[cid:image001.png@01CEE047.AF70FB00] Wednesday, 13 November 2013 [cid:image006.jpg@01CEE047.AFAA3370]
Snapshot � Company news highlights: Glencore starts trading on JSE, BHP Perseverance mine impacted by earthquake, Kirkland Lake production in line, Ferrexpo sees credit rating downgraded, Fortescue Metals partial redemption of senior notes, Mongolia Energy Corp defaults on convertible note, Chinalco Mining completes Toromocho transmission line, Resource Generation reduces capex by c.

20%, � Commodity review highlights: Johnson Matthey platinum report sees 605koz deficit, South African platinum ETF demand likely to be sticky, gold and copper prices under pressure, European coal prices slip as long positions closed out � Other Economic News: Third Chinese plenary session concludes � African Resources update: Peace deal between DRC and M23 rebels stalls, Zambian mine workers secure 12% wage increase, Anglo Platinum suffers protestors at Mogalakwena mine � FTSE futures off 28.5 points this morning.

US markets slipped last night (Dow -0.21%, S&P -0.24%) and Asian markets are providing a weak lead (Nikkei -0.15%, Hang Seng -1.68%, ASX200 -1.37%).

Uncertainty about the time and pace of Fed tapering is driving markets lower despite speeches from Fed officials Lockhart and Kocherlakita, data due tomorrow and Friday should provide further clues and we expect markets to drift lower until then.

In China, following the third Plenum meeting, the communist party agreed to offer the market a greater role in the economy as part of sweeping reforms however the Shanghai Composite Index is trading down 1.83%.

In the UK, a large amount of data out this morning including the BOE inflation report where expectations are for an upgrade to growth projects and a faster fall in unemployment. � Commodity markets - gold +0.37% (US$1,272.80/oz), silver +0.14% (US$20.7733/oz), copper -0.97% (US$3.2025/lb), iron ore -0.00% (US$135.90/t), platinum -0.28% (US$1,435.50/oz), WTI +0.24% (US$93.26/bbl), and Brent +0.40% (US$106.23/bbl).

Dual listed - BHP AU -1.05% (A$37.63), RIO AU -0.11% (A$64.63).

Copper slid on US Fed tapering speculation.

3 month LME futures traded down nearly 1% to US$7,120/t.

Iron ore remained flat at US$135.90/t, however futures were up over 1% overnight despite data showing that shipments from Port Hedland continue to remain at record levels.

In the oil space, the IEA has stated that the US will overtake Saudi Arabia and Russia to become the worlds top oil producer in 2015, but by 2020 the Middle East will regain its dominance as production from the oilfields of Texas and North Dakota will fall.

Gold continued its horrible slide downwards, trading at US$1,282/oz overnight and closing in on its worst year since 1981 when it fell 33.4%. � Economic data due today: US - MBA mortgage applications, monthly budget statement (forecast -$102bn).

Eurozone - Italian government debt, EC industrial production (forecast -0.3%).

UK - claimant count (forecast 3.9%), jobless claims change (-30K), average weekly earnings (0.7%), unemployment rate ILO (7.6%), BOE inflation report.
Company News � Glencore (GLEN LN) to start trading shares on the JSE today.

Source: Company Investec View: This is a sensible move by the company as it will offer South African investors a globally diversified resources opportunity with limited iron ore exposure that may well be attractive.

Furthermore, it would likely assist the group with undertaking any local transaction opportunities that may present themselves. � Seismic event reduces BHP Billitons (BLT LN) nickel output.

A minor earthquake has closed operations at Perseverance in Western Australia.

While all other operation remains unaffected, the company has warned that the mine suspension is likely to impact 2Q14E saleable production.

BLTs nickel production had increased by 9% YoY in the 1Q14A to 40kt.

Source: Reuters, Company � Kirkland Lake (KGI LN) 2Q14 production in-line.

KGI has reported 2Q14 production of 34,935oz from 12.0g/t ore, very close to our analysts 34,280oz from 11.7g/t ore.

KGI states that production growth will accelerate in the 2H14, but that FY14E production is likely to come in nearer the lower end of the guidance range of 150-180koz.

Source: Company Investec view.

Our analyst had been assuming 154koz in FY14E so sees no reason to alter FY14E forecasts.

Delivered ore grades of around 12g/t are already very good, so the key to increasing gold production in the 2H and beyond is lifting ore volumes.

Increased shaft capacity is now in place and the plant has ample capacity to accommodate current production rates, with skilled labour the key constraint currently.

KGIs ore production in the 2Q was 8% higher than in the 1Q and it should accelerate this trend as the expanded workforce is increasingly skilled. � Ferrexpo (FXPO LN) Fitch rating downgrade.

Fitch has downgraded 11 Ukrainian companies following the agencys rating downgrade on the country to B- outlook negative.

FXPO was one of the 11 companies to be downgraded, with various of its ratings downgraded to B-, outlook negative.

Source: Reuters Investec view: While this downgrade does not affect FXPOs business, it could be viewed as an unhelpful development for the group which we believe is likely to approach the debt markets for funding for its potential expansion. � Fortescue Metals Group (FMG AU) partial redemption of senior unsecured notes due in 2015.

FMG will voluntarily redeem US$1bn of the US$2.04bn senior unsecured notes due 2015 on 20 December 2013 at a 3.5% premium to par.

The remaining balance will be redeemed in advance of maturity subject to market conditions.

Source: Company Investec view: FMG continues to prioritise the de-gearing of its balance sheet.

The company has now repaid A$140m of preference shares with a coupon of 9%, re-priced its US$4.95bn term loan and repaid early US$1bn of debt with a coupon of 7%.

