🕐11.06.13 - 10:27 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - TUESDAY 11 JUNE 2013 - IVP CN
, AUE LN, HZM LN, FCX US, KGC US, HCH AU, RXM AU, COK AU, GBG AU



[cid:image001.png@01CE667A.AD9F8900] Tuesday, 11 June 2013 [cid:image006.jpg@01CE667A.CDDC6760]
Snapshot � Company news highlights: Ivanplats applies for Platreef mining rights, good drill results from Aureus, Horizonte raises PFS funding, Freeport may need to declare force majeure, Kinross cancels Ecuador mining project, further drill results from Hot Chili, Rex flags ore reserves in next quarter, new extended loan guarantee for Cockatoo, Ansteel provides working capital for Gindalbie � Commodity review highlights: potash oversupply overstated, enough oil shale globally for 10yrs oil consumption, new 200t gold vault in Singapore, gold near two week low � Other Economic News: Chinese markets closed until Thursday, BoJ raises assessment of economy � African Resources Update: Tiger Resources clarification on proposed DRC export ban, Ghana arrests more illegal gold miners, SAs power reserves extremely tight, Transnet raises ZAR3.3bn in bonds, Didier Drogba invest in Ivorian gold mine � FTSE futures down 12.5 points (7:20am) - markets looking to open slightly down this morning as the German Constitutional Court starts a two day hearing over the legalities of the ECBs program to buy the bonds of troubled economies.

If the program was to be withdrawn the future of the Euro would come under significant pressure.

Asian markets are mixed today (Nikkei -1.45%, Hang Seng -0.90%, ASX 200 +0.41%), the Yen is gaining against peer currencies as the BOJ keeps monetary policy steady and no increased stimulus measures announced.

The Chinese market remains closed for the Dragon Boat Festival. Commodity markets are all off this morning: gold -0.24% (US$1,383.20/oz), silver -0.00% (US$21.9283/oz), copper -0.20% (US$3.2345/lb), iron ore flat (US$110.90/t), platinum -0.39% (US$1,501.00/oz), WTI -0.15% (US$95.63/bbl), and Brent -0.28% (US$103.66/bbl).

Due listed - BHP AU +0.03% (A$33.10), RIO AU -0.38% (A$53.00). Economic new due out today: US - Small Business Optimism survey (forecast 92.1), wholesale inventories (forecast 0.2%), wholesale sales MOM (forecast -0.1%).

UK - UK - monthly industrial production (forecast flat), monthly manufacturing production (forecast -0.2%).

Germany - constitutional court hearing on the legality of the ECBs OMT.
Company News � Ivanplats (IVP CN) mining right application filed for Platreef project, in conjunction with modified ownership structure to comply with South African BEE requirements.

A BEE partner is to acquire 26% of the project through an SPV representing the interests of local communities and trusts to be financed and take effect upon receipt of the Mining Right which IVP will hold a 49% minority stake in the SPV.

Upon receipt of the mining right, IVP will own 64% of the project, a Japanese consortium 10% and the SPV 26%.

Drilling at the Platreef project is to resume later this month having been temporarily suspended with drilling to focus on exploration targets to add to the current substantial resource base and potentially support a second underground development area.

The company is still awaiting approval to sink an access shaft to the Flatreef for bulk sample testing having lodged an application for the shaft in September last year.

Source: Company Investec View: This is a positive step toward the development of this exciting PGM project that has the potential to be a low cost operation due to the high grade, substantial widths (average 24m true thickness in Flatreef zone) that could allow for mechanised and bulk mining techniques which have only met with limited success at conventional deposits in South Africa. � Aureus Mining (AUE LN) high grade drilling results from Weaju project from last 15 holes of 62 hole programme that totalled 8,726m.

Highlighted intercepts have returned grades between 1.8-9.1g/t at shallow depth over reasonable intercepts 6-14m.

1km of gold mineralisation in three zones has been outlined.

AUE aims to complete a resource estimate for sign off in Q3 to be followed by drilling programmes in Q4.

Weaju is around 30km away from the companys New Liberty project that is under construction.

Source: Company Investec View: This positive news for the company and highlights the potential in the portfolio for other gold resources to complement the developing New Liberty Project.

We look toward on-going news flow on New Libertys construction and finalising of finance that is the main value driver currently. � Horizonte (HZM LN) raises �3.8m to progress Araguaia nickel project.

Post the 7.5p per share raising the company will have a net cash position of $7.3m, which should enable it to complete its pre-feasibility study on the project, due to start in the 1H13.

HZM has also entered into a term sheet for an equity financing facility (EFF) for up to �8m over three years with Darwin Strategic Limited, a subsidiary of 13% HZM shareholder, Henderson Global Investors (HGI).

The EFF provides funding optionality, at Horizontes option.

An updated resource is currently being prepared by Snowden following the completion of a 10,000m infill drilling programme.

