🕐09.06.14 - 11:27 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - MONDAY 09 JUNE - 6198 HK, X2,
JLP LN, GGG AU, IDC AU



[cid:image001.png@01CF83B8.810F5300] Monday, 09 June 2014 [cid:image006.jpg@01CF83B8.A1BA0E60]
Snapshot � Company news highlights: Qingdao Port confirms suspension of Cu and Al shipments, Mick Davis looking to raise a further US$1.5bn for X2, Jubilee Platinum executes tailings access agreement, Greenland Minerals to raise A$8.87m, Indochine completes A$3.1m capital raising � Commodity review highlights: China May imports, Indonesia considering coal export restrictions, resumption of mining in Goa would still take 2 years, Codelco CEO resigns � Other economic news: China trade surplus increases to US$36bn in May � African resources update: New South African mines minister hopes for a solution today to strikes, Russia to invest up to US$3bn in Zimbabwe platinum mine � Market notes: In US 217,000 jobs were added in May with payrolls now past their pre-recession peak.

The VIX also hit a 7 year low of 10.73 as data showed that incomes climbed further, long-term unemployed numbers fell and businesses took on more full-time staff.

Tapering shows no signs of slowing.

In Europe, 6 year highs were passed again on the US economic news and as Italian & Irish bond yields fell to the lowest level since the introduction of the euro.

Irelands credit rating was upgraded by S&P to A- from BBB+ with a positive outlook on "brightening prospects" for the domestic economy.

The IMF has stated that it underestimated the strength of the UK economy when warning against austerity, with Christine Lagarde stating she "got it wrong".

A report in the FT over the weekend also focusses UK housing, stating that UK house buyers are "ill-prepared" for the forthcoming rise in interest rates.

In China, trade data was released on Saturday with exports beating forecasts to take the trade surplus US$35.92bn and causing many to revisit their concerns on the economic slowdown.

This comes as the CBRC stated it will push for an expansion in funds available in the real economy to aid growth.

Banks will see their Loan-Deposit ratio limits eased by including some interbank deposits in the calculation, giving more room to lend. � Commodities: Copper weak in response to ongoing concerns from the probe into collateral based financing transactions at Qingdao port has expanded to over 10 banks and traders.

Data released also showed net long positions also fell by 24% to 16.2k contracts last week, the most in a month, as concerns grow over falling demand from China.

Iron ore steadied its ship after finishing the week in the green at US$94.50/t, with local Chinese traders reportedly stepping back into the market Worth noting that the results of the latest ballot on strike action at Port Hedland by tugboat workers is due tomorrow.

Palladium futures rose to a 34mth high as the feud between miners and workers in South Africa continued with prospects for an agreement weakening after the AMCU union looked for more changes over the weekend.

August gold futures fell to US$1,252.50/oz on the better US data with prices still firmly under the 50, 100 and 200DMA levels.

Finally, the UN Environment Programs International Resource Panel has stated that global use of minerals, ores, fossil fuels and biomass will reach 140Btpa by 2050, 3x what it was in 2000, and will probably exceed all existing available resources and the limits of the planet to absorb the impacts of their use. � Data Due: China: Association of Automobile Manufacturers May Sales Data, EU - Sentix Investor Confidence Data; Italy - Bank of Italy Report on Balance Sheet Aggregates, Japan - 1Q GDP 2nd reading (ACTUAL 6.7% fcst, 5.6% QoQ annualised); April Current Account (ACTUAL JPY187
Company news � Qingdao Port (6198 HK) confirms aluminium/copper shipments suspended for one cargo owner.

Qingdao Port has clarified that it continues to provide regular port services for all metal ore products, including aluminium and copper products, other than for certain aluminium and copper products stored under the name of a third party cargo shipment agency on behalf of a cargo owner that are subject to a fraud investigation by the Chinese government.

Source: Company Investec view: Qingdao Ports announcement that just one customer is subject to the Chinese governments inventory financing fraud investigation suggests that impact from the current action is limited.

It is nevertheless clear that the Chinese government is more aggressively cracking down on trade financing deals designed to arbitrage forex and interest rates, which could lead to an unwinding of the deals and pressure spot metal prices while providing support to futures. � Mick Davis X2 looking to raise a further US$1.5bn.

X2 is reportedly looking to raise a further US$1.5bn from up to 15 institutional investors.

In March 2014 X2 raised US$2.5bn from investors including TPG and Noble Group.

