[cid:image001.png@01CE52D4.A77414B0] Friday, 17 May 2013 [cid:image003.jpg@01CE52D5.02049710]
Snapshot � Company news highlights: Allana Potash site visit comments, Anglo Platinum strikes suspended, Oceana Gold achieves commercial production at Didipio, Northam Platinum reduces smelter throughput, GlencoreXstrata management changes. � Commodity review highlights: Gold prices show no signs of recovery, copper prices could fall again, strikes expected at Newcastle coal export ports, Chinese crude steel output down in April, India continues Goa state iron ore mining ban, Norilsk Nickel halts Arctic Shipments. � Other Economic News: EU auto sales up for first time in 19 months, Australian resources investment to peak at A$85bn this year � African Resources Update: Rand hits four year low, South African mining ministers to visit Marikana � FTSE Futures up 4.5 points (7am) - markets looking marginally firmer this morning.

Overnight the S&P lost 8.31 points (0.50%), holding up well for most of the day despite weak economic data - CPI (-0.4% versus -0.3% consensus) initial jobless claims (360k versus 330k consensus), housing starts (853k versus 970k), Philadelphia Fed (-5.2 versus 2.0 consensus).

The market was sold off in the final hour as a Fed official intimated that the pace of stimulus may slow this summer.

Asian markets are all firm today - Nikkei up 0.61%, Hang Seng +0.17%, and ASX200 + 0.29%.

Dual listed - BHP AU up 2.04% and RIO AU +0.91%. � Commodity prices - gold -0.13% (US$1,384.20/oz), silver -0.02% (US$22.692/oz), platinum -0.21% (US$1,482.50/oz), copper +0.80% (US$3.321/lb), iron ore -1.0% (US$125/t), nickel -0.04% (US$14,851/t),zinc +0.47% (US$1,811.25/t), WTI +0.09% (US$95.25/bbl) and Brent flat (US$103.78/bbl). � Economic data due today - US - University of Michigan Confidence (forecast 77.9), Leading Indicators Apr (forecast 0.2%), China - property prices (tomorrow morning).
Company News � Allana Potash (AAA CN) analyst returns from site visit, notwithstanding the fact that the company faces the daunting task of financing a c US$700m in situ leach project, he was enthused by the projects unique characteristics that should enable it to be a low cost producer (sub US$100/t).

The key positive characteristics are: good grade, extraordinary evaporation rates (1-1.5cm/day) and access to abundant fresh ground water.

We note that the majority of other proposed potash projects typically have capex figures of the order of US$2bn since other ore bodies are typically deep versus 100m below surface at AAAs project.

The IFC has also taken a stake in the project (5%).

Source: Investec � Anglo American Platinum (AMS SJ) is braced for strike action, although plans to strike in response to the announced 6,000 retrenchments have been suspended by a workers committee, having previously intended to start striking yesterday.

There has been an underground sit in by 169 workers at the Tumela mine, however, this has not been very successful.

News reports indicate that thus far production has not been affected.

Source: Mining Weekly & Bloomberg Investec View: Although there appears to have been a reprieve in possible strike action, the likelihood of industrial action taking place in the near term appears inevitable. � OceanaGold Corporation (OGC AU) declares commercial production at Didipio.

The Board of Directors has reviewed the monthly operating metrics and cost profile and has determined that the effective date of commercial production is as at 1 April 2013, with all revenues and operating costs reported to the Income Statement from that point.

The announcement marks OGCs transition into a multinational gold producer, and reflects 22 months of development at the Didipio Mine, located in Luzon, Philippines.

Source: Company. Investec view: This is a positive for the Company, with interest now likely to be centred on achieving guidance at the mine, unchanged at 50-70koz Au at cash costs of negative US$370-US50/oz net of by-product credits. � Northam Platinum (NHM SJ) reduces energy intensity at its Zonereinde smelter from 12MW to 8MW to accommodate testing into possible erosion of the smelters refractory bricks.

Utrasonic and chemical testing is in progress.

The tests have required volumes processed to be reduced, which has been addressed by suspending the processing of concentrate produced by Platmin.

Captive concentrate production if in excess of the smelters reduced capacity would be toll treated if necessary.

Source: Mining Weekly � GlencoreXstrata (GLEN LN) appoints ex BP chief Tony Hayward as interim chairman following the stepping down of John Bond due to insufficient shareholder support.

The group may save US$150mpa by eliminating XTAs London office, and could achieve savings of US$1bnpa by 2015.

