[cid:image001.png@01CE55FA.7BD0A7A0] Tuesday, 21 May 2013 [cid:image006.jpg@01CE55FA.8BB47ED0]
Snapshot � Company news highlights: Kirkland Lake increases mineral inventory, Amara gets environmental permit, Central Asia Metals now produced 10,000t of copper, SAIL expects increased coking coal imports into India, Discovery board changes and change of control process, Iluka to go ahead with US development, Vale reduces Mozambique target � Commodity review highlights: Rusal comments on global aluminium consumption, tighter coking coal supply on horizon, China thermal coal overcapacity � Other Economic News: New commodities investment venture � African Resources Update: Unions demands sends rand to a four year low, SA poised to be Indias 2nd largest thermal coal supplier � The S&P came off earlier highs to close down 0.07% last night - following comments on CNBC from Dallas Fed president that QE could be scaled back.

Asian markets are currently slightly easier ahead of the BoJ two day policy meeting which starts today.

The FTSE is expected to open down 6 points.
Company News � Kirkland Lake (KGI LN) reserve and resource update.

During 2012 KGI focussed its exploration efforts on expanding the South Mine Complex (SMC) inventory in the properties it acquired from the Queenston acquisition earlier in the year, while simply replacing the ounces in its own SMC and Main Break mining areas.

To this end it has been successful, increasing the former Queenston inventory by 164%, to 459koz of resources grading around 31g/t.

Total reserves for the company remain c.1.5moz grading 16g/t, while total resources are now 15% higher at 3.0moz grading 17.4g/t.

Source: Company Investec view: KGI has mineral inventory grades that are the envy of most gold companies, albeit that maintaining them through to production levels does require labour-intensive mining.

Accessing and extracting these grades has until recently been the main issue for the company.

With its hoisting capacity now increasing, it should start to see the benefit of it exploration efforts flow through to production, with the company guiding 150-180koz in FY14E, versus the 92koz it delivered in FY13A. � Amara Mining (AMA LN) granted environmental permit.

AMA has been granted an environmental permit for its Sega gold property, 20km to the north of its Kalsaka mine in Burkina Faso.

Following the receipt of this licence, AMA can now apply for its mining licence which should take c6 weeks.

Mining at Sega should commence in Q3 2013.

Source: Company Investec view: The fact that the permitting process is clearly well underway is a positive development for the group.

Ore from Sega should enable AMA to extend the mine life at Kalsaka to at least 2015. � Central Asia Metals (CAML LN) produces 10,000t of copper.

CAML has reached a milestone in that it has now produced 10,000t of copper from in Kounrad SX-EW plant in Kazakhstan in just over 12 months since operations commenced.

Record monthly copper production of 1,114t was achieved in April.

During Q1 2013, the group produced 1,675t of copper, exceeding expectations by 26%.

Source: Company Investec view: CAML is a very low cost copper producer with significant resources in its Kounrad dumps.

This asset alone should ensure the company has a successful future. � SAIL (SAIL IN) expects increased coking coal imports.

Steel Authority of India (SAIL) expects its coking coal imports to increase to 12-13mtpa from 10mtpa currently as it lifts its steel production capacity to 18mtpa from 14mtpa by the end of this fiscal year.

Source: Mining Weekly � Discovery Metals (DML AU) Board changes, and commences formal "change of control" process.

DML came out of voluntary suspension today and announced Board changes with Gordon Galt resigning as Chairman, and Morrice Cordiner also resigning as a non-executive director, with John Shaw appointed to the role of Chairman.

DML also announced the commencement of a change of control process, and has signed Confidentiality Agreements with a number of parties.

The process is expected to take approximately 4 weeks, with a closing date of 10 June 2013.

Subsequent to this, DML has received an indicative proposal from Cathay Fortune Corporation (CFC), indicating a price range of A$0.35-$0.40/share (current price $0.24/share).

DML closed out some long dated hedge positions to increase cash by US$10m in early May, with cash of US$23.7m, and total debt of US$176m as at 17th May.

DML and lenders have agreed to close out further metal hedges to generate US$25m, with proceeds to be directed to June and September loan repayments and the debt service account.

