TGS AU), Mawson West (MWE CN) and Eurasian Natural Resources (ENRC LN).

Mawson West has however commented that it believes it will not be impacted due to its mining convention. � Bathurst Resources (BTU AU) appeal on interim decision lodged.

Following the interim decision of the Environment Court on 28 March regarding volumes of coal mined, biodiversity offsets and compensation, and the exclusion of mining in the Barren Valley area, the Royal Forest and Bird Protection Society of New Zealand Incorporated has lodged an appeal.

BTU will be seeking a hearing as soon as possible, with a further announcement once the date has been advised.

Source: Company Investec view: The light at the end of the tunnel just moved further back. � Oz Minerals (OZL AU) quarterly preview - quarterly due Monday.

Company guidance for CY13 is 90-95kt of contained copper (130-150koz of contained gold).

Cost guidance is for C1 cash costs of US$1.50-US$1.65/lb for the year, based on US$1,850/oz and A$/US$1.01 (both those assumptions are looking shaky at this stage).

Investec estimates for the MarQ13 include: 21,693t of copper produced (6,143t from Ankata underground, 15,550t from open cuts), with gold production of 31,100oz from the open pit and 2,894oz of gold from the Ankata underground; Direct cash cost US$2.80/lb; Cash cost including TC/RC US$3.09/lb; Cash cost including TC/RC and Royalty US$3.21/lb; and, Total C1 cash cost after by-product credits US$1.83/lb.

We assume full year production of 94,500t copper and 141koz gold, for a full year C1 cash cost of US$1.70/lb.

Source: Investec estimates � Discovery Metals (DML AU) quarterly production.

Produced 4,183t of contained copper and 187koz of silver in the MarQ and now expecting to be fully commissioned in the JunQ.

Milling performance has been limited by material movement.

During the quarter DML produced a 39% copper concentrate with recoveries of 83% for high grade ore and 32% for low grade ore (<0.6%Cu).

Silver recoveries of ~80% now expected rather than the 60-65% in the DFS.

Improved blasting practises have seen a reduction in mining dilution to 10%.

At 31 March, DML had cash of US$16.9m (after a US$12m debt repayment was made) and debt of US$176m.

Lenders formally agreed to extensions on debt repayments and to waivers on debt covenants during the quarter.

Source: Company
[cid:image007.png@01CE3CD4.6F5667B0] Commodities News � Coking coal prices still under pressure.

Industry sources are reporting BHP Billiton has settled some May coking coal contracts at c.

USD160/t (FOB), USD12/t below the JunQ13 benchmark settlement price of USD172/t (FOB) for Peak Downs, and spot seaborne coking coal cargoes have reportedly been offered at as low as c.

USD150/t (FOB) in recent days.

After a strong MarQ13, Mongolian coal producers suggest Chinese customer demand has weakened but coal companies are already looking forward to a pickup in demand in June.

Source: Investec Investec view: See our research note Mongolian Mining Corporation (975 HK): Hope dies last dated 18 April 2013. � Chinese owned Yancoal (YAL AU) reports weakened demand in Chinese coal market.

Commentary in YALs quarterly report indicates that conditions in Australian coal industry remain challenging, with many operators reviewing their position in the market and moving to postpone or dispose of assets in a quest for improved profitability.

The Company noted that though Chinese demand was firm in the early part of the MarQ13, since February demand had weakened and prices have continued to decline despite supply issues in Australia due to heavy rain.

YAL commented that both thermal and metallurgical markets remain oversupplied, and they expect prices to remain under pressure for some time.

Interestingly, Peabody expects a 50mt increase in the seaborne thermal coal market in 2013.

Source: Company � Copper declines.

Copper is set to demonstrate the biggest weekly fall in 16 months as LME inventories increased to the highest level since 2003 amid continued woes on the global economy.

Aluminium, nickel and lead also fell.

Source: Bloomberg � Bullion declines have encouraged jewellery buying.

Since the gold price fell 13% in 2 days, the biggest drop in 33 years, Asian buyers have now stepped up bullion purchases.

Indian imports are expected to increase by 36% in June compared to the previous year.

In China, sales in one of Hong Kongs biggest jewellers reported a 25% increase in traffic between 13 and 16 April.

Source: Bloomberg Investec view: An increase in Asian jewellery demand is what we would have expected as jewellery consumers tend to take advantage of weak prices, giving support to the gold price.
Other economic news � China may widen yuan trading band.

Speculation that China will announce a widening of the yuan trading band at the Group of 20 meetings in Washington.

Source: Bloomberg Investec view: The yuan is currently trading at 6.18 to the USD.

Continuation of appreciation versus the USD would seem inevitable given the recent trend.

A stronger yuan is a negative for high cost producers of commodities in China; aluminium and iron ore being ones to highlight.

A stronger yuan does also increase the purchasing power of companies importing commodities. � Mexican lawmakers approve 4% mining royalty.

Lawmakers from Mexicos ruling PRI Party have approved a new 4% royalty on mining net profits before tax.

It is anticipated that these measures could generate US$250-500m in additional tax revenue for the government.

Source: Mineweb
African Resources update � Vale (VALE US) in Mozambique protests.

Hundreds of protestors have blocked the entrance to VALEs biggest coal mine in Mozambique, saying that the group had not paid them enough in relocation compensation five years ago.

Production was unaffected.

Source: Mining Weekly
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