lcc copper gold report 20140310

10th March 2014 WWW.LCC.ASIA

IMPORTANT DISCLAIMER This report has been prepared by Lincoln Crowne & Company Pty. Limited ("LCC"). The research is based on information obtained from sources believed to be accurate and reliable. LCC does not guarantee the accuracy, reliability, completeness or suitability of any such information and makes no warranty, guarantee or representation, expressly or impliedly about this research. LCC accepts no ob ligation to correct or update the information. No opinion or recommendation is made within this research. This report is not intended to be, nor should it be relied on, as a substitute for professional advice. This report should not be relied upon as the sole basis for any investment decision or planning, and LCC does not accept any responsibility on this basis for actions made

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LUNAR NEW YEAR COPPER HANGOVER Global Economic Fundamentals

Source: Capital IQ, COMEX, LCC, LME, SHFE, Thomson Reuters, WGC

Precious Metals Last Week r 4-Wk r YTD r Base Metals Last Week r 4-Wk r YTD r

Gold (A$/oz) 1,475 ▼ (0.3%) ▲ 5% ▲ 10% Copper (A$/lb) 3.46 ▼ (3.9%) ▼ (5%) ▼ (8%)

Gold (US$/oz) 1,339 ▲ 1.3% ▲ 6% ▲ 11% Copper (US$/lb) 3.14 ▼ (2.4%) ▼ (4%) ▼ (6%)

Silver (US$/oz) 20.9 ▼ (1.8%) ▲ 5% ▲ 8% Copper (RMB/t) 48,840 ▼ (0.8%) ▼ (4%) ▼ (7%)

Platinum (US$/oz) 1,478 ▲ 2.2% ▲ 7% ▲ 8% Cobalt (US$/lb) 14.15 ▼ (0.0%) ▼ (0%) ▲ 6%

Palladium (US$/oz) 776 ▲ 4.3% ▲ 9% ▲ 8% Molybdenum (US$/lb) 10.66 ▲ 4.4% ▲ 3% ▲ 9%

Iron Ore (US$/t) 114 ▼ (1.8%) ▼ (6%) ▼ (15%) Nickel (US$/lb) 6.95 ▲ 5.4% ▲ 9% ▲ 10%

Crude Oil (US$/barrel) 101 ▲ 0.1% ▲ 1% ▲ 3% Lead (US$/lb) 0.95 ▼ (1.5%) ▼ (4%) ▼ (6%)

Gas H.Hub (US$/m btu) 4.76 ▲ 3.3% ▼ (0%) ▲ 14% Zinc (US$/lb) 0.95 ▼ (0.7%) ▲ 3% ▲ 0%

Uranium (US$/lb) 35 ▼ (1.3%) ▼ (3%) ▲ 2% Tin (US$/lb) 10.49 ▼ (1.7%) ▲ 4% ▲ 3%

Currencies & Indices Last Week r 4-Wk r YTD r Global Markets Last Week r 4-Wk r YTD r

AUD/USD 0.908 ▲ 1.6% ▲ 1% ▲ 2% ASX 200 5,462 ▲ 1.1% ▲ 6% ▲ 2%

RMB/USD 0.163 ▲ 0.3% ▼ (1%) ▲ 0% Dow Jones 16,453 ▲ 0.8% ▲ 4% ▼ (1%)

CAD/USD 0.903 ▲ 0.0% ▼ (1%) ▲ 0% S&P 500 Index 1,878 ▲ 0.8% ▲ 5% ▲ 1%

ZAR/USD 0.093 ▲ 0.2% ▲ 3% ▲ 0% Shang Hai Index 2,058 ▼ (1.4%) ▲ 1% ▼ (1%)

ASX Ordinary Gold 2,587 ▼ (1.3%) ▲ 12% ▲ 5% Hang Seng Index 22,660 ▲ 0.1% ▲ 5% ▼ (3%)

TSX Global Gold 201 — 0.0% ▲ 9% ▲ 1% Nikkei 225 15,274 ▲ 2.9% ▲ 6% ▼ (6%)

ASX 300 Metals & Mining 3,384 ▲ 4.6% ▲ 4% ▼ (1%) FTSE 100 Index 6,713 ▼ (0.9%) ▲ 2% ▲ 2%

TSX Global Mining 75 ▲ 1.3% ▲ 3% ▼ (2%) Euro STOXX 50 Index 3,095 ▼ (3.5%) ▲ 2% ▼ (2%)

