JSE Mining Indaba Educational Seminar ‐. By Peter MajorThe 2014 African Mining Indaba. Cape Town RSA
3 February 2014
CADIZ CORPORATE SOLUTIONS
Peter Major:Fund Manager & AnalystCadiz Corporate Solutions
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Shareholders ‐ In The Mining & Resources Sector
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How on earth did I end up here?
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Resources Have Had A Bad 6 Years.
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INDI Has ‘Stolen The Show’ These Past 5 Years.
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The Bad: Sa Mining Industry. Who’s In Charge?
Management? Workers? Unions? Government? And Shareholders?
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Policy Certainty? What’s That?But there are some certainties in South Africa . Unfortunately ‐many are bad!
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Management, Unions, Government, Labour, Suppliers Vs Shareholders
And Now We Have AMCU VS NUM.
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EXCELLENCETAKES A LIFETIME OF PREPARATION
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SA’S Mining Index Has Beaten The S&p 500 Over The Past 52 Years
This Index has returned an average 13.3%pa in US$ since 1960
Source: INet 9
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: SA INFLATION A Rand IN 1982 IS WORTH 7c TODAY.
How governments ruin economies. Through ‘bad’ management, printing money & more!
SOURCE: INET 10
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In The 1940’s – 60’s & 1990’s South Africa’s Gold Mines Kept Costs < CPI
Since 2003 +16% pa cost increases in Gold ‘and’ Platinum mines have been the norm.
SOURCE: INET 11
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Platinum n Rand/OzNice constant revenue pa increase.
SOURCE: INET 12
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Never Has The RESI Fallen To Far So Fast Realtive To The INDI
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Earnings Drive And Hold Up Share Prices
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Never Before Have The Resi’s $ Earnings Fallen So Hard – So Fast
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ALSI 40 = $690 bn RESI 10 = $170 bn
: South Africa’s Main Indices ‐ THE ALSI 40 & THE RESI 10
Always a great Rand Hedge. 25 Jan 2014
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South African Mineral Production ‐ 2013 E
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CADIZ Corporate Solutions 6 February 2014
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International & South Africa’s Mining Industries
There are no ‘bad’ jobs in mining. 1973 Major begins mining and earns $21 a day.
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In The 1990’s It Was All About ‘Stock Picking’ To Perform.
Source: INET 20
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Africa’s Dot Com ‘Millionaire Into Billionaire’: Mark Shuttleworth
$530 m in the SA Mining & All Share Indices in 2001 increased to >$1.5 billion by 2005
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But In The 2000’s It Was ‘Macro’ Ie Sector & Asset Allocation
Buying the Indices instead of ‘stock picking’.
Source: INET 22
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. CADIZ CORPORATE SOLUTIONS6 000 abandoned mines in South Africa
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Mechanization Isn’t ‘Always’ The Answer To Increasing ProductivityNorth Idaho, 2012. Modernizing ‘Processes’ Is As Important As Machines.
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African Commodity Instruments Available To Invest In
1. Equities: 70 mining & resources African companies listed on JSE
(+200 African Resource companies on other exchanges)
2. Futures: On African Mining Indices, Shares, Commodities
3. Exchange Traded Funds: Metals and Indices. Local and Overseas (Resi, GSCI, FCRB)
4. Derivatives: Warrants, Options, Single Stock Futures, ETF’s, Other
5. Gold, Platinum, Copper: ETF, Kruger Rands, Bullion, Coins
6. Unit trusts: +10 local Mining & Resources funds (many more on
other exchanges)
7. Private funds: Numerous, All types (local and overseas)
8. Mines! Operating. Control the Mine
9. Abandoned mines: 6 000 in South Africa alone! All commodities
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150 Years of mining in South Africa. Beginning in 1852 – Okiep Copper Company First PGM production in SA began in 1927.
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Western Deep Levels in 2012. 4 km deep. Shaft sinking 1957. Producing since 1962.
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People consume more each year – ‘and’ multiply!
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Most PGM production still comes from highly labor intensive, underground mines.
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Words Are Words Promises Are Promises Explanations Are Explanations
But only PERFORMANCE is Reality! 1981 (8 years later) ‐ earning $200 a day.
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This document is confidential and is issued for the information of the addressee and of clients of Cadiz Holdings Limited Reg. No.1997/007258/06 and its subsidiaries ("Cadiz") only. It is subject to copyright and may not be reproduced in whole or in partwithout the written permission of Cadiz. The information, opinions and recommendations contained herein are and must beconstrued solely as statements of opinion and not statements of fact. No warranty, expressed or implied, as to the accuracy,timeliness, completeness, merchantability or fitness for any particular purpose of any such recommendation or information isgiven or made by Cadiz in any form or manner whatsoever. Each recommendation or opinion must be weighed solely as onefactor in any investment or other decision made by or on behalf of any user of the information contained herein and such usermust accordingly make its own study and evaluation of each strategy/security that it may consider purchasing, holding or sellingand should appoint its own investment or financial or other advisors to assist the user in reaching any decision. Cadiz will acceptno responsibility of whatsoever nature in respect of any statement, opinion, recommendation or information contained in thisdocument. This document is based on historical information, and provides no guarantee of future performance.
DISCLAIMER
Contact Information
JOHANNESBURG OFFICE
Physical Address:
31 West StreetLower HoughtonJohannesburg2198South Africa
T +27 11 853 8000
CAPE TOWN OFFICE
Physical Address:
Ground Floor, Fernwood HouseThe Oval1 Oakdale RoadNewlands, 7700South Africa
Robbie GonsalvesHead: Corporate SolutionsT +27 21 657 8476M +27 82 452 7275F +27 21 657 8308E [email protected]
CADIZ CORPORATE SOLUTIONS
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Introduction: Peter Major – Cadiz – Cape Town, South Africa: SPEAKER
• Mining Consultant and Analyst ‐ Cadiz Corporate Solutions 2006 – 2012• CIO, Fund Manager, Analyst ‐ HBD Asset Management 2001 – 2005
• Senior Fund Manager and Analyst – Nedcor Investment Bank 1991 – 2001• Gold Analyst – Allan Gray Investment Counsel 1989 – 1991
• Consultant , Marketing Manager ‐ EIMCO Mining Machinery 1985 – 1988
• Came to South Africa – Harmony Gold Mine, MBA (UCT) 1982 – 1984
• BSc Mining Engineering ‐Montana School of Mines 1977 – 1981• Began mining in Kellogg Idaho, Montana, Alaska, Canada 1972 – 1981
• Born in Vancouver, BC. Moved to Kellogg , Idaho in 1961 1955 ‐ 1972
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