[cid:image001.png@01CEB9C6.6439B610] Wednesday, 25 September 2013 [cid:image006.jpg@01CEB9C6.6477D080]
Snapshot � Company news highlights: Anglo American announces sale of Amapa, Randgold pours first gold at Kibali, London Mining outlines positive life of mine study, Weatherly International agrees contracts for Tchudi development, Lucara recovers 257ct diamond, Metals Exploration H1 results, G-Resources reports US$26.4m profit, Yanzou Coal shareholder completes share purchase, China Molybdenum receives permit, China Investment corporation converts bond to secure 12.5% interest in Uralkali, Gindalbie Metals agrees funding for Karara project. � Commodity review highlights: Gold futures fall on tapering concerns, platinum ETFs reach all time high, Chinese annual steel consumption to peak in 2018, Coking coal rice settled at US$152/t. � Other Economic News: Shanghai launches free trade zone � African Resources Update: AMCU miners to strike at Anglo Plats operations, France highlights need for action in Central African Republic. � FTSE futures off 7.5 points this morning.

Concerns regarding the US budget are keeping markets subdued as US treasury secretary Jacob Lew said investor confidence that a deal can be struck to raise the debt limit is greater than it should be.

Asian markets are mixed (Nikkei -0.37%, Hang Seng flat, ASX200 +0.80%) with the Australian markets performance being driven by a slight lift in commodity prices. � Commodity markets - gold +0.20% (US$1,325.80/oz), silver +0.09% (US$21.7215/oz), copper +0.12% (US$3.261/lb), iron ore +0.30% (US$132.70/t), platinum +0.94% (US$1,435.50/oz), WTI +0.43% (US$103.57/bbl), and Brent +0.38% (US$109.05/bbl).

Duel listed - BHP AU +0.36% (A$36.00), RIO AU -0.50% (A$62.41). � Economic data due today: US - MBA mortgage applications, durable goods orders (forecast -0.2%), New home sales MoM (forecast 6.6%).

UK - CBI reported sales (forecast 23).

Eurozone - French production outlook indicator (forecast -16), French business confidence (forecast 99), Spanish PPI MoM, Italian consumer confidence (forecast 98.5).
Company News � Anglo American (AAL LN) sells Amapa.

AAL has announced that he has sold its 70% interest (and the 30% which it had agreed to buy from Cliffs Natural Resources) in the Amapa iron ore operation in Brazil to Zamin Ferrous for an initial contribution of US$136m and a deferred consideration of up to US$130m payable over 5 years.

AAL will use the funds to repay some of its debt.

Source: Company Investec view: The asset was initially acquired by Anglo as part of a transaction to secure the much delayed and costly Minas Rio project that is due to start shipping late next year with initial production planned at 26.5mtpa.

Amapa is a considerably smaller mine that has been impacted by damage to its shipping port preventing ore sales in recent months. � Randgolds (RRS LN) Kibali operation pours its first gold.

The JV with Anglogold Ashanti (ANG SJ), although operated by Randgold, yesterday officially poured its first bar during a ceremony attended by government officials.

The US$1.7bn development has been brought into production ahead of schedule and is starting as an open pit operation, with planned underground ore access from 2015.

Projected annual production is around 600koz/pa.

With gold sales set to commence next month, RRSs immediate focus is on completing commissioning of the metallurgical plant and hydropower stations.

Source: Company Investec view: A first gold pour certainly does not mean that a project is operational and Randgold still has some work ahead of itself, but it does suggest that the project is tracking along nicely.

In an industry littered with failed target dates, Randgold has done exceptionally well to get Kibali to this stage, ahead of schedule and only modestly above the original capital estimate, particularly given the scale, the remote location and the need to relocate 4,000 families. � London Mining (LOND LN) outlines positive life of mine study.

Through a simple $40m plant optimisation, LOND expect to be able to lift the Marampa production rate to 6mtpa (dry) at cash costs of $42-45/t.

This is in addition to the $240m plant upgrade that had already been forewarned, in order to be able to process all ore types once the tailings are depleted.

LOND expects to be able to fund all capex through cash flows.

The study envisage a 40yr life of mine, based on the probable reserves of over 500mt.

An analyst briefing is being held this morning.

Source: Company Investec view: Our analyst indicates that this outcome appears very positive for LOND.

Previous production plans had been for 5mtpa so an extra 20% of product for only $40m of additional capex, at such low cash costs, will be extremely NPV accretive. � Weatherly International (WTI LN) update on Tschudi project indicates that contracts have been executed with contractors to build the mine and plant.

Other contracts are being negotiated to secure power and acid for the development.

Source: Company � Lucara Diamond Corp (LUC LN) recovers 257ct diamond.

LUC has recovered a 257ct diamond from its Karowe mine in Botswana.

The total number of diamonds recovered from this mine in excess of 50cts this year is now 47.

Of those, 14 were larger than 100ct.

The diamond will be told on tender in Q4 FY13.

Source: Company � Metals Exploration (MTL LN) H1 results.

MTL has reported a net loss of �2.45m for the 6 months to June 2013.

At the end of H1, the group had cash of US$40.6m, having raised �22.9m during the 6 month period.

Most of the infrastructure works on site have now been completed meaning the group can now move ahead with construction of the gold plant.

Conversations with debt providers for US$70m continue and assuming this is forthcoming, MTL expects first gold to be poured in Q4 2014.

Source: Company � G-Resources (1051 HK) FY13A profit of US$26.4m.

G-Resources reported a FY13 (Jun YE) attributable profit of US$26.4m, below our analyst forecast US$35.1m due primarily to a higher than forecast effective tax rate.

