[cid:image001.png@01CEB2B4.3145ABB0] Monday, 16 September 2013 [cid:image006.jpg@01CEB2B4.41DEC920]
Snapshot � Company news highlights: Petra Diamonds preliminary results, Sirius approvals update, Aquarius makes positive remuneration changes, BUMI separation in sight, EMED permitting update, Sable sees Guinea production by 2015, Tom Albanese to join Vedanta, Barrick Gold activist shareholders pushing for accelerated asset sales, ERA provides update in challenging uranium market, Discovery financing update, Intrepid loses court case, China Coal sales up YoY, Beny Steinmetzs place searched. � Commodity review highlights: Noble to sell Nyrstar zinc production, Japan nuclear restart, rising LME lead inventories, copper easing, gold up � Other Economic News: Chinas power consumption growth at an 19-month high, mid-year results provide sobering first sense of gold industrys all-in costs, Paulsons gold fund up in August, FOMC meeting, Mongolia to sell US$1bn bonds � African Resources Update: Egypt close to debt repayment schedule, SAs construction industry settles at 12% wage increase � Market notes: Another day, another dollar.

US markets rose again on Friday, with the S&P having its best week since July, as worse than forecast data caused many to believe that tapering may not be as severe as expected.

All eyes are on the FOMC meeting this week and the prospect of Fed tapering, which is now pricing in a US$10bn/mth reduction in purchases. European markets rose, for a 2nd week on increased M&A activity in the healthcare and media sectors, however falls by the global miners BHP and Anglo American held back the gains.

2Q13 employment numbers for the Eurozone fell again though, down 0.1% QoQ, but economists pointed to a slower rate and that the modest recovery may be gaining momentum. In Asia, the World Bank has stated that expects China is likely to achieve its growth target of 7.5% this year this year despite planned structural reforms to rebalance the economy. In the commodities space, gold futures rallied over the weekend on the Larry Summers news, with December futures up 2.1% to US$1,336/oz after the 5.6% fall during the week - the largest fall since June.

December silver futures also surged, up 3.6% to US$22.49/oz.

Elsewhere, copper fell on Friday on expectation of Fed tapering, down 0.25% to US$7,010/t.

WTI crude had its biggest weekly drop since July as the US and Russia held talks on the plan for Syria to surrender its chemical weapons.

Futures for fell 1.3% US$107.66/bbl.

Brent rose into the October contract settlement on Friday, up to US$112.78/bbl.

Iron ore edged down to US$134.50/t.

Of note, the Dalian Commodity Exchange has received regulatory approval from the CSRC to launch Chinas first iron ore futures.

This will be the worlds first physically backed derivatives contract and will have a lot size of 100t of 62% Fe.
Company News � Petra Diamonds (PDL LN) preliminary results.

Revenue increase of 27% yoy to US$403m, EBITDA up 36% yoy to US$122.4m leading to post tax profit of US$27.9m and EPS of 6.3cps, with adjusted EPS of 10.31c/share.

At the end of June the company had US$26.2m in cash, debt of US$147m and diamond inventories of US$31.5m.

Production in the year reached 2.7m carats up 21% yoy.

The company continues to invest in its asset base to build production spending a total of US$198.3m in the year.

Petra has been impacted by some industrial activity that started 29 August, with operations to resume today, and despite the disruption the company maintains its target of lifting production 12% to 3m carats in 2014 and then to 5m carats by 2019.

The company expects stable diamond prices in the year ahead with some upside potential.

Source: Company Investec View: A solid performance from Petra following on from Julys trading update.

That the company retains its guidance despite strike action is encouraging.

Rising volumes are also assisting the company in offsetting inflationary cost pressures, against a background of firm diamond prices. � Sirius Minerals (SXX LN) approvals update.

SXX has announced that, due to changes to its approach with the aim to secure essential permits, the company will not be submitting its mine approval application until July 2014, with the other permit applications to follow thereafter.

