Anglo American (Price: 28511c | Target: 29800c | Rec: Hold) The largest deviation from production capacity is the well flagged impact of the strike-affected platinum business in SA.

Other than that, operations seem to have met their challenges and delivered volumes in line or modestly above our expectations.

1H production numbers are in general near enough the run rate required to meet our full year expectations hence we leave our forecasts and TP unchanged. * Platinum production, flat on 1Q14, was 8% ahead of our expectations, but bearing in mind that quarterly PGM production volatility is high and it was strike impacted we don’t think this is too significant.

Copper had a good performance, 2% ahead of our expectations as Los Bronces was able to compensate declines elsewhere.

Midway through the year copper output is around 5-10% above that guided by the company and we think there is modest upside risk here although we expect lower production going forward.

Iron ore production was also 2% ahead of our forecast, mostly from above nominal capacity performance at Kolomela.

Waste stripping operations at Sishen remained challenging although output and exports were in line or slightly ahead of our expectations. * Good performance also in nickel mainly from Barro Alto, but less relevant to earnings (3-4% of revenues).

Thermal coal saw stable production and coal production was modestly lower, in a low-price environment.

The company delivered a good performance in diamonds, within annual guidance range. * 1H14 financial results are due 25 July.

The biggest challenge for the company in the near term, in our view, is ramping up platinum output following the strike (something that could adversely impact the platinum price as Amplats and competitors resume normal operations) as well as making the tough but needed decisions regarding restructuring/disposals in the platinum business.

There could also be disposals in other business units in the medium term in line with the company’s intention to exit non-core business.
To access the full note please click here Analyst: Albert Minassian +27 21 416 1454
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