Of the 41m new shares, 20m were taken up by Teck (TCK.US, lifting its ownership from 41.8% to 42.5%) and 12m by HGI (lifting ownership from 13.0% to c.

14.9%).

Source: Company. Investec view: The company has done well to raise funds in the current market, even a relatively small amount such as this.

Fortunately for HZM, it has had the support of its two major shareholders to facilitate this, with both of them lifting their ownership in the company. � Freeport (FCX US) may need to declare force majeure at Grasberg.

Freeport Indonesias President Director indicated that the company may need to declare force majeure at Grasberg if the mine remains shut.

The mine remains closed, except for maintenance, pending government investigations following two separate fatal accident events.

There are also labour problems with unions threatening to strike from 14 June unless certain mine management officials are suspended.

Source: Bloomberg � Kinross (KGC US) cancels Fruta de Norte mining project in Ecuador that will lead to a US$720m write down.

Agreement could not be reached with government have been in negotiation for two years.

Kinross acquired the asset through a takeover of Aurelian Resources in 2008 for C$614m.

A sticking point was a proposed 70% revenue based windfall tax rate that Kinross wasnt prepared to agree to.

The government has indicated that it will accelerate the development of the asset without Kinross.

Source: Bloomberg Investec View: Clearly Ecuador is one of those particularly difficult countries for miners and such action e.g.

70% proposed windfall tax, will only discourage mining companies and their investors from looking to explore and develop assets there. � Further drill results from Hot Chilis (HCH AU) Frontera.

More positive drilling results from the Frontera project, with intersections of 120m at 0.5% Cu and 0.3g/t gold as well as 348m at 0.4% Cu and 0.3g/t gold.

A second pass 3,000m drilling program is currently underway with HCH finalising its first pass assessment of the recently acquired project.

Source: Iress Investec view: Early days, but promising results.

Frontera is ~60km from HCHs key Productora project and could give HCH options to extend the life of Productora or increase throughput. � Rex Minerals (RXM AU) expecting increased ore reserve in the next quarter.

Announced that Reserves at Hillside are expected to increase following drilling of the 12 year open pit design shell, with drill spacing reduced from 50m to 25m.

For the first time RXM expects to have a significant Proven Reserve as well as a larger Probable Reserve, at the flagship Hillside project.

Note this is not an upgraded reserve, rather it is confirmation that a new reserve is expected in the September quarter.

Source: Iress � Cockatoo Coal (COK AU) extension of loan guarantee facility.

SK Networks has agreed to extend its guarantee of COKs existing A$100m loan facility from 28 June 2013, to 28 September 2013, with negotiations underway for a matching (short term) extension for the facility.

This will enable COK to progress current discussions regarding refinancing of the facility and the overall funding of the Baralaba expansion.

COK will repay A$5m, reducing the facility to A$95m and will issue 50m options to SK on 15 October 2013 at an exercise price equal to the 20day VWAP Source: Iress Investec view: Cockatoo has regularly taken things down to the wire in terms of debt refinancing, but to-date has always managed to find a solution, and it appears that is the case once again, although here they are only buying themselves an additional three months.

The company reports that positive progress is being made with a number of parties regarding funding the Baralaba expansion, and the short tenure of the debt extension sough tends to support this view. � Ansteel provides working capital in Gindalbie Metals (GBG AU) restructure.

The Karara project has experienced a working capital shortfall following the delayed general ramp-up of the project.

JV partner Ansteel has undertaken to provide all required bridging loan finance to fund any cash shortfalls over the next 12 months.

In exchange, Ansteel will have the option to increase its stake in the project from 50% to 52.16%.

Post approval of this deal, GBG will have cash of A$35m and no debt.

Source: Iress
[cid:image007.png@01CE667A.CDDC6760]
Commodities News � Potash projects are being put on hold.

In an interview with Bloomberg, Allana Potash (AAA CN) says that predictions of global oversupply of potash are overblown as competing projects are being put on hold.

Supply forecasts include mines that arent yet in production and may be shelved or cancelled due to rising capex.

Source: Bloomberg Investec view: Capex numbers for bringing new potash projects on stream are eye-watering.

Indeed BHP Billitons (BLT LN) Jansen project is expected to cost c.US$12bn, assuming it goes ahead, but there has to be a question mark over that given new managements more prudent approach to capital allocation.

BLT will decide whether to push ahead with Jansen in its next financial year (post 1 July 2013).

We think that AAA looks like it has a project that will succeed.

Given natural advantages of an extremely hot and dry climate in Ethiopia, the solution mining product can be dried naturally, leading to markedly reduced capex and opex.

With total capex estimated at a (relatively) low US$642m, banks mandated and supportive major shareholders, AAA looks well positioned to finance its project. � World has 10 years of global oil shale.

