🕐21.10.13 - 12:27 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - MONDAY 21 OCTOBER - ANTO LN,
APF LN, SHAN LN, CNDR LN, AMA LN, 1088 HK, 1393 HK, AA US



[cid:image001.png@01CECE35.5AC2AFA0] Monday, 21 October 2013 [cid:image006.jpg@01CECE35.6D0B9FF0]
Snapshot � Company news highlights: Antofagasta research note out, Anglo Pacific Group change in management, Shanta Gold Q3 production update, Condor Gold metallurgical results, Amara Mining delisting from TSX, Shenhua receives NDRC approval to construct two coal-fired power plants in Inner Mongolia, Hidili SepQ13 production, Alcoa accuses the LME of exceeding the proper role of an exchange. � Commodity review highlights: Copper production is rising: Lex, Indias jewellery exports up again in September, Chinese iron ore futures slip as steel mills restocking cools, Canada waives requirement that buyers take on Canadian partner in uranium mines, Energy major EDF and the British government sign an agreement to build two nuclear reactors. � Other economic news: Chinas central government called for unrelenting implementation of its economic policies. � African resources update: Lonmin senior NUM union worker shot dead overnight in local town, New study highlights diamond potential in Angola. � Market notes: FTSE futures +25 points this morning following a solid lead from the US on Friday (S&P + 0.65%) and Asian markets are responding well (Nikkei +0.91%, Hang Seng +0.54%, ASX 200 +0.57%).

Markets start to re-focus on Fed stimulus tapering as US data release restarts this week with the crucial jobs report due tomorrow (forecast 180K jobs added and unemployment steady at 7.3%).

Chinese shares are also up strongly this morning following a reiteration by the cabinet that they are confident that this years growth targets will be met (Shanghai Composite +1.42%). Commodity markets - gold +0.43% (US$1,322.00/oz), silver +1.37% (US$22.2210/oz), copper +0.03% (US$3.330/lb), iron ore +0.00% (US$134.40/t), platinum +0.32% (US$1,442.40/oz), WTI -0.02% (US$100.79/bbl), and Brent +0.07% (US$110.02/bbl).

Dual listed - BHP AU +1.26% (A$36.20), RIO AU +0.47% (A$63.75).

Gold continues to push forward as investors assume the timing of fed stimulus tapering moves into 2014 and the USD weakens.

WTI has dropped towards the US$100/bbl mark as data shows crude stockpiles are at a 3 month high in the US, climbing by 3mmbbls to 373.5m for the week ended Oct 11.

The nickel glut is expected to continue into 2014 as new technology lowers the cost of pig iron production significantly. Economic data due today: US - existing home sales (forecast -3.3% MoM).

Eurozone - German PPI MoM (forecast 0.1%), Italian industrial orders (forecast 0.5% MoM), Italian industrial sales, EC current debt/GDP ratio for 2012.
Company news � Antofagasta (ANTO LN) research note out reviewing earnings following upgrade to long term copper prices from 280c/lb to 300c/lb.

Negligible impact to near term earnings since only minor changes to price assumptions, however, longer term NPV has benefitted from the upgrade.

Source: Investec � Anglo Pacific Group (APF LN) change in management with CEO John Theobald and CIO Chris Orchard stepping down, and Julian Tregar and Mark Potter to succeed them in these roles.

The company is also issuing 1.3m shares at 195p for �2.5m to a trust of which Julian Tregar is a beneficiary, and to Mark Potter.

Source: Company Investec View: John and Chris have successfully expanded the royalty portfolio of the group.

The new management team should be able to continue this work potentially bringing taking advantages of synergies from their roles at Audley Capital. � Shanta Gold (SHAN LN) Q3 production update.

During Q3 FY13, SHAN produced 18,900oz of gold and sold US$19,200oz at an average price of US$1,366/oz.

Q3 production represents a 31% increase on Q2 output.

The group remains on track to deliver its targeted production of 63,000oz at an average all-in sustaining cost of US$1,000-1,100/oz.

Source: Company Investec view: The SHAN management team has done a good job with the New Luika mine which is operating well.

Output is solid, and costs are competitive when compared to the gold industry.

We believe these results will be taken well by the market today. � Condor Gold (CNDR LN) metallurgical results.

CNDR has undertaken metallurgical studies in relation to its 100% owned La India project in Nicaragua.

