oz metals 20141018

Oz Metals 18th Oct 2014

DISCLAIMER

This report is provided in good faith from sources believed to be accurate and reliable. Terra Studio Pty Ltd directors and employees do not accept liability

for the results of any action taken on the basis of the information provided or for any errors or omissions contained therein. Readers should seek investment advice from their professional advisors before acting upon information contained herein.

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NO REMISSION IN COPPER CAPITAL INTENSITY Base Metals & Precious Metals Fundamentals

Sources: Metal Prices, RBA, Terra Studio

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Bauxite

US$/t $A/t

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

Jan-14 Apr-14 Jul-14 Oct-14

Gold A$

US$

$2.80

$2.90

$3.00

$3.10

$3.20

$3.30

$3.40

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$3.60

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Copper

SHFE COMEX LMEUS$ A$

$2.80

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

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China Copper Imports

ImportsPrice

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Nickel

LME US$ A$

$0.80

$0.85

$0.90

$0.95

$1.00

$1.05

$1.10

$1.15

$1.20

$1.25

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DISCLAIMER



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Markets & Majors

The global copper market will be in deficit for a fifth straight

year in 2014 before switching to a surplus of about 390,000 tonnes next year. The International Copper Study Group forecast a deficit of 270,000 tonnes this year as operational failures combined with delays in the start-up of new mines will lead to lower-than-anticipated production growth. The latest estimate is a reversal of the ICSG's previous forecast in April that production would outpace demand by about 400,000 t as demand would lag output growth. At that time, it predicted a surplus as big as 595,000 tonnes due to increases in output mainly in Asia and Africa.

Thomson Reuters - China's copper imports surged 14.7%

from the previous month in September, hitting a 5-month high, after importers increased term shipments on an expected rise in seasonal demand. Arrivals of anode, refined copper, alloy and semi-finished copper products reached 390,000 tonnes in September, up from a 16-month low at 340,000 tonnes in August, according to data from the General Administration of Customs. The monthly imports were down 14.8% from a year earlier, but in the first nine months, inflows rose 10.5% y/y to 3.59 million tonnes. September arrivals were higher than expected, with term shipments rising because factories expected seasonal demand to start from October, said Zhou Jie, a trading manager at China International Futures (Shanghai).

FT - China copper imports are set to plunge 25% next

year as the fallout from a financing scandal in the port city of Qingdao tightens access to bank credit in the world’s largest consumer of the metal. China is set to import 2.35m tonnes of refined copper in 2015, according to CRU. That would be the lowest level since 2008, before the practice of using commodities as collateral for loans in China started to gain momentum. “Anything copper-related is under greater scrutiny than other metals as a consequence of Qingdao. Nobody is touching the place,” said Matthew Wonnacott, a consultant at CRU. He was speaking ahead of LME Week. Other factors that will weigh on imports next year are domestic smelter and refinery expansions and the fact that Chinese consumption is slowing. Lenders have stepped up scrutiny after an investigation by Chinese authorities in June found the same metal had been used as collateral for multiple loans by Dezheng Resources. That left foreign banks such as Standard Chartered and their Chinese counterparts with hundreds millions of dollars of liabilities as copper and other metal could not be secured. Other analysts are also expecting a drop in Chinese copper imports but as much as the 25% forecast by CRU. Vivienne Lloyd, an analyst at Macquarie, said she expected China’s total net copper imports to drop around 10% next year. In spite of the sharp slowdown in Chinese imports, CRU still expects copper to average $6,760/t ($3.07/lb) next year as some of the slack is taken up by markets in the rest of the world. “The fall in imports will hit sentiment in the first quarter especially, but the market is tight enough to absorb these tonnages and this will become apparent through the year,” said Mr Wonnacott.

Thomson Reuters - The world's top copper producer Codelco will offer its customers in Europe premiums of

$112/t in 2015, unchanged from last year, reflecting weak

market conditions due to poor demand and rising supply, sources said on Monday. The flat premium - paid above the London Metal Exchange (LME) cash price to cover physical delivery costs such as trans-port and insurance - raises expectations that the miner might offer flat, or even slightly lower, term costs for its biggest buyer China in 2015, the sources said. Chinese customers paid $138/t for 2014 deliveries, the sources with direct knowledge of the matter said. Chinese and foreign banks have tightened credit conditions in the copper trade in China since June, when an alleged scam came to light at Qingdao port involving metal being used multiple times as collateral for loans.

Zambia will increase underground mining royalties to 8%

from 6% as part of an effort to revamp the industry’s tax system, Finance Minister Alexander Chikwanda said in his 2015 budget speech. The new system he outlined aims to collect revenue from the industry at different stages of the production pipeline by introducing a 30% corporate processing and smelting tax. Another 30% tax will be applied to income earned from “tolling”. Open cast mining operations in the southern African nation will now be subjected to a “20% mineral royalty… as a final tax” Chikwanda said.

