🕐11.09.14 - 11:27 Uhr

INVESTEC GLOBAL NATURAL RESOURCES DAILY - MINING - THURSDAY 11TH SEPTEMBER - ANG
SJ, AUE LN, CLF US, AMI LN, 486 HK



[cid:image001.png@01CFCD98.1508B910] Thursday, 11 September 2014 [cid:image006.jpg@01CFCD98.1F0220F0]
Snapshot � Company news highlights: AngloGolds equity plan opposed by Paulson, New Liberty construction update from Aureus, another Cliffs Natural Resources director quits, African Minerals 1H14A results update � Commodity review highlights: Rebar remains near record low as Baoshan Steel cuts its prices, Chinese coal market - usage to fall further?, Rusal forecasting continued strength in aluminium market � Other economic news: One in 10 Australian explorers no longer exploring, Chinese banks: more concerns over bad debts � African resources update: Expensive bond issue for Ghana, Todays African Proverb
Company news � AngloGolds (ANG SJ) equity plan opposed by Paulson.

John Paulson, whose hedge fund holds 6.6% of ANG, has said that he opposes the companys plan to raise $2.1bn as it spins off non-South African assets, noting that he approves the concept but not the execution, which includes "this massive dilutive equity offering, its value- destructive".

Overall he feels that the limited benefits of the spinoff are outweighed by the dilution.

Source: Bloomberg Investec view.

Clearly the market agrees with Paulson, with the companys ADRs falling 16%, the biggest one-day drop since October 2008 according to Bloomberg. � New Liberty construction update from Aureus (AUE LN).

The company reports that, despite Ebola concerns in the region and the resultant impact on logistics, construction of the New Liberty project remains on track for first gold in Q1 2015 and to be fully commissioned and operating at a steady-state nameplate capacity by mid-2015.

The project is now technically 62% complete.

Significant milestones include completion of the creek diversion project and successful relocation of all families from Kinjor village.

Source: Company � Another Cliffs Natural Resources (CLF US) director quits.

Richard Riederer has stepped down and in a letter to CLFs new chairman and CEO, Lourenco Goncalves, he criticised Goncalves approach to corporate governance and the lack of (legacy) director inclusion in decision-making, stating that the issue stems from resolutions being presented for approval with no input from the board and an "unwillingness to discuss options and bullying of directors who suggested considering other options." He expressed concern over what he believed was a short-term oriented plan to liquidate Cliffs assets in an unfavourable pricing environment.

Timothy Sullivan stepped down in August, saying that new directors elected in Casablanca Capitals proxy battle had failed to work with the companys legacy directors.

Source: SNL � African Minerals (AMI LN) to report its 1H14A results on 30 September.

The Company reports that there remain no cases of Ebola at its sites and that its operations remain unaffected.

It expects to continue operations and exports over the government-proposed restricted period (18 to 21 September) without causing material disruption.

AML remains on track to export 16-18Mtpa for 2014.

Source: Company Investec view.

With the company now trading at around 30% the levels it was trading at by end of FY14A, shareholders will be hoping that the financial results include some information that can provide comfort to the market, justifying why the results come out 6-8 weeks later than its peers.
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Commodities news � Rebar remains near record low as Baoshan Steel cuts its prices.

Baoshan Steel (600019 CH), Chinas biggest publicly-traded steelmaker, has cut its cold- and hot-rolled product prices for October, highlighting oversupply and adding to the pressure on futures.

Meanwhile spot iron ore at Qingdao fell 1.5% yesterday to $82.22/y, the lowest since Sept.

2009.

Traders have reported that along with increasing supply from miners, Chinese traders are also clearing their stocks at the ports, even selling some cargoes at a loss as prices could fall some more.

The difference between domestic iron ore and seaborne fell 0.1% to $24.84/t.

Source; Bloomberg Investec view: We note an article in the AFR citing Roy Hill Holdings CEO, Barry Fitzgerald, saying that declining iron ore price isnt of concern to Gina Rineharts venture.

While the 55mtpa projects break-even cost per ton is confidential information, the company states that is comfortable with where it is at in lower quartile of the cost curve.

Full steam ahead and damn the icebergs. � Chinese coal market - usage to fall further? The State Council stated overnight that it is looking at a draft air pollution law that will see the cut in the production, import & sale of coal that doesnt meet quality standards, as well as the reduction in the use of coal in Chinas energy mix.

This comes hot on the heels of a report released by Greenpeace that showed coal use in 1H14 dropped for the first time this century and that coal use and GDP growth have decoupled.

The recent trade data this week showed continuing weakening of coal imports, now expected to fall 8% this year.

Source: State Council website, Bloomberg � Rusal (486 HK) forecasting continued strength in aluminium market.

Rusal stated overnight that it does not expect any material impact in the aluminium market if the outcome of the LME warehousing appeal in the UK High Court results in increased load out rates.

It cited data showing that the 5 largest LME warehouses have shown net outflows, consistent with emergence of a market deficit and a lack of new projects, as well stronger producer discipline.

The High Court decision is due next month.

Source: Company Investec view: The Companys view is in contrast to various broker research pieces cited on the newswires, suggesting that the recent surge in spot prices will reduce as further stockpiles enter the market and as Chinese exports increase on the back of a continued rise in domestic capacity growth,.
Other economic news � One in 10 Australian explorers no longer exploring.

According to data from BDO (the accountancy firm, not the British Darts Organisation) more than 10% of explorers failed to conduct any exploration at all in the JunQ as access to capital remained tight.

The study looked at the JunQ Appendix 5B cashflow statements for 845 Australian-listed mining and O&G companies.

The JunQ was the fourth quarter in a row of an increasing number of exploration companies not exploring.

Companies that only had enough cash to survive 1-2 quarters rose to 44%.

BDO noted an increase in backdoor listings involving resources companies.

Source: MiningWeekly � Chinese banks: more concerns over bad debts.

BoCom (3328 HK) last week became the third bank to note that asset quality is worsening, after BOC (3988 HK) and AgBank (1288 HK) stated that NPLs are rising fast and that large provisions have been put aside.

The Investec HK office notes broker pointing to Chinas bad debt accumulating rapidly going forward (NPL ratios to become double digit), unless monetary policy is loosened quickly.

With New Yuan loans and Money Supply data due from today, it will be interesting to see the governments response, particularly after the PBoCs chief economist sees China remaining on a "stable growth path".

Source: Investec, Bloomberg
African resources update � Expensive bond issue for Ghana.

Ghana is set to price a benchmark-size dollar issuance today that is more expensive than its neighbour Ivory Coasts bond earlier this year.

The debt, due January 2026, may be priced at 8.5%, versus Ivory Coast 10-year notes at 5.375% sold in July.

A benchmark-sized issue typically raises at least $500 million.

The higher coupon presumably reflects the countrys financial woes.

Meanwhile the IMF may sign a deal with Ghana on technical and possible financial assistance by November, according to Deputy Finance Minister Mona Quartey.

Source: Bloomberg � Todays African Proverb.

"Patience is the mother of a beautiful child".

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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