The results have demonstrated that the ore can be processed by whole ore cyanidation with a standard carbon-in-pulp (CIP) plant without the need for gravity concentration.

Gold recoveries from the La India vein set are estimated at 90-92% and recoveries from the America Vein set are estimated at 94-95%.

Source: company. � Amara Mining (AMA LN) delisting from TSX.

AMA has announced it has applied for voluntary delisting of its shares from the Toronto Stock Exchange.

The company will remain quoted in London.

Source: Company � Shenhua (1088 HK) receives NDRC approval to construct two coal-fired power plants in Inner Mongolia.

Shenhua has received National Development and Reform Commission (NDRC) approval to construct two 300MW low calorific coal-fired power plants in Inner Mongolia.

Annual demand will be 2.72mt of coal which will be supplied by Shenhua.

Capex is estimated at CNY2.865bn.

Source: Company Investec view: As at the end of June 2013 Shenhuas equity share of installed coal-fired generation capacity was 24,847MW. � Hidili (1393 HK) SepQ13 production.

Hidili reported SepQ13 coking coal sales of 118kt, down 54% YoY, at an average selling price of CNY949/t, down 10% YoY.

Raw coal production of 344kt was also weak, down 64% YoY.

Source: Company � Alcoa (AA US) accuses the LME of exceeding the proper role of an exchange.

Alcoa has sent a letter to the UK Financial Conduct Authority and the US Commodity Futures Trading Commission complaining over the LMEs attempts to reduce LME warehouse queues.

Source: Company Investec view: Alcoas issue seems to be that if LME warehouse queues are reduced aluminium physical premiums (the price in addition to the LME price) would also reduce.
[cid:image007.png@01CECE35.6D0B9FF0] Commodities news � Copper production is rising: Lex.

The Lex column looks at copper supply and demand, noting that copper output at Rio Tinto (RIO LN) was up 23% in YoY in Q3 as Oyu Tolgoi ramped up, and output at Anglo American (AAL LN) rose by almost a third.

Lex believes that excess supply could reach 800,000t by the end of next year as bigger miners expand and China adds capacity.

Demand looks to be worsening too, as investment in Chinas power sector falls.

The column believes that shares in pure play copper producers have not fallen as far as earnings estimates.

Source: FT � Indias jewellery exports up again in September and expected to continue, with exports up 16.5%mom to US$653.9m.

Growing orders from the US appear to be the main cause.

Gold imports however are struggling due to restrictions being applied to help balance the trade deficit.

Gold imports in August and September were well down at 10.62t, versus Mays record high of 162t.

October imports are expected to be around 30t at a time when seasonal demand is typically strong.

Source: Thomson Reuters � Chinese iron ore futures slip as steel mills restocking cools due to a weaker demand outlook into Q4.

The most active May iron ore contract is reported at around US$160/t (RMB960/t).

However, the current spot price remains firm at US$134.4/t.

Source: Thomson Reuters � Canada waive requirement that buyers take on a Canadian partner in uranium mines for European Companies in an effort to encourage investment.

The move follows lobbying by Areva and Rio Tinto to scrap this requirement.

Source: Thomson Reuters.

Source: Inside Coal � Energy major EDF and the British government sign an agreement to build two nuclear reactors for US$25.9bn in which the company would have a 45-50% stake in the consortium to build two Areva designed reactors at Hinkley Point.

China General Nuclear Corp and China National Nuclear corp will have a combined stake of 30-40% and Areva will have 10%.

The asset will have a contract of 35 years from the date of commissioning.

Source: Thomson Reuters
Other economic news � Chinas central government called for unrelenting implementation of its economic policies and reform measures to consolidate the countrys recovery after two quarters of slowed growth.

However, China grew at 7.8% in Q3, which reversed the slowdown which risked the country missing it 7.5% target for 2013.

The nations leaders will meet next month to map out policies to reform the economy and sustain long term growth at about 7%.

Source: Reuters
African resources update � Lonmin (LMI LN) senior NUM worker shot dead overnight in local town to Marikana for reasons unknown.

There have been numerous violent incidences between union members in particular NUM and AMCU following inter union tensions.

Source: Thomson Reuters � New study highlights diamond potential in Angola, but for this potential to be realised, the country needs to develop transport link and services for mining companies and make geological data more accessible.

The country is the worlds fourth largest diamond producer by value.

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
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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