[cid:image001.png@01CFB797.12097C70] Thursday, 14 August 2014 [cid:image006.jpg@01CFB797.125CF3A0]
Snapshot � Company news highlights: Centamin Interim results, African Minerals considering changing role of chairman Frank Timis, Lucara Diamonds interims, Firestone Diamonds initiates process of Botswana asset sale, Serabi Interim, Avocet raises GBP700k, Afarak interim results � Commodity review highlights: Copper premiums and prices under pressure, A$2.2bn rail line approval for major Carmichael coal project, gold demand in China slumps � Other economic news: Legal action gathers pace over Chinese metals fraud, India looking at juniors to drive exploration � African resources update: SA government tries to accelerate growth in mining sector, Ghana inflation reaches four year high
Company news � Centamin (CEY LN) interim result weaker than we expected but higher dividend.

On the back of higher than expected 2Q operating cost of $783/oz (Investec US$690/oz), CEY delivered EBITDA of US$66.9m (Investec US$72.4m) and earnings of US$31.9m (Investec US$41.5m), for EPS of 285cps (Investec 360cps) with a maiden dividend of 87cps (Investec 50cps).

Cash and saleable assets at end of period of US$133m (US$139m at end March).

CEY is still maintaining FY14E guidance of 420koz (Investec 416koz), meaning it has to deliver 264koz in the 2H - doable, but going to be under a bit more pressure.

Stage IV commissioning going well with10mtpa rate expected to be hit in 2H.

Conference call at 9am.

Source: Company Investec view: The solid maiden dividend is a good start for a company, which intends to be a meaningful dividend payer.

With the capital program now winding down, our analyst expects to see a meaningful lift in free cash generation going ahead, underpinning the ability to pay dividends. � African Minerals (AMI LN) pondering Frank Timiss role.

Press reports suggest the AMI board is considering changing the role of its executive chairman, with director Roger Liddell stating at the AGM that "Franks hands-on role is very important but this is not an ideal structure longer term" and that the board was considering replacing Timis as chairman in the medium term.

Source: Reuters, FT. Investec view: Any restructuring will of course have to consider that SISG has an option to sell back its 25% stake in the Tonkolili project to African Minerals if Frank resigns voluntarily from the board. � Lucara Diamonds (LUC CN) H1 results reflects revenues of US$128.6m and increases forecast for the year to US$240-250m selling stones at an average price of US$540/carat for an operating expense of US$124/carat leading to net income US$20.7m and adjusted EPS of 13cps and cash of US$82.1m at the end of the period.

The company continues to pay dividends with a policy reflective of values derived from larger stones recovered with a third tender exceptional stone tender planned for Q4 as the Karowe mine continues to deliver.

Source: Company � Firestone Diamonds (FDI LN) disposal process started with regards to Botswana operations as it focusses on its flagship Liqhobong mine development in Lesotho.

The companys principal investment is the BK11 diamond mine that was put on care and maintenance in February 2012.

The mine plan of the asset would process 1.5mt of ore over 10 years at an average grade of 8.5cpht, with scope to extend the mine life through delineation of more reserves at depth.

The tax loss on the asset is estimated at US$45m at the end of June.

Source: Company Investec View: The decision to divest of non-core assets we believe is sensible and appropriate as focussing on Liquobongs development is the best means to deliver value for shareholders and therefore important that management or company resources are not diverted.

BK11 was a tough project, developed under the previous management team.

We would hope with a firming outlook for diamond prices there is scope for it deliver some value that FDI can realise through its sale. � Serabi Mining (SRB LN) interim result highlights commercial production at Palito from 1st July.

The company sold 3,900oz in H1 delivering revenues of US$5.2m.

Subsequent to a placing in March of GB10m, the company had cash of US$5.9m at the end of June.

Operations are gathering pace at Palito with the company anticipating a strong H2 on course to deliver production of 23-24kozpa.

Source: Company � Avocet Mining (AVM LN) raises GBP700k by placing 9.95m shares at 7.13p/share, a discount of 5% on yesterdays closing price.

Major shareholder Elliott subscribed for 26% of the lacing resulting in a post placing stake of 27.69% of the company.

Second largest shareholder Prelas AS took 50% of placing leading to a stake of 6.87%.

Funds will be used to support corporate activities in London and Guinea.

