[cid:image001.png@01CE7179.936786A0] Tuesday, 25 June 2013 [cid:image006.jpg@01CE7179.93AF16F0]
Snapshot � Company news highlights: Aquarius Platinum extends Kroondal mine life by 3 years, Lonmin strike threat, Newcrest disclosure practice review, Phoenix Gold reports strong drilling results, Perseus Mining operational update, Eastern Platinum puts Crocodile River on care and maintenance, Mongolian Mining announces 55mt coal resource, China Minmetals increases stake in MMG ltd, � Commodity review highlights: Iron ore research note signals long signal for prices, Higher shipping rates suggest rebounding Chinese demand Chinas gold production to rise 10% in 2013, China to consider curbing Aluminium overcapacity, update on Titanium dioxide market � Other Economic News: Mongolian election tomorrow � African Resources Update: AMCU serves demands on bad day for gold stocks, Zimbabwe prime minister requests election delay, African nations continue bond issues, Tawana Resources metallurgical update � FTSE futures up 28 points this morning ahead of a press conference being held at 7:30 by the PBoC, CSRC, CBRC, and CIRC to address the recent market turmoil and liquidity issues.

Speculation that the Chinese government will announce measures to bolster equities has led to an 85 point rise in the Shanghai composite index over the past hour and has driven FTSE futures into positive territory.

US markets were down overnight (DOW off 0.94% and S&P off 1.21%) and Asian markets are recovering from earlier heavy losses thanks to speculation regarding the Chinese press conference (Nikkei -0.72%, Hang Seng +0.56%, ASX 200 -0.28%).

Copper has also put on 1% in the past 30 minutes.

In the US after a few quiet days on the economic data front, durable goods, home sales and consumer confidence data is due today offering further clues on the potential timing on Fed stimulus tapering. � Commodity markets this morning - gold -0.04% (US$1,281.73/oz), silver +0.37% (US$19.7634/oz), copper +0.76% (US$3.05/lb), iron ore -1.69% (US$116.60/t), platinum +0.59% (US$1,340.50/oz), WTI -0.15% (US$95.05/bbl), and Brent -0.13% (US$101.03/bbl).

Due listed - BHP AU -1.59% (A$30.85), RIO AU -2.70% (A$50.15). � Economic data due today: US - Durable goods orders (forecast 3%), consumer confidence (forecast 75), new home sales (forecast 460K), house price index (Apr 1.1%).

EU: Hungary base rate announcement (forecast 4.25%), Polish unemployment (forecast 13.7%).
Company News � Aquarius Platinum (AQP LN) to extend mine life at Kroondal by 3 years to 9.5 years.

The mine life extension follows reaching an agreement with Anglo Platinum to contribute15.97mt of reserves at 2.42g/t containing 1.2moz PGMs into the Pool and Share (PSA) agreement that is effectively a 50:50 JV.

The terms of the agreement involve AQP contributing the use of its infrastructure and continuing to manage the operation, all concentrate production will continue to be sold to Amplats and a variable royalty rate will be paid of between ZAR8.05-14.95/t mined subject to the Rand metal price.

Source: Company Investec View: We are not surprised to see such an agreement reached, and it is an important step forward for the company providing it with more breathing space due to pressures of the previous short mine life.

The mine should produce 240+kozpa platinum of which 50% is attributable to AQP. � Lonmin (LMI LN) news reports indicate strike threat imminent subject to a ruling due shortly over recognition rights being negotiated with labour union AMCU.

Source: Bloomberg � Newcrest Mining (NCM AU) Independent advisor to review disclosure practices.

Former ASX Chairman, Dr Maurice Newman, is to conduct an independent review of the Companys disclosure and Investor Relations practices.

The Board will consider all findings and recommendations of the review, with Chairman Don Mercer planning to report publicly on any actions the Board decides are necessary.

Source: Company � Phoenix Gold (PXG AU) More strong drilling results at Castle Hill.

PXG released results from extensional drilling program at Castle Hill Stage 1, with a best gram metre intercept of 187gm (39m @4.8g/t), followed by 67m at 2.1g/t and 85m at 1.2g/t.

The Stage 1 mineralisation remains open at depth and in all directions.

