[cid:image001.png@01CF6F4B.B66F46D0] Wednesday, 14 May 2014 [cid:image003.jpg@01CF6F4C.0D082930]
Snapshot � Company news highlights: London Mining research note looks at scenarios, Rio Tinto Pilbara operations hit 290mtpa run rate, Rio states Simandou development wont be impacted by legal actions, Rios Oyu Tolgoi received financing extension from banks for underground development, BHP formalising nickel asset sale, Vedantas (VED LN) Agarwal rebuffs privatisation rumours, Lonmin workers militant protest on return to work day, Talvivaara to delist, EMED quarterly, Discovery Metals recapitalisation proposal lapses, Gindalbie Metals Karara project secures US$300m loan facility, Hot Chili receives US$25m debt facility, Bumi quarterly earnings � Commodity review highlights: Chinese steel rebar near record low, platinum and palladium holding onto gains, US gold output up sharply, Turkey coal mine explosion kills 201 people � Other economic news: Commodities gaining greater appeal, Bank of China plans to raise US$16bn to comply with government requirements. � African resources update: AMCU applies to prevent employers contacting employees, South African mining production declined, Bob Diamond seeks US$400m to back African investments, Essar setting up Zimbabwe steel plant, Todays African proverb � Market notes: FTSE futures up 10.5 points.

US markets pushed to new highs again (Dow +0.12%, S&P +0.04%) thanks to a positive revision to the March retail sales print offsetting the weaker April number.

Asian markets are mixed (Nikkei -0.14%, Hang Seng +1.06%, ASX200 -0.03%) with misses across the board from Chinese IP, FAI and retails sales adding more fuel to the slowdown argument.

Some concerns are starting to build regarding the strength of the German economy with investor confidence levels falling to the lowest level in more than a year.

In the US we will be looking for further signs of a strengthening economy from producer prices and homebuilder confidence whilst German and French inflation numbers will provide some scope for any further ECB stimulus measures. Commodity markets - gold +0.03% $1,294/oz, silver 0.00% $19.54/oz, platinum +0.08% $1,457/oz, copper +0.10%, $3.14/lb, nickel +0.33% $20,966/t, iron ore +0.29% $103.00/t, thermal coal $78.50, WTI +0.33% $102.04/bbl, Brent +0.22% $109.48/bbl, zinc -0.72% $2,054/t.

Dual listed - BHP +0.99% A$38.34, RIO -0.24% A$62.70.

Commentary suggest the massive run in the nickel price may be starting to fade with the relative strength index rising to 91 whilst other investment banks are predicting the price to surge towards US$30,000/t by the end of 2015.

WTI and Brent continue to rise after the API report revealed a 590,000 drop in Cushing crude inventories in the US. Economic data due today: US - MBA mortgage applications, PPI final demand MoM (forecast 0.2%).

Eurozone - German CPI MOM (-0.2% actual), French CPI MoM (0.1% actual), Spanish CPI MoM (forecast 0.9%), UK claimant count (3.3%), UK jobless claims change (-30K), UK average weekly earnings (2.1%), BOE inflation report, EC industrial production MoM (forecast -0.3%).
Company news � Research note on London Mining (LOND LN).

Update note post capital reschedule and announcement of strategic partner search and potential 8mtpa expansion.

We look at the NPVs and cash flow profiles under various scenarios, including where LOND sells down a 25% interest in Marampa and then expands to 8mtpa, with both scenarios value accretive (the latter scenario accretive even under bearish iron ore prices).

LOND joins a long list of iron ore companies seeking strategic partners, but its position as an established producer should garner it genuine interest.

The question is whether it can do so at attractive terms.

Source: Investec � Rio Tintos (RIO AU) Pilbara iron ore operations reach 290mtpa rate.

Rio Tinto announced that its Pilbara iron ore operations have reached the 290mtpa production rate two months ahead of schedule.

Rio Tinto will now focus on the expansion to 360mtpa.

The company expects some variability in its run rate as it completes the expansion to 360mtpa and as it integrates its automated heavy-haul rail system (AutoHaul�).

Source: Company Investec view: The 360mtpa expansion infrastructure will be completed by the end of 1H15 and mine capacity will be increased by >60mtpa between 2014 and 2017.

Mine production of more than 330mt is expected by the company in 2015. � RIO Tinto (RIO LN) states that legal actions wont impact Simandou development plans.

In a May 12 letter to the Guinean mines minister, the CEO of RIOs diamonds and minerals division has assured Guinea that its legal dispute with Vale and BSG wont affect a plan to build a mine.

"Rio Tinto wishes to clarify that this is a damages claim, and not a claim for reinstatement of the mining titles in question, nor in any way an action against the government".

Source: Bloomberg Investec view: While stating that the claim wont impede the "timely development" of the $20bn Simandou project, the company also announced that it was ahead of schedule with its Pilbara expansion.