FY13 EBITDA of US$118m was however better than our forecast US$114m.

Source: Company Investec view: The company has once again reiterated its 2013 gold production guidance of 280koz and is on track to meet guidance if it maintains, until year end, the monthly average production rate of 24koz achieved in July and August.

A significant positive has been the increase to reserves extending the mine life by two further years. � Yanzhou Coals (1171 HK) controlling shareholder, Yankuang Group, completes buying of H shares.

Yankuang Group announced completion of the purchase of 82.27m (1.67%) Yanzhou H shares on 24 September.

This followed the purchase of 97.7m (1.99%) H shares announced on 9 September.

Post the share purchases Yankuang holds 180m H shares, 3.66% of total shares, and 2.6bn A shares, c.

52.86% of total issued capital.

Source: Company � China Molybdenum (3993 HK) receives mining permit for Xinjiang Luomu Mining.

China Molybdenum announced that it has received the mining permit for its 70% owned 9.9mtpa Xinjiang Luomu molybdenum mine.

Source: Company � China Investment Corporation subsidiary converts its convertible bond into shares in Uralkali.

The transaction represents a 12.5% interest in Uralkali (URKA LI).

Chengdong Investment Corporation, a subsidiary of China Investment Corporation, has converted its c.

USD3bn convertible note into ordinary shares in Russian potash producer Uralkali giving it a 12.5% interest in the company.

Source: Company, FT Investec view: This could prove to be a good investment for the Chinese sovereign wealth fund.

Uralkali recently broke away from the Russian-Belarusian cartel and is now focussed on potash volume over price.

As the worlds largest, lowest cost producer, with China as its largest market, it is capable of remaining profitable through lower prices as it increases volumes, thereby increasing market share.

And if it does not pursue as high volume strategy, it will still continue generating robust margins. � Gindalbie Metals (GBG AU) reaches funding agreement with Ansteel for its Karara project.

Gindalbie has reached in principle agreement with Ansteel for a US$230m funding package for its Karara iron ore project in Western Australia.

The proposed funding would comprise US$100m in the form of concentrate pre-sales and an US$130m loan from the Bank of China guaranteed by Ansteel.

Ansteel will have the option to convert these loans into equity.

Source: Company Investec view: Work at Karara is continuing to eliminate bottlenecks in the tailings management system.

Production guidance for DecH13 remains for 1.5-2.0mt magnetite concentrate and 1.9-2.1mt DSO.
[cid:image007.png@01CEB9C6.6477D080] Commodities News � Gold futures continue to fall on US tapering concerns.

Gold fell in New York for the third session 0.8% to US$1,316/t on concerns that the Federal Reserve will slow the pace of US fiscal stimulus in October, following comments from James Bullard on 20 September.

24 of 41 economists interviewed by Bloomberg believe that the Fed will scale back stimulus in December.

India is expected to pick up buying activity after limited action for last two months as rules on imports and exports have been clarified and the upcoming festival and wedding season should trigger demand.

Source: Thomson Reuters and Bloomberg � Metal held in platinum ETFs may have hit an all-time high in excess of 2moz with holdings having risen substantially in expectation of supply disruptions.

Around 42kos were added yesterday to various ETF holdings.

Strike action at the largest producer, Amplats is planned to take place on Friday to protest against proposed job cuts.

Source: Thomson Reuters Investec View: Despite stronger underlying supply demand fundamentals, platinum price movements are largely reflecting gold price movements currently, although platinum producers will be benefitting from the current weaker South African rand. � Chinese annual steel consumption forecast to peak at 825mt in 2018 according to domestic producer Baoshan Iron and Steel.

Local producers indicate that demand is slowing and that a gut in iron ore supply should lead to lower prices.

Annual Chinese iron ore demand is expected to stabilise at around 900-1,000mtpa.

Source: Thomson Reuters � Coking coal settlement at US$152/t.

Platts reported on 20 September that Nippon Steel and BHP Billiton had settled premium low-vol coking coal (Peak Downs, Saraji) prices at US$152/t (FOB, Australia) up US$7/t QoQ.

There are no reports of a settlement for PCI.

Source: Platts Investec view: Investec had forecast a US$147/t DecQ13 settlement price.

We continue to forecast a slow recovery in coking coal prices and currently forecast a MarQ14E coking coal settlement price of US$155/t.
Other economic news � Shanghai free trade zone to be officially launched on 29 September.

Shanghais free trade zone (FTZ) is to be officially launched on 29 September.

Most of the excitement at the moment seems to be around the possible availability of Facebook and Twitter, which have been blocked in China since mid-2009, in the FTZ.

Source: Reuters
African Resources update � South African platinum miners to strike at Anglo Platinum in protest against job cuts.

AMCU workers have served notice of strike action to take place this Friday.

Wage talks with unions are ongoing with AMCU looking for increases of as much as 100%, however, gold wage negotiations have settled at a more reasonable 8% increase.

Source: Mining Weekly Investec View: That strike action has been announced is not surprising, it is perhaps unexpected that such action hasnt been announced sooner.

Platinum miners however face tough markets with costs escalating undermining margins, hence Anglo Platinums plans to cut output from higher cost assets that should also help balance the market.

We note that price performance of platinum has been relatively muted against the background of strike action and rapid ETF buying of metal. � France highlights requirement for action in Central African Republic to help keep peace.

The country has been suffering an rebel uprising that has seen control of the capital lost.

The African Union plans to deploy a 3,600 peace keeping force incorporating the 1,100soldiers already there, however the force is unlikely to be operational before 2014.

Source: Thomson Reuters
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
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