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US$/oz

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LME Copper Price and Volume

Volume (kt)Price (A$/lb)Price (US$/lb)

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COMEX Copper Price and Stocks

Stocks ('000 t)

Price (US$/lb)

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Stocks ('000 t)

Price (RMB/t)

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SHFE Copper Price and Volume

Volume ('000 lot)

Price (RMB/t)

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Dec Jan Feb Mar

COMEX Copper Price and Volume

Volume ('000 lot)

Price (US$/lb)

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Dec Jan Feb Mar

S&P/ASX All Ordinaries Gold Index(XGD)

3.00

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Jan 13 Apr 13 Jul 13 Oct 13 Jan 14

China Copper Imports

Tonnes (kt)

Copper Price

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LME Copper Price and Stocks

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Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13

World Gold Demand and Supply

Total Demand (tonnes)

Total Supply (tonnes)

Gold Price (US$/oz, RHS)

3.10

3.11

3.12

3.13

3.14

3.15

Cash 3 Months Dec 1 Dec 2 Dec 3

LME copper forward curve

Seller

Buyer

Gold Demand



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Markets & Majors

Western Australia has jumped nine places to finish in sixth position in the Fraser Institute’s survey of mining companies 2013. Australia’s largest state finished 15th previously but jumped back into the top 10 and was the top ranked jurisdiction globally for investment attractiveness. WA also ranked second in terms of geological attractiveness behind Alaska but in front of Nevada, Chile and British Columbia. South Australia also improved its previous 20th rank, jumping up into the 11th spot, while Tasmania was the most improved, jumping from 49th to 27th. The Northern Territory went from 22nd to 13th, while Queensland was 24th, up eight spots. Victoria dropped to 33rd from 24th, while New South Wales was the worst ranked Australian jurisdiction in 39th place.

Thomson Reuters - After record imports of 536,000 t in January, arrivals of copper are likely to drop in February, as importers scheduled fewer term shipments due to the Chinese New Year holidays. Importers had cut purchases of spot copper because of weak domestic prices. The absence of a demand pick up after the Lunar New Year holiday, along with expectations of even lower prices have led buyers to stave off fresh orders. Stocks in bonded warehouses in Shanghai are estimated at between 560,000 and 660,000 tonnes. The Shanghai Future Exchange inventories closed at 207,320 tonnes last Friday.

Thomson Reuters - Democratic Republic of Congo's prime minister has told mining companies to halt any expansion plans requiring extra power in the copper-rich Katanga province due to an "energy crisis". The national power company SNEL should not grant any new energy contracts for mining companies nor allow changes to existing contracts. International mining companies such as Glencore and Freeport McMoRan have major operations in the Katanga province, drawn to the region by huge copper deposits. LCC notes that Tiger Resources (ASX: TGS) has secured its energy supply for the SX-EW plant currently close to completion and scheduled to start production in Q2 2014.

Thomson Reuters – Indonesia's mines ministry could recommend that Freeport-McMoRan Copper & Gold receive a reprieve from a controversial tax that has halted copper exports for more than two months, a government official told Reuters. To win the tax reprieve, Freeport must pay the government a 5% security bond for the construction of a smelter and finalise supply agreements with smelter-building companies, said Sukhyar, director general of coal and minerals for the mines ministry. Freeport, which warned last week it may need to declare force majeure on copper concentrate sales if the dispute drags on, has submitted a request to the mines ministry for a permit to resume concentrate exports.

GlencoreXstrata booked a 2013 net loss of US$7.40 billion, compared with a US$1 billion profit the previous year. Revenue rose 9% year on year to US$233 billion. Copper was the group's best performing commodity, with higher volumes and lower costs off-setting an 8% price fall. Copper production rose 26% year on year to 1.5 million tonnes including African copper, up 43%, with

Mutanda and Katanga in the DRC each reaching 200,000 tpa capacity at year-end and 58% production growth at Collahuasi.

Western Australian Mines and Petroleum Minister said there will be no gold royalty rise in the 2014-15 state budget. Behind iron ore, gold was WA’s most valuable commodity with total sales of A$8.7 billion, representing 10% of total mineral sales in 2013.