Clearly additional supply from the Pilbara (and from the other big projects now coming on stream globally) impact the economics of developing Simandou � Rio Tinto (RIO LN) 6 month financing extension to commitment to fund underground expansion at Oyu Tolgoi following a new feasibility study.

A syndicate of 14 banks are supporting facilities that stand at around US$4bn.

The underground development was put on hold last year following Mongolian government concerns of cost overruns.

Source: Thomson Reuters � BHP Billiton (BLT LN) formalising the mooted nickel asset sale.

The company has stated that it is in talks to sell its Western Australia-based nickel business, but that it would not comment on the timing or outcomes.

Source: Company Investec view: The currently higher-nickel prices provide a more attractive environment to divest the nickel assets, with the manganese and aluminium business also potentially on the block.

Our analyst values the nickel business at $0.7bn. � Vedantas (VED LN) Agarwal rebuffs privatisation rumours.

The Billionaire founder of VED has built up his position in the company by 4 percentage points to almost 70% between December 2013 and March 2014.

He has rebuffed speculation that he plans to delist his company to simplify the groups complex corporate structure.

Source: FT � Lonmin (LMI LN) news reports 1,000 protesting workers barricaded roads and torched roadside vegetable stores near Lonmins Marikana Mine.

The company has been hoping for a return to work today, however, clearly staunch AMCU supporters are using aggressive intimidation tactics to prevent a split in the union as the mining companies have been approaching workers directly to encourage them to return.

Police are apparently present.

Source: Thomson Reuters Investec View: We will wait to see how successful the push to get workers back will be, however, in light of the militant protest, and the likely threat of further violence we would not be surprised if the turnout is weak. � Talvivaara (TALV LN) to delist.

At its forthcoming AGM, TALV will propose to delist from the London Stock Exchange to conserve cash and because a very large majority of shareholders trade their shares on the Helsinki exchange.

The resolution will need a 75% majority.

Source: Company Investec view: This decision is perhaps unsurprising given the operational issues which TALV has faced and the subsequent poor performance of the companys shares.

Presumably TALV has in excess of 75% of its shareholders in Helsinki in order to propose this solution. � EMED (EMED LN) mining quarterly update outlines ongoing progress as further permitting requirements have been fulfilled as well as changes in management.

At the end of the period the company had cash of Euro5.774m.

Operating cash flows were up nearly two fold yoy to Euro2.4m with financing costs up materially.

Net quarterly cash outflow totalled Euro5.626m.

Source: Company � Discovery Metals (DML AU) recapitalisation proposal lapses.

Discovery Metals, owner of the Boseto copper project in Botswana, announced that the US$105m recapitalisation proposal from Montsant Partners has lapsed and the conditional non-binding term sheet is now at an end.

Source: Company Investec view: The company is now negotiating directly with its lenders on the re-profiling of its project financing facility and revolving credit facility. � Gindalbie Metals Karara project (GBG AU) secures US$300m loan facility.

Karara Mining (52.16% Ansteel, 47.84% Gindalbie) has secured a US$300m fixed term loan from China Merchants Bank to meet the funding shortfall for the Karara iron ore project located 200km east of Geraldton, Western Australia.

Source: Company � Hot Chili (HCH AU) receives 12 month US$25m secured debt facility from Sprott Resource Lending.

Hot Chili has executed a term sheet with Sprott Resource Lending for a US$25m secured debt facility.

The facility can be extended by a further 12 months for a 2% extension fee.

The agreement also includes a 1% fee and 11m equity options at A$0.4/share over a 5 year period.

Proceeds will be applied towards completion of the Productora copper project pre-feasibility study, further drilling, working capital and initial definitive feasibility studies.

Source: Company � Bumi Resources (BUMI IJ) reports MarQ14 earnings of US$330m.

Bumi Resources reported MarQ14 earnings of US$330m, considerably better than the US$73.4m loss in the p-c-p.

Earnings however included a US$747m gain on the sale of a 19% interest in Kaltim Prima Coal to China Investment Corporation, reducing Bumis ownership from 65% to 51%.

Gross profit in MarQ14 of US$127.3m was down 37% y-o-y.

Source: Company
[cid:image005.png@01CF6F4C.0D082930] Commodities news � Steel Rebar now near record low on China mortgage loosening.

Shanghai steel reinforcement-bar futures closed at 3,165 Yuan, the lowest close for the most-active contract since inception in 2009.

Weak home sales (-18% in Apr.

vs previous month) has prompted central bank to order the top 15 mortgage lenders to "improve efficiency of service, give timely approval and distribution of mortgages to qualified buyers", but weak demand and high supply are not assisting rebar prices.

Source: Bloomberg � Platinum and palladium holding onto yesterdays increases that were a consequence of the tensions in South Africa following four deaths of miners that wanted to return to work.

Source: Thomson Reuters Investec View: Platinum prices have not materially responded to the major supply disruptions from the strike, highlighting inventories throughout the supply/consumption chain.