GLEN has indicated that US$200-400mpa could be saved at its copper, coal and zinc units through the cutting of duplication and management costs.

Two former XTA executives have been retained as division heads amongst 14 senior managers.

Source: Bloomberg
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Commodities News � Gold price showing no signs of recovery following previous fall and continued sales of ETF holdings, which are at the lowest level since July 2011 at around 2,207.1t.

However, demand may receive some support from Central Banks which bought as much as 534.6t last year, the most since 1964, and are expected to buy 450-550t this year according to the World Gold Council.

ETF holdings may be 2/3s through its fall in holdings as most institutional investors are thought to have made their sales.

However, physical demand is expected to remain strong with speculation of another 1,000t of demand from India this year and probably a near record from China.

Source: Bloomberg & Mining Weekly � Copper prices may be set to fall again following US jobless claim increase and that the seasonal surge in demand from China may be now largely over.

Copper fabricators typically buy up metal in Spring after the winter period.

Source: Bloomberg � Strikes forecast at Newcastle coal export ports.

Following stop work meetings on May 15, port workers have voted to protest against Port Waratah Coal Services over the coming 2 weeks.

The strikes are believed to be time-limited for 8, 12 and 24 hours.

Source: Tex Report � Chinese crude steel production falls in April, ore production increases.

Production of crude steel in April was 65,650kt, down 0.1% on March numbers, though up 6.8% on the same period last year.

In contrast, production of crude ore totalled 110.5mt for April (up 5.7% on Apr12), bringing the Jan-Apr total to 398mt (9.9% higher than the previous corresponding period), a record high.

Source: Tex Report � India continues Goa State iron ore mining ban.

Indias Supreme Court has decided to continue the ban on mining activities in the State of Goa, which has been in effect since September 2012.

The strict controls over illegal mining are in place for environmental protection, with the environment ministry suspending operations of 80 mines within the state, including any movement of ore from mines and stockyards.

Source: Tex Report Investec view: Indias market share of Chinese imports has fallen from ~20% in 2008 to ~4.5% in 2012.

The question now is, can it recover from this point? Probably not. � Norilsk Nickel (GMKN RU) halts Arctic shipments.

GMKN has suspended nickel and palladium shipments from its main outlet Arctic port of Dudinka, due to flooding.

The port is expected to resume operations on 6 June.

Source: Mineweb Investec view: While this is an annual occurrence, it does disrupt supplies of concentrate to the smelter and could provide near term support to the nickel and palladium prices.
Other economic news � European car sales up for the first time in 19 months following gains in Germany and the UK.

Registrations in April were up 1.8% yoy to 1.08m vehicles.

However, sales in the first four months of the year were down 7% yoy to 4.18m vehicles.

Sales in France and Italy were however down.

Source: Bloomberg Investec View: If EU auto sales are turning the corner and a recovery continues, then this could well be beneficial for platinum prices, since one of the biggest platinum consuming markets is in the EU diesel car market. � Investment in Australian resources sector to peak at A$85bn this year with gas attracting the most attention.

Upstream investment is forecast at A$48bn rising to A$50bn next year.

After gas spending iron ore and coal will comprise the largest share, with iron ore set to account for A$22bn and coal around A$8.5bn.

Iron ore investment is to peak this year.

Source: Mining Weekly
African Resources update � Rand reaches four year low.

Yesterday, the South African rand touched a four year low against the US dollar at 9.3836.

This movement was driven by falling metal prices and continued labour unrest, predominantly in the countrys mines.

Moodys downgraded the rand to Baa1 in September 2012, S&P followed suit in October and Fitch did the same in January.

Now, Moodys and S&P both have South Africa on a negative outlook, meaning further downgrades could be to come.

Source: FT Investec view: Given the fact that many large companies within the mining sector are about to start wage negotiations, these could easily lead to strikes and unrest which could in turn lead to near term weakening of the rand.

While this could be seen as negative for the country, for the mining companies, this could be positive in terms of costs given the companies incur rand denominated costs versus typically US dollar prices received for the products.

That said, it is very likely that any currency related cost savings are swallowed up in labour demands. � South African Mining ministers to visit Marikana.

The cabinet will send a delegation of ministers to Lonmins Marikana platinum mine in the North West Province to calm the unrest caused by a dispute between NUM and AMCU.

Miners have returned to work but tension remains high.

The visit will follow a return of the relevant ministers from a trip to Russia.

Source: Mining Weekly
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