Thomson Reuters - Barrick Gold Corporation, the world's biggest gold miner, is not looking to hedge the price of the precious metal because it expects a sharp increase in coming years, Chief Executive Jamie Sokalsky said at the Prospectors & Developers Association of Canada (PDAC) convention. Sokalsky said he was not interested in hedging because investors want to capture gold's upside.

Copper Explorers & Emerging Producers

Source: ASX, Capital IQ, LCC. A$/US$ exchange rate of 0.90

Copper Producers

Source: ASX, Capital IQ, LCC. Assumption: A$/US$ of 0.90

ASX-Listed Company News

Venturex Resources (ASX: VXR) has entered into an agreement with private company Blackrock Metals Pty Ltd for the reprocessing of the existing Whim Creek oxide copper heap leach pads. Venturex will hold a 15% net profit interest in the

Code Company NameClose

PriceWeek r YTD r

Market

Cap (A$m)

52 Week

Range

Cash

(A$m)

EV

(A$m)

AVI Avalon Minerals 0.008 ▼ (11% ) (20% ) 10 2.7 7

AZS Azure Minerals 0.035 ▼ (5% ) 17% 25 2.3 23

BMB Balamara Resources 0.13 — 0% 37% 39 1.2 37

BTR Blackthorn Resources 0.16 ▼ (6% ) (38% ) 26 16.3 10

BOC Bougainville Copper 0.51 ▲ 1% 7% 205 6.2 198

ERM Emmerson Resources 0.036 — 0% (14% ) 9 1.2 8

ENR Encounter Resources 0.23 ▲ 5% 18% 30 3.9 26

ESR Estrella Resources 0.12 ▼ (8% ) (31% ) 12 2.0 10

GCR Golden Cross Resources 0.006 ▲ 20% 20% 11 1.1 10

HAV Havilah Resources 0.23 ▼ (4% ) (8% ) 28 3.5 24

HCH Hot Chili 0.45 ▲ 2% 6% 156 8.2 148

HIG Highlands Pacific 0.073 ▲ 1% 20% 62 9.6 53

IRN Indophil Resources 0.19 ▲ 16% 12% 223 215.1 7

KGL KGL Resources 0.110 — 0% 5% 15 7.8 8

KDR Kidman Resources 0.145 ▼ (6% ) (22% ) 19 3.7 15

MMC Marengo Mining 0.016 ▲ 33% 7% 18 4.5 42

MNC Metminco 0.034 ▲ 6% 10% 59 7.8 52

PEX Peel Mining 0.28 ▲ 10% 6% 36 3.8 32

RDM Red Metal 0.18 ▼ (20% ) 17% 25 1.1 24

RXM Rex Minerals 0.42 ▼ (9% ) (13% ) 79 20.9 58

SBR Sabre Resources 0.040 ▼ (17% ) (7% ) 9 4.1 5

SUH Southern Hemisphere 0.045 — 0% (10% ) 9 0.5 8

TLM Talisman Mining 0.12 ▼ (4% ) 10% 15 17.3 (2)

VXR Venturex Resources 0.008 ▲ 14% (20% ) 12 3.4 9

YTC YTC Resources 0.25 ▲ 4% 9% 82 25.8 121

AVB Avanco Resources 0.069 ▼ (4% ) (3% ) 93 16.6 77

CDU Cudeco 1.77 ▼ (3% ) (2% ) 414 47.4 367

FND Finders Resources 0.18 ▼ (3% ) (14% ) 99 12.9 86


PriceWeek r YTD r

Market

Cap (A$m)

52 Week

Range

Cash

(A$m)EV (A$m)

EV/

EBITDA

ABY Aditya Birla Minerals 0.33 ▼ (4% ) (4% ) 102 118 (16) 0.0x

AOH Altona Mining 0.17 ▼ (8% ) 0% 88 20 79 5.9x

DML Discovery Metals 0.036 — 0% (32% ) 20 13 178 NM

HGO Hillgrove Resources 0.090 — 0% 0% 106 17 134 3.9x

OZL OZ Minerals 3.92 ▲ 5% 24% 1,189 364 825 4.7x

PNA PanAust 1.82 ▲ 3% 1% 1,111 145 1,146 4.6x

SFR Sandfire Resources 6.23 ▲ 4% (4% ) 970 75 1,125 8.9x

SRQ Straits Resources 0.005 ▼ (17% ) (38% ) 6 12 116 2.9x

TGS Tiger Resources 0.43 ▲ 12% 25% 345 42 359 5.7x



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reprocessing operation which will contribute to the on-going environmental and administration costs of the overall Whim Creek mine site.