Source: Company � Iluka Resources (ILU AU) to continue greenfield Virginia mine development.

Following the 2012 idling of its existing Virginia capacity, ILU will push ahead with development of the greenfield "Hickory" project.

The project, for which a definitive feasibility study was completed in 2012, has moved into phase one execution stage to complete detailed engineering design and construction plans, mining plans, and final permits.

The project is located just 19km West of Ilukas existing Stony Creek separation plant, with the heavy mineral content material planned to be trucked to Stony Creek for processing.

Source: Industrial Minerals Investec view: We are already seeing signs of a stronger zircon market in the JunH13, and with pigment producers highlighting a stronger demand for TiO2 products in the DecH13, we believe both zircon and TiO2 feedstock prices have bottomed. � Vale (VALE US) makes downward adjustment to export target from Moatize Coal mine in Mozambique.

As a result of poor weather, and continued delays to planned expansions stemming from insufficient capacity on in country infrastructure, Vale has reduced its CY2013 export target from 4.9mt to 3.4mt.

With ~500kt of the lost tonnes due to weather related closure of the Sena Railway Line/Beira Port, Vale is planning to develop a more robust railway system taking exports instead to the port of Nacala, where it intends to build a large scale coal terminal.

Source: Tex Report
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Commodities News � Rusal (RUALR RX) comments on global aluminium consumption.

Rusal has broadly maintained its 2013 market outlook with only some improvement to EU consumption added.

Consumption of primary aluminium globally is forecasted to reach 50Mtpa (+6%) with China the largest growing market (+9.5%), followed by India (+6%) and Asia ex China (+5.8%).

European consumption for 2013 is expected to be only 1% lower than in 2012, vs.

-2% previously.

Source: Strategic Research Institute (via Steelguru) � Tighter coking coal supply.

Coking coal supply is expected to tighten in the coming months, given 52-58Mt of production is reportedly loss making at the 2Q13 contract price of US$170/t.

With spot under $150/t currently, Platts is talking about further production cuts in June as the 3Q13 benchmark price is announced.

Source: Coalguru � China aiming to resolve thermal coal overcapacity.

A Chinese commodities portal Umetal has suggested that the best way to resolve overcapacity issues in the thermal coal industry is to use coal as a chemical raw material rather than only as power-generating resource.

The portal claims that normally the coal price sees a jump from April to May as this is the period that sees the main coal transportation railways undergo maintenance.

However, given the large stockpiles (expected to reach 500Mt by 4Q13 as production rises to 3.65Mt), the National Energy Administration is stating that coal demand reforms are required, including a structural upgrading of the industry.

Source: Globaltimes.cn
Other economic news � New commodities investment venture.

US private equity group Riverstone is leading talks on an investment of as much as US$1bn in a new commodities investment venture, TrailStone, which will aim to plug a funding gap left by the banks.

The new venture plans to acquire or lease refineries, power plants and midstream assets such as terminals, pipelines and storage.

Source: FT
African Resources update � Unions demands sends rand to a four year low.

60% wage increases demanded by the NUM in South Africas gold and coal industries helped push the rand to a four year low of ZAR9.36 against the dollar yesterday.

AngloGold Ashantis share price fell 4% and Goldfields fell 3.5%.

Source: BDLive Investec view: The next few months will be a testing time for the mining industry in South Africa as wage negotiations will also move through to the platinum mines.

In terms of wage increases in these labour intensive mines, something has to give.

While the headline union demands no doubt reflect a fair degree of posturing, at some stage the unions will need to appreciate that we are no longer in a mining boom, as can be evidenced by a cursory glance of the accounts of some of these groups (particularly the platinum producers, but becoming more so with gold companies in light of the weaker gold price). � SA poised to be Indias 2nd largest coal supplier.

Indian officials expect coal imports to increase to 165-180mt in 2013/14, up from 135mt in the previous year and in view of favourable coal trading policies of the South African government (no export taxes), it could replace Australia as the 2nd largest supplier to Indian thermal power plants.

In In fact 2012/13 Indonesia accounted for 77mt, Australia 26.8mt and SA 17.4mt.

Source: MiningWeekly
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