The group will align the environmental study work for the four key areas of the project - mine, pipeline, materials handling plant and port - and this will enable the group to provide decision making bodies with an enhanced level of information.

Source: Company Investec view: Permitting for mines is never easy in the UK and we suspect the SXX team have found this a more difficult process than initially envisaged.

It looks to us like the market will now have to wait for almost another year for any meaningful developments with this company. � Aquarius Platinum (AQP LN) board makes positive remuneration changes.

AQP has announced that its Non-Executive Directors have agreed to reduce their fees by 10% and to take 25% of their fees in shares rather than cash, with the share price being taken as the average over the previous quarter.

In addition, CEO Jean Nel has suggested he takes 70% of his salary (and any applicable bonuses) in shares instead of cash during the next three years.

The number of shares to be issued will be 708,000/year, set at US$0.62/share.

The board has supported his proposal.

Source: Company Investec view: We believe that todays announcement will be taken well by the market, as a clear indication that the team is aligned with what is best for the company.

Investors are now focussing more closely on directors remuneration and we believe there may be pressure for other companies to make decisions similar to that of AQP in the not too distant future. � Bumi (BUMI LN) separation end in sight.

Following the announcement last week that discussions were on-going regarding certain outstanding elements related to the split from the Bakrie Group and PT Bumi Resources, BUMI announced today that discussions are still ongoing, but that it has agreed to modify certain conditions/timing in order to facilitate a resolution.

As a result it is anticipated that the BUMI shareholder circular will be published in Oct13 and that the separation will be completed by the end of Nov13.

Source: Company � EMED mining (EMED LN) permitting update indicates that 30 day public comment period has commenced on Saturday updated with refinements to the tailings management facility.

The government has publically re-affirmed the feasibility of issuing the two principal permits that will allow site preparations to begin.

Source: Company Investec View: It continues to be a slow and tortuous process securing permitting for restarting the Rio Tinto copper mine in Spain.

We are encouraged by indications that the government indicates that it is possible to sign off on the key permits and hope that this will follow in due course to develop this attractive copper project. � Sable Mining (SBLM LN) sees Guinea iron ore production by 2015.

Aboubacar Sampil, executive director of SBLMs local subsidiary, told Reuters last Friday that construction at the Nimba iron ore project was expected to begin next year with production scheduled for 2015.

While presenting the companys pre-feasibility study in Conakry, he said that SBLM plans to invest about $5bn and export +10mtpa of iron ore.

Source: Mineweb Investec view: Sable joins a long list of small cap companies (SBLMs MCap is �51m) with very large capex requirements.

Five billion dollars doesnt sound much.

Five thousand million dollars sounds a whole lot more. � Tom Albanese to join Vedanta (VED LN).

VED has announced that Ex Rio Tinto (RIO LN) CEO Tom Albanese will join the company as Chairman of its Vedanta Resources Holdings Subsidiary.

Source: Company � Barrick Gold (ABX CN) could see shares rally if activist shareholders push management to accelerate asset sales.

Barrick aims to show greater capital discipline rather than concentrate on growth, however, it has been suggested that further value could be unlocked by selling or spinning off assets outside of the Americas and putting its Nevada mining assets in a master limited partnership vehicle.

Source: Thomson Reuters � Energy Resources Australia (ERA AU) company update.

ERA provided a company update to analysts in Sydney today.

The company expects 2013 U3O8 production of 2,800-3,200 tonnes and remains on track to achieve cash savings of AUD150m by the end of 2014.

The AUD57m Ranger 3 Deeps mine prefeasibility study is progressing and ERA is targeting production from late 2015 subject to feasibility studies and approvals.

The AUD220m brine concentrator, needed for water management and rehabilitation, has been completed.

Source: Company Investec view: Despite positive operational progress ERA continues to view the uranium market as very challenging in the short-term.