Turquoise Hill Resources reduced its 2014 forecasts for gold and copper production at the massive Oyu Tolgoi

copper-gold mine in Mongolia because of delays in mine development in the third quarter. The miner, which owns some 66 percent of Oyu Tolgoi, said it now expects the mine to produce between 550,000 and 600,000 oz of gold in concentrates this year, down from the 600,000 to 700,000 oz it had forecast in August. It also reduced its expectation for copper concentrate output to between 135,000 t and 150,000 t this year, down from a range of 135,000-160,000 t.

Rio Tinto has increased its mined copper output for the

quarter slightly by 1% year over year to 151,800 tonnes. However, Rio Tinto reported a year-over-year drop in the production of bauxite, aluminum, hard coking coal, and

semisoft and thermal coal for the quarter. Bauxite output dropped 3% to about 10.89 million tonnes, and aluminum output dropped 1% to 848,000 tonnes. Rio Tinto said its expectation for bauxite and aluminum production remains unchanged at 41 million tonnes and 3.4 million tonnes, respectively. The company, however, reduced its alumina output guidance to 7.4 million tonnes from 7.6 million tonnes, excluding alumina production in the year from the Gove alumina refinery in Australia's Northern Territory.

SNL - MMG flags delayed start, higher capex for Las Bambas copper project in Peru. MMG expects maiden

concentrate output from its Las Bambas copper project in the first quarter of 2016, with capex required to complete the project to be in the range of US$2.7 billion to US$3.2 billion. MMG noted that it identified numerous significant risks to the previous project schedule and capex guidance through the due diligence process. Factors identified by the company include the availability of skilled labor in Peru to fill temporary construction roles, changes in the project scope, including the design of the tailings dam; higher-than-expected costs associated with the relocation of the nearby community. MMG led a Chinese group that acquired the project from Glencore in August for US$7 billion.


DISCLAIMER



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MMG has advised that sourcing competitively priced natural gas will be critical to avoid complete closure of its near-depleted Century zinc mine. Mark Adams, general manager

of Queensland operations for MMG, said a tentative plan to convert the remote site to a tailings recovery operation to prolong its life for potentially another 15 to 20 years couldn't proceed if wholesale gas prices continued to surge. Mr Adams said the rising prices had driven MMG to consider alliances, such as its accord with northern Australian shale gas explorer Armour Energy as it scoured options to avoid closing Century completely after the open pit is exhausted in about July 2015.

Financings, Deals & Transactions

At a time where most juniors are experiencing great difficulties in raising capital, Mick Davis' X2 Resources has secured a further US$1 billion in equity funding, pushing its total funding pipeline to US$4.8 billion. The London-based, mining-focused investment firm has now US$3.3 billion available in committed equity capital for immediate deployment, and a further US$1.5 billion in conditional equity capital. Discussions with additional potential investors remain ongoing, the company added. Davis said X2 was reviewing M&A opportunities in the mining sector.

Orbis Gold has received a proposal from SEMAFO to acquire 100% of OBS shares for cash consideration of A$0.65 per share, conditional to the proposed placement by Obis to Greenstone (at A$0.42) being rejected by shareholders.

Bauxite Sector

Source: ASX

Copper Producers

Source: SNL

Copper Developers & Explorers

Source: SNL

Gold Producers

Source: SNL

Code Company NameClose

PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

ABX Australian Bauxite 0.30 ▼ (14%) 36% 38 2 36

BAU Bauxite Resources 0.12 ▼ (8%) 0% 28 41 (13)

