[cid:image001.png@01CEDB91.852B4770] Thursday, 07 November 2013 [cid:image006.jpg@01CEDB91.85693AD0]
Snapshot � Company news highlights: Centamin research note, Randgold quarterly in line albeit minimal net cash balance, Vale and London Mining reflect strong quarterly results, Talvivaaras Q3 report highlights need for financing, IFL performed well in Q3, Aspire Mining provides update on Mongolias foreign investment legislation, Fortescue credit rating upgraded to BB, Amara Mining signs US$10m share purchase agreement, Hummingbird to benefit from South African credits, Yanzhou coal may seek Yancoal sell down extension. � Commodity review highlights: BHP offers Japanese smelters US$80/t and 7c/lb copper TC/RCs, Indonesian tin exports rise, hedge funds going long gold and silver, spot iron ore prices at high levels prompting � Other Economic News: Australian jobless rate increases, Queensland offers incentives to Galilee Basin coal miners � African Resources Update: Guinea demands clarity on Steinmetz, Anglogold Ashanti new gold mining technology produces first gold � Market notes: FTSE futures -9.5 points.

Following another record run in the US (Dow +0.82%, S&P +0.43%) markets are cautious this morning, taking a lead from Asia (Nikkei -0.76%, Hang Seng -0.66%, ASX200 -0.22%) as we await interest rate and asset purchase announcements from the ECB and the Bank of England.

However, regardless of the outcome, tomorrows US jobs report data will remain key with markets are expected to tread water until then. � Commodity markets - gold -0.11% (US$1,316.70/oz), silver -0.05% (US$21.8010/oz), copper +0.34% (US$3.248/lb), iron ore +0.22% (US$137.10/t), platinum +0.02% (US$1,467.70/oz), WTI -0.07% (US$94.74/bbl), and Brent -0.29% (US$104.94/bbl).

Dual listed - BHP AU +0.39% (A$38.24), RIO AU -0.18% (A$65.48).

Brent and WTI rose as data from the EIA showed US gasoline stocks fell by 3.8Mbbls last week.

Worth keeping eyes on how the developments of the class action in the US goes on price rigging, as four NYMEX traders have stated that the North Sea Brent crude oil market has been manipulated by oil majors and trading houses since at least 2002.

Elsewhere, spot copper moved to a premium to forward contracts of US$5/t, from a US$12/t deficit last month, as LME data showed that Novembers short positions are hedging as much as 145-220Kt of metal that is not in the LME warehousing system.

In the iron ore space, spot prices rose again to US$137.10/t, driven by rising steel prices, positive economic data, and restocking ahead of winter.

Our spread monitor remains in a downward trend and we believe that stocks look overbought and a due for a pullback as iron ore prices fall.

Finally, gold held its gains as many wait for the key US economic data that are expected to boost the case for sustained stimulus. � Economic data due today: US - Initial jobless claims (forecast 335k), continuing claims (2,875k), annualized GDP (2.0%), personal consumption (1.6%), core PCE QoQ (1.5%).

Eurozone - Spanish industrial output (forecast 1.4%), ECB interest rate announcement (0.50%), German industrial production (0.8%).

UK - Bank of England rate decision.
Company News � Centamin (CEY LN) research note published following yesterdays quarterly result that reflected the 21% fall in the realised gold price from a year ago.

Operationally the company has been performing well with strong production from the mine.

Source: Investec � Randgold (RRS LN) 3Q production in line, costs better, net cash positive (only just).

RRS delivered production of 233,676oz at cash costs of $662/oz (Investec 231koz at $751/oz).

The company remains net cash positive, but only just, with $17m cash remaining but with access to an undrawn $200m revolving credit facility.

Capex (mainly related to Kibali) has consumed $545m so far this year, against operating cashflow of $255m.

There remain a number of key areas of the Kibali expansion to complete but it is on track for 30koz production in 4Q and 550koz in FY14E (well ahead of our analysts expectations for the year).

Source: Company: Investec view.

Kibali is going well, achieving commercial production in the 3Q.

It needs to, given the drain on Randgolds cash this year.

Kibali has consumed $601m (100%) so far this year, with total capex estimated at $1,725m (100%).

The company remains ungeared, however, so has ample capacity to weather this.

Certainly, if Kibali is able to deliver its targeted 550koz in FY14, it will go a long way to rebuilding the balance sheet. � Vale (VALE US) 3Q13 production and earnings.

Vale reported 3Q13 underlying earnings of US$3.7bn (US$3.3bn in 2Q13) and an adjusted EBITDA of US$5.9bn (US$5bn in 2Q13).

Iron ore production was 85.89mt (shipments of 83.6mt), its 2nd best quarter ever, up 17.3% QoQ.

The large QoQ production increases were due in part to a weak 2Q13 that was adversely affected by an extended wet season that only ended in May.

Iron ore cash costs fell to just US$22.10/t in the quarter (versus US$24.15/t in 2Q13).