The spot uranium price is down to a new low of USD34/lb. � Discovery Metals (DML AU) financing update.

Discovery Metals, 100% owner of the Boseto copper project in Botswana, has informed the market that they are continuing discussions with interested parties in relation to a potential transaction.

The company is also in discussions with a party in relation to re-financing, and with their existing lenders to extend the current debt maturity.

The company and its lenders have agreed to extend the date for a final board recommended offer to 30 September 2013.

Source: Company Investec view: The DML share price collapsed after Cathay Fortune let its November 2012 bid lapse in February 2013.

As at the end of June 2013 DML had total debt of USD153.9m.

The company is currently in default on its project financing facility (USD128.86m) and its revolving credit facility (USD25m). � Intrepid Mines (IAU AU) loses court case, plans appeal.

Indonesian copper-gold explorer Intrepid Mines lost a judgement by the Indonesian State Administrative Tribunal seeking to set aside the transfer of the Tujuh Bukit mining leases from its JV partner IMN to Bumi SuksesIndo.

Two judges ruled against Intrepid, opining that Intrepid had no standing to bring the court case, while a third ruled in favour of Intrepid, opining that the mining lease transfer was in violation of the law.

Intrepid intends to lodge an appeal of the verdict.

Source: Company Investec view: The court ruling is a setback for Intrepid but the final outcome regarding ownership of the Tujuh Bukit mining leases is yet to be determined.

Previous CEO, Brad Gordon, in now well removed from the sorry saga, recently taking up the role of CEO of African Barrick (ABG LN). � China Coal (1898 HK) self-produced coal sales flat MoM, up YoY in August.

China Coal reported August 2013 self-produced coal sales of 9.38mt, up 0.2% MoM and up 8.1% YoY.

Monthly coal production was 9.80mt, up 7.5% YoY, while total coal sales volume including trading was 13.3mt, up 18.0% YoY.

Source: Company Investec view: Chinese thermal coal prices continue to remain in the doldrums with the Bohai price at CNY536/t. � Beny Steinmetzs place searched.

Swiss authorities have searched Beny Steinmetzs private jet and Swiss home looking for evidence of corruption related to the Simandou iron ore project in Guinea.

Steinmetzs lawyer said the raids failed to yield any evidence.

Source: Bloomberg
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Commodities News � Noble group to sell some of Nyrstars zinc production in a deal worth as much as US$650mpa to secure around 350ktpa of Nyrstars zinc production.

Nyrstar is the worlds biggest producer of the metal.

Noble is taking over from Glencore which had to exit the deal as part of getting EU consent to merge with Xstrata.

Glencore will continue to market Nyrstars commodity grade zinc produced outside of Europe when the current deal ends in January.

Source: Thomson Reuters � Japans nuclear restart of nuclear reactors now expected to take place any time from December to mid-2014.

The current government is keen to get reactors up and running again as the economy suffers soaring energy costs.

Japan currently consumes around a third of the worlds LNG production taking demand to record levels.

Source: Thomson Reuters � LME lead inventories increase to 231kt; lead prices fall.

LME lead inventories increased 27% last week after 49.4kt of lead was delivered into warehouses at the Dutch port of Vlissingen.

Source: Bloomberg Investec view: LME spot lead prices have fallen to USD2,044/t, down from USD2,248/t on 19 August 2013. � Copper prices up on easing concerns over Syria.

However, hedge funds on Friday cut long positions reducing net longs from 6,204lots to 2,007 lots.

Source: Thomson Reuters. � Gold up this morning as US weakened following Lawrence Summers withdrawing as candidate to head the Fed succeeding Ben Bernanke.

Source: Thomson Reuters
Other economic news � Chinas August power consumption growth at 18 month high.

Chinas National Energy Administration (NEA) reported August electricity consumption up 13.7% YoY to 510.3bn KWh, the fastest growth rate since March 2012.