According to a US assessment of reserves from Russia to Argentina, the world has shale resources vast enough to cover more than a decade of total oil consumption.

The US Department of Energy estimated technically recoverable shale oil resources of 345bn barrels in the 42 countries it surveyed.

Source: FT Investec view: The oil shale business, particularly in the US, has already changed the dynamics within the energy markets, and domestic thermal coal prices may continue to suffer because of these developments. � DB to open 200t gold storage vault in Singapore.

Deutsche Bank is opening a gold storage vault in Singapore as it looks to capture surging demand for gold bullion in Asia.

Singapore last year excluded gold traded for investment from sales tax liability, prompting even more interest.

The bank said the new vault would be one of the largest physical holdings of gold in the city state.

Source: Telegraph � Gold near two week low over speculation that the Fed will go through with stimulus curbs.

However, assets held by largest gold ETF, SPDR, actually rose yesterday, the first time since 29 May.

Source: Bloomberg
Other economic news � Chinese markets closed until Thursday.

Its a slow week in China with markets closed until Thursday for the Dragon Boat festival.

Source: Investec � BoJ raises assessment of economy.

The Bank of Japan raised its assessment of the Japanese economy for the 6th straight month on Tuesday, noting a pick-up in exports and industrial production and continued resilience in private consumption.

The central bank kept its monetary policy settings on hold.

Source: FT
African Resources update � Tiger Resources (TGS AU) clarification of proposed ban on export of copper and cobalt in DRC.

The DRC government announced in April 2013 that it would prevent companies from exporting copper and cobalt concentrates.

Tiger sells more than 80% of its concentrate to t smelters within the DRC with the remainder sold to a smelter in Zambia that has the support of the DRC government.

TGS is currently constructing a an SXEW plant and will produce a high value copper cathode once this plant is complete.

TGS issued the clarification in response to media articles in the Sydney Morning Herald and The Age that suggested the ban would "greatly affect Tigers operations.

Source: Iress � Ghana arrests gold miners from neighbouring states.

Following the arrest last week of 200 Chinese illegal gold miners (now due to be repatriated), Ghana has now arrested at least 55 West Africans suspected of illegal gold mining.

The miners are from Niger, Nigeria and Togo.

The raids demonstrate that officials are determined to stop any non-Ghanaian from getting involved in artisanal mining.

Source: BBC � South Africas power reserve is extremely tight.

Yesterday the estimate was that the reserve margin stood at 0.2% of available power at 63MW.

Cold weather affected Johannesburg which has prompted increased demand for heating.

Source: Engineering News Investec View: Should the situation continue then blackouts are a likely risk that could well impact miners as has happened before. � Transnet raises ZAR3.3bn yesterday in an oversubscribed bond.

The company plans to spend ZAR300bn on modernising and expanding rail, ports and pipelines.

This follows an attempt two weeks ago that was unsuccessful.

Source: Engineering News Investec View: Having previously failed with an auction of ZAR750m of bonds to mature in 2035, we wonder what the different terms were that persuaded investors. � Footballer buys into Ivorian gold mine.

Ivorian former Chelsea striker, Didier Drogba, has bought a 5% stake in the Ity gold mine in the Ivory Coast as part of a sale of state assets to a company led by billionaire Egyptian Naguib Sawiris.

Canadian quoted La Mancha Resources (LMA CN) will now control 55% of the Ity mine.

Source: Mineweb.
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
Matthew Whittall Tel: +852 3187 5075
Albert Minassian Tel: +27 (0) 21 416 1454
Marc Elliott Tel: +44 (0) 20 7597 5189
Colin McLelland Tel: +61 (0) 2 9293 2140
Leavitt Pope Tel: +852 3187 5074
Louise Collinge Tel: +44 (0) 20 7597 5779
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
Rod Clarkson Tel: +61 (0) 2 9293 2278
Will Robbins Tel: +852 3187 5098
Hayden Smith Tel: +27 (0) 21 416 1401
USA Thomas Lawrence Tel: +1 212 2595604
Matt Martin Tel: +61 (0) 2 9293 2168
Alistair Roberts Tel: +852 3187 5097
_____________________________________________________________________ Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales (No.

489604).

Registered office at 2 Gresham St, London EC2V 7QP. Investec Asset Finance Plc is a subsidiary of Investec Bank plc.

Registered in England and Wales (No.

2179313).

Registered office at Reading International Business Park, Reading RG2 6AA. We may monitor e-mail traffic data and the content of email.

Calls may be monitored and recorded. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed.

If you have received this email in error please notify the sender.

This e-mail is subject to terms available at the following link: www.investec.co.uk/emaildisclaimer.

By communicating electronically with us, you consent to these terms. _____________________________________________________________________ _____________________________________________________________________ This email has been scanned by the Symantec Email Security.cloud service. For more information please visit http://www.symanteccloud.com -------------------------------------------------------------------------------- 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