Based on these measures FMGs annual interest expense has already reduced by US$132m pa. � Mongolia Energy Corporation (276 HK) defaults on convertible note.

MEC has failed to redeem the principal and repay the interest on its HKD466.8m Sculptor Finance (SF) convertible note that was due on 12 November 2013.

MECs default on the redemption of the SF note triggers HKD2.4bn of early redemption obligations under other existing convertible notes.

The SF note holders have proposed a conditional 6 month moratorium on repayment of the note.

Sculptor Finance is managed by hedge fund Och Ziff.

Source: Company Investec view: MEC is severely distressed.

The company had already deferred redemption of an HKD300m convertible note due to Golden Infinity on 6 September 2013 that was to be repaid before 31 December 2013.

In addition, MEC has triggered early redemption obligations of an HKD2bn convertible that was due to Chow Tai Fook on 15 June 2014.

These notes are well out of the money and we think it will be challenging for MEC to redeem these notes or renegotiate terms.

MECs primary asset is the Khushuut coal mine in far-west Mongolia which is on effective care and maintenance and uneconomic at current coal prices. � Chinalco Mining (3668 HK) completes Toromocho transmission line.

Chinalco Mining reiterated that its Toromocho copper project in Peru remains on track to commence production before 15 December 2013.

The recent completion of a 220kV power transmission line to site will allow commissioning of key equipment including the SAG mill.

Toromocho is expected to reach full capacity in SepQ14 and capex for the first phase of the project was c.

US$3.5bn for ore processing capacity of 117,200tpd (42.7mtpa).

Source: Company � Resource Generation (RES AU) reduces CHPP capex by c.

20%.

South African coal company Resource Generation has signed a binding term sheet with FL Smidth for design and supply of a coal handling and processing plant (CHPP) at its Bokarabelo project for under US$200m, c.

US$50m beneath the companys initial estimate.

The Danish export credit agency will guarantee debt for half the cost of the CHPP.

Source: Company Investec view: This is a positive development for Resource Generation, which is targeting 6mtpa of saleable coal production at its Bokarabelo project with first production in late 2015.

Project financing is yet to be arranged but with a cash balance of c.

US$80m, the company is in a strong position.
[cid:image007.png@01CEE047.AFAA3370] Commodities News � Johnson Matthey interim review sees deficit.

Johnson Matthey said that platinum demand is forecast to exceed primary and secondary supplies by 605,000oz.

The 2012 deficit was 340,000oz.

Demand from industrial users and investors continue to outweigh a fall in auto and jewellery demand.

A third consecutive year of deficit is likely in 2014.

Source: Johnson Matthey Investec view: This analysis is positive for the platinum sector, although we believe that there needs to be a step change in auto demand for PGM prices to really start to respond.

Since the beginning of 2012, the platinum price has been volatile but has broadly trended downwards.

This leads us to believe that the production deficits reported and forecast are not having a materially positive impact on PGM prices. � Major South African platinum ETF holdings likely to be sticky.

Local investors view it as a hedge against local inflation according to Johnson Matthey.

Other market participants have raised concerns over the potential for some of the holdings to liquidate rapidly and undermine prices similarly to what happened in gold earlier this year.

Source: Mining MX � Gold prices creeping up in morning trading but threatens to slip due to uncertainty over US stimulus measures, following last weeks jobs data leading market participants to speculate over tapering to start in December.

Source: Thomson Reuters � Copper prices falling sharply over concerns of falling investment demand for the metal due to the threat of tapering and an absence of detail following Chinas economic reform meeting.

China consumes around 40% of the worlds refined copper output.

Source: Thomson Reuters � European coal prices slip as trading houses close out long positions despite comments that Colombian Cerejon mine may struggle to meet targets.

Spot coal prices for delivery in Europe stood at US$84.25/t yesterday, down 70c/t.

Cold weather is anticipated to trigger higher demand in the next two weeks or so.

Source: Thomson Reuters
Other economic news � Third Plenary Session concludes.

Top Chinese Communist Party leaders concluded their four day conference and released a statement heavy on broad principles and light on details indicating that reforms would make the markets decisive in allocating resources while the state remains dominant in the economy.

Source: Xinhua, Bloomberg Investec view: The plenum communique has generally disappointed market commentators given a lack of specificity and the incremental nature of proposed reforms.

We expect more detailed proposals to emerge in the coming weeks following the plenum.

One focus area relevant to commodities was the emphasis on improved environmental protection, where the party will draw a red line, which could lead to reforms in mining taxes and closure of inefficient and polluting downstream processing.
African Resources update � Anglo American Platinum (AMS SJ) protestors at Mogalakwena mine.

AMS said that community members were protesting on Wednesday at the Mogalakwena mine, demanding that the company give them permanent employment.

Five trucks have been damaged.

Source: Reuters � Uganda-led peace deal between DRC and M23 stalls.

A peace deal between the DRC and the M23 Movement has stalled after government representatives refused to enter the room where the treaty was to be signed.

The DRC delegation is now studying the agreement document to ensure it conforms to what they negotiated.

The DRC government wants the rebels to pledge not to take up arms again.

A new date for a signing ceremony will be set up if and when both parties are ready to progress.

Source: The Africa Report & Thomson Reuters � Mineworkers Union of Zambia agrees to a 12% wage increase.

The Mineworkers Union of Zambia has agreed to a 12% wage increase with Chinas Jinchuan Group.

The agreement covers workers at the Chibuluma mine.

Source: Bloomberg Investec view: The agreement is likely to form something of a benchmark for other Zambian copper producers.
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.