Iron ore production in 4Q13 is expected to be helped by the addition of 5.2mt of capacity due to the gradual commissioning of a 40mtpa dry ore processing plant in Carajas.

Copper production was also strong in the quarter with 95kt produced, up 3.5% QoQ.

Source: Company Investec view: Vale has clearly benefited from a quarter of higher iron ore prices and strong iron ore production/shipments.

Vale remains very leveraged to iron ore prices/volume.

In 3Q13 ferrous minerals (including iron ore) contributed US$5.65bn to a total adjusted EBITDA of US$5.9bn; 96%. � London Mining (LOND LN) delivers good 3Q IMS, with production of 948,000wmt (Investec 900,000wmt) and a slight lift in FY13 production guidance (100kt lift in bottom end of range) to 3.6-3.9Mwmt, with sales guidance maintained at 3.9-4.1Mwmt.

The expansion is going well and LOND expects to exit 2013 at a 5.4Mwmtpa rate at cash costs of $47/t. Investec view.

LOND is performing very well and appears to have a good handle on the (prolonged) seasonal wet weather conditions.

It is encouraging that it has maintained its FY13 sales guidance, although it is going to be under pressure in 4Q to get sales tonnes out: it has only sold 2.49Mwt so far this year and therefore has to sell a minimum 1.41Mwmt in the 4Q.

This can certainly be done, based on June load-out rates and the addition of a third self-propelled barge, but will be a test � Tavivaara (TALV LN) quarterly shows operational improvements but company in need of financing.

2.6kt Ni and 5.6kt Zn was produced, up 46% and 26% qoq leading to net sales of Euro24.4m and generating an operating loss of Euro29.2m.

Production has continued to be impacted by low metal grades in the leach solution due to excess water in the older heaps.

Capex in the first 9months has totaled some Euro53.2m.

Against a background of struggling output and weak nickel prices, the company is in financing discussions with stakeholders.

The company currently has borrowings of US$510m against cash and equivalents of Euro46.5m.

Source: Company Investec View: Talvivaara continues to struggle and needs to raise further cash.

The companys technical difficulties continue to be compounded by the weak nickel market that shows little sign of improving in the near future.

There is scope for a pick-up in nickel prices next year when an Indonesian ban on ore exports is to take effect, however, we see that this policy will be watered down. � International Ferro Metals (IFM LN) quarterly production report shows 47% qoq increase in production to 58kt ferrochrome with both furnaces operating, leading to sales of 52kt.

Stockpiles stood at 15.6kt up from 10kt the previous quarter.

Net borrowings are lower than planned at ZAR393m, albeit up from ZAR362m at the end of June.

The benchmark price has remained steady at 112.5c/lb with cash costs at ZAR5.58/lb up only ZAR0.02/lb qoq with 88% of targeted cost reduction programmes have been achieved.

Source: Company Investec View: A solid quarter from the company despite facing higher winter power prices in the period.

The operation is performing well with both furnaces running.

The outlook for the market remains tough, although the company expects to remain competitive. � Aspire Mining (AKM AU) provides update on Mongolias foreign investment legislation.

Aspire has released a summary of Mongolias recent amendments to its foreign investment legislation which became effective 1 November 2013.

In a nutshell, there is now no differentiation between Mongolian and foreign investors.

The only exception is state-owned-entities (SOEs, entities owned >50% by foreign governments), who will require Mongolian government approval if they acquire more than a 33% interest in companies in strategic sectors (including resources).

Source: Company Investec view: The new legislation is recognition of the lack of investment, and damage done to the Mongolian economy, following implementation of the Strategic Entity Foreign Investment Legislation (SEFIL) in May 2012.

The current legislation has the support of both the Government of Mongolia and the opposition and cannot be amended without a 66% majority vote.

This legislation once again opens the possibility of Chinese investment in the Mongolian coal sector and follows the announcement of a MoU covering logistics and coal purchases between Shenhua (1088 HK) and Tavan Tolgoi coal producers. � Fortescue (FMG AU) credit rating upgraded to BB.

S&P has upgraded Fortescues credit rating to BB with positive outlook from BB- citing higher production levels, unit cost reductions and lower project execution risk.

Source: S&P Investec view: The timing of the credit upgrade is fortuitous for FMG as it seeks to refinance its US$5bn senior secured credit facility, which reporting from Bloomberg suggests would reduce interest rates by up to 0.75% (US$37.5m per year if fully drawn) as well as remove a number of maintenance covenants from the facility to enhance financial flexibility if FMGs proposal to pay LIBOR + 3.5% with a 4.5% floor is granted. � Amara Mining (AMA LN) has entered into a US$10m share purchase agreement with Amlib Holdings that will also include a drilling operation and three Liberian exploration licenses for an aggregated value of US$11m.

Amlib is private gold exploration company with RDV Corp as an 88.2% major shareholder.

The agreement involves issuing to Amlib 52m shares equivalent to US$11m or 23.6% of Amara that is planned to be distributed to its shareholders resulting in RDV having a 20.8-22.8% stake in Amara subject to shareholders participating in Amlibs US$10m raising.