Mergers & Acquisitions

GlencoreXstrata said it had selected China's Minmetals as preferred bidder for the sale of its Las Bambas copper mine in Peru, which sources have said could fetch about US$5 billion. The company also said it would allocate part the proceeds of the sale to repay its debt, which stood at US$35.8 billion in 2013, against US$29.5 billion in 2012. Glencore agreed to sell Las Bambas to secure approval from China's competition authorities for its takeover of Xstrata.

GlencoreXstrata has confirmed that BHP Billiton’s Nickel West assets are for sale and the company is among the interested parties. Glencore already owns the Murrin Murrin nickel operation in Western Australia through its takeover of Minara Resources in 2011. BHP has refused to comment on a possible sale of the Nickel West assets in the past, but nickel is outside the company’s “four pillars” of iron ore, copper, coal and petroleum.

Emerging Gold Producers


Bloomberg - Several groups have expressed interest in acquiring Randgold Resources Massawa gold project in Senegal, and the company would consider a sale. According to the CEO, the project does not currently meet the company's development requirements of having 3 million ounces of gold reserves at an assumed gold price of US$1,000/oz and an IRR of 20%.

Genesis Minerals (ASX: GMD) agreed to purchase 100% of AngloGold Ashanti’s 970km2 Viking gold project near Norseman giving the Company access to a series of high grade, drill ready gold targets and a high-quality A$5m database. The total purchase price for the project is a $50,000 payment due on March 10, 2014; a Deferred Payment of A$2 per measured or indicated (JORC 2012) resource ounce defined on or partially on the Tenement Area as quoted in the first public announcement of a measured or indicated resource on or partially on the Tenement Area; and a royalty payable to AngloGold Ashanti equal to 1.25 percent of the Net Smelter Return generated from the sale of any gold mined or produced from the Tenement Area, after commercial production of 25,000 ounces.

SNL - Private equity is stepping up efforts to increase its involvement in capital raising activities in the mining sector, four private equity players told the PDAC conference. Private equity firms remain relatively untested in the sector, but have been eager to increase their holding in mining and metals companies following pressure from investors, who felt they were missing out on commodities returns.

Gold Producers



PriceWeek r YTD r

Market Cap

(A$m)

52 Week

Range

Cash

(A$m)

EV

(A$m)