Source: Company Investec View: Clearly the budget is tight, as indicated in the interim results the company faces a cash shortfall of US$15-20m (lower than previously indicated) and does have options to evolve its asset base subject to financing. � Afarak (AFRK LN) interim results and updated outlook.

The company has reported a mixed result with significantly improved revenues YoY (up 44%) as a result of increased volumes but with EBITDA down 39% to EUR6.4m, while EPS was 1cps versus a loss of 1cps a year ago.

Operating cash outflow in the 2Q was EUR0.2m (EUR4.8m inflow in 2Q13A), leaving liquid funds at 30 June of EUR 17m, close to last years $17.7m.

The company still expects its overall FY14E financial performance to be better than FY13A, with improved revenue and EBIT, but EBITDA is now expected to be lower than FY13A.

Source: Company Investec view: While reporting on improved market conditions, the company laments that product pricing has not yet responded to the increased demand.
[cid:image007.png@01CFB797.125CF3A0] Commodities news � Copper premiums at lowest in a year at US$70-100/t in Europe, from around US$100/t last month with traders and consumers holding adequate stocks and weaker seasonal demand.

Copper prices are trading close to 6 week lows.

Availability of copper concentrates has increased with expectation of a growing surplus in H2.

Chinese copper imports may also be weaker in response to the financing scam that took place and tightening credit with local banks cutting lending.

Source: Thomson Reuters � A$15bn Carmichael coal project sees approval of A$2.2bn rail line that will extend 300km to connect the mine to the east coast port of Abbot Point.

Indian company Adani Mining is to be the operator for this major asset that would become Australias largest coal mine producing 60mtpa.

Source: Thomson Reuters � Gold demand in China in the 2Q slumps 52% YoY.

Purchases in the three months to June dropped 52% YoY to 192.5t.

The World Gold Council reports that almost every Asian economy bought less bullion in the period as demand across region shrank 46% to 470.9t.

While a YoY comparison is skewed by the buying frenzy that took place in the previous corresponding period as the gold price plummeted, current Chinese demand is also weaker on the back of a clampdown on corruption.

Demand in the 2Q remained above the level in the 2Q12, a year thought to be "typical" for Chinas consumption.

Source: Bloomberg
Other economic news � Legal tussles gather pace following Chinese metals fraud at Qindao port with Trafigura now initiating legal action against two units of Citi Bank and trade house Mercuria Energy (which has also raised proceedings against Citi Bank).

Other groups involved in initiating law suits and counter law suits over an estimated US$1bn exposure to the fraud include Standard Bank and Standard Chartered Bank.

Source: Thomson Reuters Investec View: Clearly the situation will take some time to unknot as the Chinese investigation continues into the alleged fraud. � India looking at juniors to drive exploration.

The Federation of Indian Mineral Industries (FIMI) is urging the Indian government to provide a framework to attract foreign and domestic junior exploration companies.

The FIMI president notes that most mineral-rich countries do not spend taxpayers money on exploration but encourage junior miners to undertake exploration at their own cost.

In those areas of India where mineral exploration is the exclusive domain of the government, absolute investment in exploration averages about $7/km2.

This pales next to $359/km2 in Chile, $88/km2 in Canada, and $20/km2 in Brazil.

Source: MiningWeekly
African resources update � SA Mining commences Operation "Hurry Up".

Minister in the Presidency, Jeff Radebe, announced last night that an Operation Phakisa (Hurry Up) for the mining sector, aimed at realising its full GDP potential, was underway in consultation with all the key stakeholders.

Radebe said that mining would have a shorter Phakisa horizon of 2025 and a target several times higher than the current GDP, which had declined considerably from the 1970s.

The Phakisa concept drew on the experience of the Malaysian government in improving the performance of its government and economy and involved all stakeholders in the implementation of detailed action plans that were then rigorously monitored.

Source: MiningWeekly � Ghana annual inflation reaches four year high of 15.3%, from 15.0% in June, with price of utilities and fuel contributing as well as the depreciation of the local currency.

Source: Thomson Reuters � Todays African Proverb.

"He who chases a fowl should expect to fall down".

Source: BBC
Investec Global Natural Resources Research Team: UK South Africa
Hunter Hillcoat Tel: +44 (0) 20 7597 5182
Albert Minassian Tel: +27 (0) 21 416 1454
Marc Elliott Tel: +44 (0) 20 7597 5189
Investec Global Natural Resources Sales Team: UK Hong Kong South Africa Adam Bidwell Tel: +44 (0) 20 7597 5089
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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