The infill drilling program at Stage 1 has been completed on a 50m x 25m pattern to enable conversion to Indicated category (currently 31% Indicated), with infill drilling results expected to be released early in the September quarter Source: Company Investec view: The existing Castle Hill resource of 1.178moz at 1.6g/t is likely to increase both in scale and confidence category in the upcoming resource update.

The current drilling has demonstrated extensions of ~300m to the north of the current resource envelope, and infill drilling should enable inclusion of drill results below the current 85m depth limit.

PXG remains confident of delivering a 4moz resource and a DFS by December this year. � Perseus Mining (PRU AU) Operational update on the Edikan mine released last night.

PRU expects production for the half to be marginally below the lower end of guidance of 105,000 - 125,000oz, while the all-in cash cost for the half year is likely to be above the forecast US$1,100/oz.

This results from the impact of an accumulation of several minor plant maintenance issues last week.

Guidance for the next 18 months is will be provided with the Quarterly activities report in 15 July 2013, along with an updated resource.

The guidance will reflect a focus on maximising cash margin ahead of maximising production.

A revised Life of Mine plan is expected to be published towards the end of the September quarter.

The current GM of the Edikan gold mine will leave cease employment at 30 June.

Source: Company Investec view: Likely to be one of many mine revised mine plans with the weak gold price causing a sharp shift in focus from throughput to cash margin. � Eastern Platinum (ELR LN) to put Crocodile River Mine on care and maintenance having served a section 52 notice to the government to enable it to curtail operations.

The company previously suspended funding for the mine due to the difficult market conditions.

92% of the mines employees are to be retrenched.

Source: Company � Mongolian Mining (975 HK) announces new 55mt JORC resource near Baruun Naran.

Mongolian Mining has been granted a mining license by the Mineral Resource Authority of Mongolia (MRAM) for a coal deposit called Tsaikhar Khudag in exploration tenements surrounding its Baruun Naran deposit.

The mining license has a 55mt JORC inferred resource and 73mt Mongolian standard resource.

Source: Company Investec view: While the announcement is positive and increases MMCs resources by 5.6% to 1,038mt, it is relatively immaterial in our view as MMC has sufficient reserves at its UHG/Baruun Naran mining hub to support c.

25 year mine life at an 18mtpa ROM production rate.

Coal quality for Tsaikhar Khudag was not disclosed but is likely to be similar to Baruun Naran given proximity of the two deposits. � China Minmetals Corporation (CMC) increases MMG Ltd (1208 HK) interest to 73.12%.

MMG announced on Monday that state-owned-enterprise CMC increased its ownership in MMG to 73.12% from 72.40%.

This was the second CMC ownership increase announcement in as many days as MMG disclosed on Friday that CMC had increased its ownership to 72.40% from 71.72%.

CMC is limited by Australias FIRB and Hong Kong Stock Exchange rules from going above 75% ownership of MMG.

Source: Company Investec view: Since 17 June 2013 MMGs share price has been spiking into the close on big volume.

Whilst this has presumably been due to CMCs buying, the objective seems to have been more to support the share price into the close rather than acquire shares cheaply.

Efforts to inflate the closing share price raise suspicions that the company may be looking at acquisitions using at least some scrip.

Both Northparkes and Los Bambas have been mentioned in the press as potential targets.

Investec analysts remain cautious on this name.
[cid:image007.png@01CE7179.93AF16F0] Commodities News � Investec analysts analyse iron ore futures for insight into spot iron ore price moves.

We have looked at spread between 6-month forwards (near-term sentiment proxy) and 24-month forwards (long-term fundamentals proxy) to analyse long/short signals as we found Chinese steel mill margins are a poor indicator for iron ore price moves.

Our model shows a spread of >US$20/t is a strong short signal for spot iron ore and equities whilst a spread of
The signal, when cross checked against duration of spot iron price corrections, is now positive for iron ore as model triggered long on 5 June 2013.

Coupled with recent China destocking, this suggests some relative support for iron ore and equity prices.

Source: Investec Investec view: See note The futures spread is a good predictor of the present published on 25 June 2013 by Matthew Whittall and Leavitt Pope for full details. � Higher shipping rates suggest rebounding Chinese demand.

The biggest jump in shipping rates since Sep12 is suggesting rebounding demand from Chinese steelmakers.

Rates for Capesizes, the largest iron-ore carriers, doubled in 10 days.

The booked shipments would arrive in 2-3 months, boosting port stockpiles that have fallen to about 21 days of demand in April, the lowest level since 2007.