Fundamentals should assert themselves and a price rally has been long overdue. � US mined gold production rises sharply.

US mined gold production was 608koz in February, up from 556koz a year ago.

In 2013, The US fell from third to fourth largest gold producer in the world, having been overtaken by Russia.

Of the total, 463koz ounces were mined in Nevada, up from 408koz in February 2013.

Source: Mineweb � Turkey coal mine explosion.

At least 201 people have been killed with hundreds more remaining trapped underground at a Turkish coal mine, when an electrical fault triggered the blast.

Source: BBC
Other economic news � Commodities gaining greater appeal.

Commodities as an asset class remain appealing as the global economic recovery extends into 2015, according to Goldman Sachs, which raised its 12-month allocation for commodities to neutral from underweight.

The commentary follows more positive stances recently being taken by Citigroup and JP Morgan.

A Barclays survey published in April showed 54% of investors planned to increase their stakes in commodities in the next 12 months versus only 27% the preceding year.

Source: Bloomberg � Bank of China plans to raise up to $16bn.

The bank is seeking Rmb100bn ($16bn) in the largest fundraising by a Chinese bank in almost four years to comply with stricter capital requirements.

This follows Agricultural Bank of China, the countrys 3rd largest, stating last week that it would be seeking Rmb80bn.

Tighter requirements introduced by the government in 2013 mean Chinas four biggest banks will face a capital shortfall by 2019 of US$87bn under the new rules.

Source: Bloomberg
African resources update � AMCU has made an urgent application to the Labour Court to prevent employers from communicating with AMCU members and other forms of contact to try and settle the labour dispute directly with employees.

The action is to be strongly opposed by the platinum producers who have rejected the proposals and the statement by AMCU that they are inducing members to resign from the union.

Source: Platinum Wage Negotiations 2014 Investec View: With violent protests taking place at the gates of Marikana and increasingly desperate action by AMCU to force producers to meet their requirements, it appears unlikely that any settlement will eventuate in the near future. � South African mining production.

According to Statistics South Africa, mining production declined by 4.7% YoY in March with platinum group metals production, which decreased by 44.3%, contributing significantly to the negative growth.

Gold production also contracted YoY, by 2.9% in March.

Iron ore, coal and manganese were up YoY at 1.7%, 1.5% and 1.2% respectively.

Source: Miningweekly Investec view: This result reflects the disruption caused by the platinum strikes, and the figures for January and February were equally poor.

Clearly April and May figures are unlikely to fare much better.

There is now a possible end in sight for the platinum strikes so mining production may improve in the near future. � Bob Diamond seeks $400m to back African investments.

Atlas Mara Co-Nvest Ltd., an investment firm backed by former Barclays Plc CEO Robert Diamond, disclosed plans for a share sale to raise c.$400m for future acquisitions.

Diamond and Ugandan entrepreneur, Anish Thakkar, raised $325m for the venture in an IPO last year, which aims to focus on Africa.

Source: Bloomberg � Essar setting up Zimbabwean steel plant.

Essars Africa Regional Director has said that the group, which owns 54% of New Zim Steel (formerly Zimbabwe Iron and Steel Company) was setting up a new 500ktpa steel plant in Zimbabwe which should be operational in 2016.

Industry experts believe that Zimbabwes annual domestic steel consumption is around 90-120,000t, meaning Essar Africa would also export.

The government and Essar Africa have now reached an agreement over iron ore claims, with Essar Africa now to access 80% of the disputed claims and the government reserving 20%.

Source: Miningmx � Todays African proverb.

"Patience puts a crown on the head".

Source: BBC
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
In the United Kingdom, this document is a "marketing communication" and not a "research recommendation" as defined by The Financial Conduct Authority (the "FCA").

This document has been produced for information purposes only and is not to be construed as investment advice or a solicitation or an offer to purchase or sell investments or related financial instruments.

Any expressions of opinion in this document are subject to change without notice.

The investments referred to in this document may not be suitable for all recipients.

Recipients of this document should make their own investment decisions based upon their own financial objectives and financial resources and, if in any doubt, should seek advice from an investment advisor. This document is not for general distribution and should not be passed, directly or indirectly, to persons outside your organisation. This document and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed, being persons who are Eligible Counterparties or Professional Clients as described in the FCA rules or persons described in Articles 19(5) (Investment professionals) or 49(2) (High net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended).

It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons and may not be relied upon by such persons and is therefore not intended for private individuals or those who would be classified as Retail Clients. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority (register number 172330) and is a member of the London Stock Exchange.

Registered office 2 Gresham Street, London, EC2V 7QP.
_____________________________________________________________________ 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 authorised and regulated by the Financial Conduct Authority for credit-related regulated activities (including hiring).

Investec Asset Finance plc is also an appointed representative of Investec Bank plc for the purposes of insurance mediation activities.

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.