Source: Company Investec View: This is a positive development for Amara since at current gold prices its Kalsaka operation is unlikely to be generating much cash; furthermore the company is repaying a loan to Samsung.

The cash injection will help the company advance its portfolio of projects as well as broadening the asset base and bringing in what could be an important corner stone investor for the future. � Hummingbird Resources (HUM LN) funding for DFS.

HUM has announced that its appointed DFS contractor, MDM Engineering, has received approval from the South African Trade and Industry for a grant to support MDMs consultancy work in relation to HUMs DFS.

As a result, HUM will benefit from a 55% reduction in the expected cost of its DFS for its Dugbe gold project in Liberia.

Source: Company � Yanzhou Coal (1171 HK) may seek Yancoal (YAL AU) sell down extension.

Yanzhou Coal spokesman Zhang Baocai indicated that the company may seek to extend the timeframe it is required to divest its Yancoal ownership to 70% to beyond end December 2013.

The maximum ownership requirement was part of Yanzhous deal to gain Foreign Investment Review Board (FIRB) approval when it acquired Felix Resources and Gloucester Coal.

Source: Bloomberg Investec view: It is unclear whether an extension will be granted.

One mechanism Yanzhou could use to reduce its 78% ownership of Yancoal to beneath the 70% threshold is to pay contingent value rights (YALN AU) in shares when the A$261m bill comes due at year end.

Yanzhou is also currently working on an offer to privatise Yancoal by issuing Yanzhou scrip, although this appears unlikely to succeed given news reports suggests Noble Group (NOBL SP), which has a blocking stake in Yancoal, is unlikely to accept Yanzhous offer.
[cid:image007.png@01CEDB91.85693AD0] Commodities News � BHP has offered TC/RC contracts of US$80/t and 8c/lb to Japanese copper smelters, up from US$70//t and 7c/lb for this years benchmark.

Source: Thomson Reuters Investec View: We wait to see whether smelters will accept this since there has been reports of smelters seeking US$100/t and 10c/lb, indicative of an improving supply situation of copper concentrates. � Indonesian refined tin exports in October at 3,314t were up four times the previous month, albeit down 70% yoy.

The country introduced a regulation forcing 47 registered tin ingot exporters to trade on a domestic exchange before shipping the material as part of an effort to set its own benchmark prices.

Last year monthly exports tended to be around 8-9ktpm.

Source: Thomson Reuters � Hedge funds and other investors are reported to be increasingly taking on long gold and silver holdings, whilst cutting copper investments.

Source: Thomson Reuters � Spot iron ore prices at highest level since early September as Chinese steel mills prefer to buy up seaborne cargoes due to tight domestic supplies and availability of credit.

Chinese buyers have to pay cash for iron ore stockpiled at ports, yet they can purchase seaborne cargoes with letters of credit that need not be settled immediately, which is more appealing currently.

Source: Thomson Reuters
Other economic news � Australian jobless rate up.

Figures released today by the Australian Bureau of Statistics recorded joblessness increasing by 0.1% to 5.7% in October and the biggest cut in full-time employment in more than a year.

Bloomberg notes that traders have unwound bets for an interest rate increase.

Source: MiningNews � Queensland to offer incentives to Galilee Basin coal miners.

Australias Queensland state plans to offer incentives including reduced state royalties and access to a port site to companies keen on developing coal mines in the states galilee Basin.

The area is 500 miles from the nearest port but estimates are that 100Mt of coal could be produced from the area annually.

Source: Reuters
African Resources update � Guinea demands clarity on Steinmetz.

Guinea has demanded more information on Beny Steinmetzs personal involvement in the acquisition of mining assets worth US$5bn as it pushes towards the culmination of a corruption investigation that could lead to the cancellation of mining rights held by his family business.

The information is related to the dispute as to how Steinmetzs group acquired half of Simandou and allegations that the company bribed agents of the previous dictator, Lansana Conte.

Source: FT � AngloGold Ashantis (ANG SJ) gold mining technology produces first gold.

ANG has produced gold at its Tau Tona mine in South Africa with its new reef boring technology and plans to roll this mining method out to another two operations next year.

The technology involves drilling a hole through the reef and extracting all the gold as no pillars are left behind due to backfill.

The absence of drilling and blasting reduces seismic issues.

Vast quantities of waste will now not be brought to the surface.

Source: Mining Weekly
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
_____________________________________________________________________ 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 Private & Confidential / Disclaimer: This document is private and confidential and remains the property of Bell Pottinger.

Its contents may not be copied, forwarded or duplicated in any form or by any means without the permission of Bell Pottinger.

Bell Pottinger is made up of Bell Pottinger Private Limited, a limited company registered in England & Wales with registered number 08024999 and Bell Pottinger LLP, a limited liability partnership registered in England & Wales with registered number OC380478, together with their subsidiaries.

Our registered office is at 6th Floor, Holborn Gate, London WC1V 7QD.

A list of the members of Bell Pottinger LLP is open for inspection at our registered office.