Source: China Daily Investec view: Electricity consumption is generally seen as a better indicator of economic activity versus other indicators and is likely to provide the market with further comfort that Chinas economy is rebounding. � All in sustaining costs reflecting a more sobering view of margins.

According to the FT, a dozen of the 18 companies that are members of the World Gold Council reported costs on an all-in sustaining cost (AISC) basis during the recent 2Q and interims.

African Barrick Gold (ABG LN) and Gold Fields (GFI SJ), reported an AISC of $1,416/oz and only five of the twelve companies said their AISC was less than $1,000/oz.

Source: FT Investec view: After years of seeing low reported cash costs, but little in the way of cash generation, the market is finally getting a transparent view of the real cost of producing gold.

And it tells us that cost cutting still has a long way to go.

There is a limit to how far costs can be trimmed back, so it is ultimately more likely that production will decline, as companies focus on the more profitable ounces - quality over quantity. � Paulsons Advantage Funds beats peers after August gains.

John Paulsons Advantage Fund rose 1.9% in August (when many hedge funds were in the red) and is now up 10% for the year.

Even Paulsons Gold fund, now largely made up of his personal money, which made dramatic headlines with heavy losses earlier in the year, gained 11% in August.

Source: Mineweb � FOMC meeting 17-18 September.

The USs Federal Open Market Committee (FOMC) will meet this week 17-18 September with a statement due for release on Wednesday 2pm (EDT).

Source: Bloomberg Investec view: There is a market expectation that the FOMC will reduce its USD85bn/month asset purchases by c.

USD10bn/month.

More aggressive tapering is likely to be a negative for gold prices.

Spot gold prices are currently back at USD1,327/oz after breaking through USD1,400/oz in late August/early September. � Mongolia plans to sell USD1bn of Samurai bonds.

Mongolias Prime Minister indicated the country hopes to raise USD1.0bn of JPY bonds later this year.

Source: Bloomberg Investec view: Japan is a potentially attractive fundraising market for Mongolia given political links between the two countries and the relatively high yield-to-maturity on Mongolias 10-year USD bonds (currently c.

8%).
African Resources update � Egypt close to agreeing schedule for repaying US$6bn in outstanding debt to foreign oil companies.

Reaching an agreement would also lead to a rise in investments from the companies of US$15bn over two years.

The country has been struggling with energy bills caused by high subsidies on fuel products.

Firms involved include BP, BG Group, Edison SpA and TransGlobe Energy who were owed US$5.2bn at the end of 2012.

Source: Thomson Reuters � South Africas NUM indicates that it has agreed a 12% wage increase for the construction industry, ending a three week strike.

This follows wage settlements in the gold industry recently.

Unemployment in the country remains at around 25% with many South Africans more concerned with having a paycheque than listening to union bosses calling for strike action.

Source: Thomson Reuters Investec view: This is a significantly larger increase than the 7-8% increase the mining industry settled at, but may be off a lower base
Investec Global Natural Resources Research Team: UK Hong Kong South Africa Hunter Hillcoat Tel: +44 (0) 20 7597 5182
Matthew Whittall Tel: +852 3187 5075
Albert Minassian Tel: +27 (0) 21 416 1454
Marc Elliott Tel: +44 (0) 20 7597 5189
Leavitt Pope Tel: +852 3187 5074
Louise Collinge Tel: +44 (0) 20 7597 5779
Investec Global Natural Resources Sales Team: UK Hong Kong South Africa Jamie Campbell Tel: +44 (0) 20 7597 5038
Will Robbins Tel: +852 3187 5098
Hayden Smith Tel: +27 (0) 21 416 1401
USA Thomas Lawrence Tel: +1 212 2595604
Alistair Roberts Tel: +852 3187 5097
Investec Commodity Hedging Team: http://treasury.investec.co.uk/products-and-services/commodities.html UK Callum Macpherson Tel: +44 (0) 20 7597 5070
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