X2 plans to utilise funds to acquire assets being divested by the majors.

Source: Bloomberg � Jubilee Platinum (JLP LN) executes tailings access agreement with ASA Metals that will give JLP the right to access PGM bearing tailings on the DCM mine area as well as the right to construct a dedicated chrome and PGM processing plant with ASA agreeing to provide power and water for such an operation.

The tailings comprise 800kt of material containing 74koz 4E PGM, which JLP could process at a minimum rate of 180ktpa.

DCM continues to add to the tailings at around 8-12ktpm.

Source: Thomson Reuters � Greenland Minerals (GGG AU) announces fully underwritten rights issue.

Greenland Minerals has announced an A$8.87m fully underwritten renounceable rights issue.

The rights issue is at a 30% discount to the 1 month VWAP and will include free attaching options (A$0.2/share exercise price, 30 June 2016).

Proceeds will be used to finalise a mining licence application at the Kvanefjeld rare earth/uranium project in Greenland.

Source: Company � Indochine (IDC AU) completes A$3.1m capital raising.

Indochine Mining has completed a A$3.1m capital raising (73.4m shares at A$0.042/share), mainly to major existing shareholders.

Proceeds will be used for working capital and to progress discussions with potential investors in the Mt Kare gold project.

Source: Company
[cid:image007.png@01CF83B8.A1BA0E60] Commodities news � China May imports: Iron ore imports fall MoM to 77.4mt of iron ore in May, down 10.2% MoM but up 12.9% YoY.

Copper imports fell15.6% mom to 380kt as higher prices prompted some end users to delay buying spot material.

Coal imports fell 11.4% mom to 24.01mt as weaker domestic prices made imports less attractive.

Source: Bloomberg & Thomson Reuters � Indonesia is considering new regulations to limit coal production and tighten up on exports.

Around 70% of total production is exported largely to China and India, however, the government is interested in constraining this as demand for the fuel in power stations is expected to rise 13% this year and next.

The country was targeting output of 421mt this year.

Weaker prices are prompting some of the key domestic producers to boost output to maintain earnings.

Source: Thomson Reuters Investec View: If the Indonesian government is successful at introducing such a policy, then this will be welcome news by other coal producers around the world as the market struggles with significant oversupply depressing prices. � Early resumption of iron ore mining in Goa could take two years despite the local government being expected to finalise the draft of the mandatory new mining policy by the end of the month and subsequently grant new mining leases.

Even after being granted mining leases a miner would still have to apply for mandatory approvals from the ministry of Environment and Forest, Goa State pollution control board , and the Indian Bureau of Mines for mining plan approval, a process that could take two years.

Source: Mining Weekly Investec View: Clearly doing business in India remains highly bureaucratic making it a challenging environment to operate in. � Codelco CEO, Thomas Keller resigns.

The CEO of Chilean state-owned copper producer, Codelco, has been asked to resign by the board.

Thomas Kellers resignation is reportedly due to his focus on cost cutting and the need to invest to prevent a fall in output.

Source: Bloomberg Investec view: Codelco accounts for c.

10% of global copper output, producing 1.79mt of copper in 2013.
Other economic news � Chinas trade surplus increases to US$36bn in May.

Chinas trade surplus increased to US$36bn in May 2014 as exports increased 7% MoM on strengthening global demand and as imports fell 1.6% MoM.

Source: Bloomberg
African resources update � New South African mines minister indicated at the weekend that he had done enough work to mediate between AMCU and the PGM miners to resolve the strike action in talks set to take place today.

However, despite hopes of reaching a solution he indicated strike action could yet continue.

Anglo American CEO recently defended Amplats refusal to meet wage demands citing that they were unaffordable and highlighted that the productivity of workers needed to improve with the example that SA workers are paid a fifth of Australian workers, however their productivity was a tenth.

Source: Thomson Reuters & Mining MX � Russia to invest up to US$3bn in Zimbabwean platinum mine.

Vi Holding, a consortium of Russian companies including Rostec and Vneseconombank, will undertake exploration at the Darwendale platinum deposit in Zimbabwe with the ultimate aim of developing a US$3bn mine.

The consortium plans to finish exploration work this year and begin construction of the first stage of the mine and processing plant in 2015.

Total production capacity could be 600koz pa of platinum.

Vi Holdings acquired a 40% interest in Ruschrome, holder of the Darwendale mining license, in August 2013.

Source: Bloomberg
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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