ABU ABM Resources 0.027 ▼ (7%) 23% 89 5.1 84

ALK Alkane Resources 0.36 ▼ (11%) 4% 132 43.3 89

AZM Azumah Resources 0.059 ▲ 28% 111% 21 3.3 18

BSR Bassari Resources 0.010 — 0% 25% 9 0.2 8

BAB Bullabulling Gold 0.057 ▼ (11%) 27% 20 4.3 15

CHZ Chesser Resources 0.12 ▼ (4%) 14% 26 4.6 22

CDG Cleveland Mining 0.11 — 0% 5% 25 0.6 25

CVG Convergent Minerals 0.013 — 0% (19%) 5 0.7 4

CAS Crusader Resources 0.29 ▼ (5%) (3%) 37 2.2 40

DCN Dacian Gold 0.43 ▲ 23% 79% 41 13.2 28

EXG Excelsior Gold 0.092 ▲ 8.2% 33% 38 4.3 32.2

FMl Focus Minerals 0.02 ▲ 14% 33% 146 81.2 72

GCY Gascoyne Resources 0.17 ▼ (6%) 18% 26 1.2 25

GRY Gryphon Minerals 0.18 ▲ 3% 6% 72 41.7 30

IDC Indochine Mining 0.067 ▲ 2% 56% 70 0.5 70

IAU Intrepid Mines 0.26 — 0% (17%) 145 98.2 46

KGD Kula Gold 0.09 ▼ (6%) (10%) 12 3.2 9

MSR Manas Resources 0.043 ▲ 5% 34% 18 5.6 12

MYG Mutiny Gold 0.031 ▼ (3%) (3%) 19 1.7 24

OBS Orbis Gold 0.33 ▼ (6%) 32% 82 5.5 77

ORD Ord Resources 0.01 ▼ (14%) 20% 6 1.5 4

PAN Panoramic Resources 0.41 ▲ 11% 64% 132 34.0 98

PIR Papillon Resources 1.44 ▲ 1% 47% 491 43.6 447

PXG Phoenix Gold 0.16 — 0% (3%) 37 4.6 33

RED Red 5 0.10 ▼ (9%) 14% 76 36.7 39

RNI Resource & Investment 0.105 ▼ (9%) 98% 32 3.0 44

ROL Robust Resources 0.28 ▼ (7%) (20%) 29 2.5 32

SIH Sihayo Gold 0.030 — 0% 0% 28 0.5 28

SXG Southern Cross Goldfields 0.016 — 0% 23% 14 5.1 16

SUM Sumatra Copper & Gold 0.08 ▼ (14%) 14% 33 4.0 32

WAF West African Resources 0.20 ▲ 30% 39% 48 4.0 47

YTC YTC Resources 0.25 ▲ 4% 9% 82 25.8 121


PriceWeek r YTD r

Market

Cap (A$m)

52 Week

Range

Cash

(A$m)EV (A$m)

AQG Alacer Gold 3.17 ▲ 6% 40% 903 322 580

AGD Austral Gold 0.09 ▼ (32% ) (29% ) 15 9 67

BDR Beadell Resources 0.77 ▲ 1% (3% ) 609 24 654

BEZ Besra Gold 0.027 ▼ (10% ) (40% ) 13 1 38

CRK Crocodile Gold Corp 0.26 ▼ (5% ) 117% 124 28 102

DRM Doray Minerals 1.03 ▲ 4% 83% 167 24 193

DRA Dragon Mining 0.19 — 0% 46% 17 6 11

EVN Evolution Mining 0.98 ▲ 4% 59% 691 37 796

EVR Endeavour Mining Corp 0.88 ▲ 10% 81% 385 119 565

IGO Independence Group 4.33 ▲ 5% 39% 1,010 46 1,028

KCN Kingsgate Consolidated 1.28 ▲ 5% 37% 209 37 348

KRM Kingsrose Mining 0.36 ▲ 3% 6% 127 1 126

LSA Lachlan Star 0.28 ▲ 12% 40% 41 3 43

MML Medusa Mining 2.35 ▲ 8% 15% 488 23 465

MLX Metals X 0.23 ▲ 2% 35% 381 50 331

MOY Millennium Minerals 0.13 ▼ (19% ) (32% ) 28 5 62

MLI Mintails 0.054 ▼ (2% ) (4% ) 15 4 10

NCM Newcrest Mining 12.00 ▲ 6% 54% 9,192 121 13,709

NGF Norton Gold Fields 0.14 ▲ 4% 0% 126 41 200

NST Northern Star Resources 1.25 ▲ 8% 59% 655 49 606

OGC OceanaGold Corporation 2.74 ▲ 1% 72% 820 28 986

PNA PanAust 1.82 ▲ 3% 1% 1,111 145 1,146

PGI PanTerra Gold 0.044 ▼ (12% ) 7% 34 5 79

PRU Perseus Mining 0.44 ▲ 1% 78% 229 28 201

RMS Ramelius Resources 0.14 ▼ (3% ) 44% 51 33 22

RRL Regis Resources 2.33 ▲ 2% (20% ) 1,164 13 1,161

RSG Resolute Mining 0.67 ▲ 11% 21% 430 50 474

SAR Saracen Mineral Holdings 0.35 ▲ 15% 89% 263 23 262

SBM St Barbara 0.35 — 0% 35% 171 70 431

SLR Silver Lake Resources 0.52 ▼ (10% ) (3% ) 262 17 253

TBR Tribune Resources 3.05 ▲ 13% 31% 153 9 164

TGZ Teranga Gold Corp 1.09 ▼ (4% ) 98% 361 39 389

TRY Troy Resources 1.28 ▲ 11% 63% 244 18 257

UML Unity Mining 0.033 ▲ 6% (20% ) 23 10 13

VGO Vantage Goldfields 0.029 — 0% 12% 7 1 6

ANG AngloGold Ashanti 196.91 ▲ 3% 60% 8,137 725 11,623

ABX Barrick Gold Corp 22.08 ▼ (2% ) 18% 25,559 2,688 39,439

GFI Goldfields 40.45 ▼ (1% ) 23% 3,197 358 5,246

NEM Newmont Mining Corp 24.60 ▲ 6% 7% 13,489 1,739 22,332



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Australian Gold Producers Cost Curve as at 31 December 2013

lcc copper gold report 20140310

Economy & Finance