However, while Chinese steel production expanded almost three times faster than global output last month, the advance in ore cargoes may be more about replenishing inventories than an accelerating economy.

Source: Bloomberg � Chinas gold production to rise 10% in 2013.

China, the worlds largest gold producer, is set to increase production 10% YoY to 440t (14.1moz).

Through to April 2013 China produced 122.89t, up 12% YoY, according to the China Gold Association.

Source: Bloomberg � China considering plan to curb aluminium overcapacity.

Chinas National Development and Reform Commission (NDRC) may implement a plan to curb aluminium production overcapacity in Xinjiang, Qinghai and other western provinces where substantial new production capacity is being built according to reporting from the Economic Information Daily citing unidentified sources.

Source: Bloomberg Investec view: China has previously announced campaigns to reign in overproduction in aluminium with little success.

However, it appears low prices may finally exceeded aluminium producers pain thresholds this time with the China Nonferrous Metals Industry Association estimating that 93% of Chinese aluminium producers were loss making in 2012 and Chalco recently announcing it would suspend 380ktpa of aluminium production capacity. � Titanium dioxide feedstock market.

The latest monthly from mineral sands consultant TZMI makes the following points on titanium dioxide (the feedstock for the pigment sector): � The major pigment producers being Cristal, Huntsman, DuPont, and Tronox have announced price increases for all products effective either 1 June or 1 July.

The increases appear to be about US$175-200/t, or 7-8% � Huntsman reduced its stocks to 45 days at the end of March � TZMI expects the feedstock market to improve in the latter half of 2013 and into 2014. � TZMI expects the high-grade feed stocks to move toward a deficit by the end of 2013 (good news for Rio Tinto, Iluka and Kenmare) � Interestingly TZMI expects the zircon market recovery to be slower with demand improving in 2014 (not so good news for Iluka) Source:- Mineral Sands Report, June 2013.
Other economic news � Mongolia to hold presidential election tomorrow.

Mongolians head to the polls on 26 June to select a new president.

The incumbent, T Elbegdorj of the Democratic Party, is the favourite according to commentators.

Source: Investec Investec view: This years presidential election has been very low key by Mongolian standards.

Re-election of Elbegdorj appears likely and is the best outcome for the mining industry in our view as it assures minimum changes to the political environment, which is relatively constructive towards the mining industry at the moment.

Legislation that has been on hold prior to the election including revisions to the mining law is likely to be resolved following the election.
African Resources update � AMCU serves demands on bad day for gold stocks.

The Chamber of Mines has reported that the AMCU has submitted gold industry wage demands, without providing details on the demands.

The National Union of Mineworkers (NUM) submitted its wage demands around May 19 in which it was seeking average wage increases in the high teens, although as high as 60% in certain wage bands.

The demands came on a day when the share prices of three of South Africas gold producers threatened to test or hit five-year lows.

Source: MiningMX � Bullish Wescoal eyes significant Eskom supply demand gap.

SA coal junior, Wescoal (WSL SJ), has stated that it is targeting to supply part the significant upcoming needs of Eskom, which intends procuring half of its future coal from juniors.

At WSLs presentation the company indicated a supply cliff for Eskom from 2015, adding that Eskom needed new supplies of 60mtpa a year in the next two years.

Source: MiningWeekly � Zimbabwe prime minister requesting that the Constitutional Court delay the elections to prevent electoral disputes and political instabilities.

Source: Bloomberg � Kenya and Senegal plan to issue substantial bonds of US$1bn and Euro500m respectively, following the trend set by Ghana, Nigeria and Rwanda as African Nations tapping foreign debt markets.

Ghana and Nigeria may issue further bond sales of US$1bn later this year.

Source: Bloomberg � Tawana Resources (TAW AU) Metallurgical testwork confirms 60+%Fe product at Mofe Creek.

Stage 1 testwork on friable itabirite ore at TAWs Liberian Mofe Creek project demonstrated a 60%+Fe grade concentrate with low impurities.

A desktop economic study is underway, with results expected to be released to the market in the next fortnight.

Source: Company Investec view: The Mofe Creek iron ore project in Liberia looks a promising project and has eclipsed earlier gold projects to become the companys focus.

It deserves a more significant market capitalisation, but also probably requires a larger market cap to retain development flexibility.
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
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