CBX Cape Alumina 0.018 ▼ (22%) (40%) 4 1 3


PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

TEV/

EBITDA

ABY Aditya Birla Minerals 0.22 ▲ 2% (35%) 69 137 (67) NM

AOH Altona Mining 0.24 ▲ 2% 42% 126 18 111 3.1x

DML Discovery Metals 0.030 — 0% (43%) 19 5 140 2.3x

HGO Hillgrove Resources 0.52 ▼ (5%) (28%) 76 16 90 2.2x

KBL KBL Mining 0.040 — 0% (9%) 16 7 31 1.9x

OZL OZ Minerals 3.96 ▲ 8% 26% 1,202 364 1,047 5.7x

PNA PanAust 1.75 ▼ (1%) (3%) 1,114 146 1,332 NA

SFR Sandfire Resources 5.52 ▲ 0% (15%) 859 58 962 4.4x

SRQ Straits Resources 0.005 — 0% (38%) 6 13 129 17.5x

TGS Tiger Resources 0.23 ▼ (6%) (35%) 236 42 366 NA

985 CST Mining 0.006 ▼ (6%) (34%) 176 146 21 NM

1208 MMG 0.39 ▼ (6%) 60% 2,040 154 3,944 4.4x

3993 China Molybdenum 0.68 ▼ (3%) 33% 5,786 347 6,499 NA

MWE Mawson West 0.18 ▼ (5%) (69%) 31 54 26 NM


PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

ARE Argonaut Resources 0.018 ▼ (5%) (24%) 8 2 5

AVB Avanco Resources 0.087 ▼ (3%) 23% 145 32 112

AVI Avalon Minerals 0.004 — 0% (60%) 6 1 5

AZS Azure Minerals 0.022 ▼ (8%) (26%) 18 1 17

BMB Balamara Resources 0.065 — 0% (32%) 23 0 23

BTR Blackthorn Resources 0.26 ▼ (4%) (2%) 42 12 29

CDU CuDeco 1.38 ▼ (0%) (23%) 325 9 316

ENR Encounter Resources 0.18 ▼ (22%) (8%) 23 4 19

ERM Emmerson Resources 0.034 ▲ 6% (12%) 13 2 11

FND Finders Resources 0.150 ▼ (6%) (28%) 101 8 86

GCR Golden Cross Resources 0.105 — 0% 5% 10 2 7

GPR Geopacific Resources 0.070 ▲ 1% 133% 20 3 20

HAV Havilah Resources 0.125 ▲ 9% (48%) 19 6 15

HCH Hot Chili 0.23 — 0% (46%) 80 13 78

HMX Hammer Metals 0.115 ▲ 5% (43%) 9 1 9

IAU Intrepid Mines 0.25 ▼ (9%) (22%) 137 11 (23)

IRN Indophil Resources 0.28 — 0% 70% 337 215 128

KDR Kidman Resources 0.074 ▲ 14% (60%) 9 3 6

KGL KGL Resources 0.27 ▲ 10% 157% 38 7 24

MEP Minotaur Exploration 0.16 — 0% 10% 24 5 20

MNC Metminco 0.014 ▼ (13%) (55%) 25 8 22

PEX Peel Mining 0.077 ▼ (4%) (70%) 10 3 7

RDM Red Metal 0.17 ▲ 13% 13% 30 2 28

RXM Rex Minerals 0.23 ▼ (2%) (52%) 51 3 48

SMD Syndicated Metals 0.045 ▲ 7% 32% 12 2 10

SRI Sipa Resources 0.037 ▲ 9% (34%) 12 2 10

SUH Southern Hemisphere 0.056 ▼ (15%) 12% 14 2 11

THX Thundelarra Resources 0.094 ▼ (1%) 147% 30 1 30

TLM Talisman Mining 0.11 ▼ (13%) 0% 14 16 (2)

XAM Xanadu Mines 0.12 ▲ 5% 130% 28 4 29


PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

TEV/

EBITDA

AGD Austral Gold 0.12 ▼ (4%) (4%) 20 NA 80 6.7x

ALK Alkane Resources 0.27 ▲ 29% (22%) 109 16 94 13.9x

AMI Aurelia Metals 0.33 ▼ (7%) 43% 113 22 198 NM

BDR Beadell Resources 0.33 ▼ (7%) (58%) 264 10 325 2.6x

DRM Doray Minerals 0.50 ▲ 3% (11%) 83 16 83 2.5x

EVN Evolution Mining 0.68 ▼ (8%) 10% 483 32 612 3.0x

IGO Independence Group 4.20 ▲ 3% 35% 984 57 955 6.8x

KCN Kingsgate Consolidated 0.71 ▲ 3% (20%) 159 54 259 NM

KRM Kingsrose Mining 0.38 ▼ (7%) 13% 136 7 142 NM

LSA Lachlan Star 0.043 ▼ (43%) (79%) 6 2 24 8.7x

MIZ Minera Gold 0.005 — 0% (29%) 12 0 17 NM

MLX Metals X 0.21 ▲ 2% 24% 348 57 291 4.1x

MML Medusa Mining 0.74 ▲ 3% (64%) 154 14 150 2.7x

MOY Millennium Minerals 0.088 ▲ 13% (54%) 19 2 57 5.9x

NCM Newcrest Mining 10.00 ▲ 4% 28% 7,662 141 11,723 NM

NGF Norton Gold Fields 0.14 ▲ 4% 0% 126 38 226 NA

NST Northern Star Resources 1.23 ▲ 2% 57% 723 82 646 7.7x

OGC OceanaGold Corp. 2.54 ▲ 5% 52% 765 28 890 4.0x

PGI PanTerra Gold 0.029 ▼ (17%) (29%) 24 6 90 4.4x

PRU Perseus Mining 0.37 ▲ 9% 51% 195 37 164 29.7x

RMS Ramelius Resources 0.052 ▲ 16% (46%) 24 12 14 NM

RRL Regis Resources 1.51 ▼ (1%) (48%) 752 7 786 NM

RSG Resolute Mining 0.38 ▼ (5%) (32%) 244 19 275 2.6x

SAR Saracen Mineral Holdings 0.33 ▲ 2% 83% 262 36 240 5.7x

SBM St Barbara 0.15 ▲ 12% (44%) 71 79 331 NM

SLR Silver Lake Resources 0.35 ▼ (3%) (36%) 174 24 163 NM

TBR Tribune Resources 2.77 ▼ (0%) 19% 139 11 154 8.9x

TRY Troy Resources 0.67 ▼ (5%) (15%) 131 43 128 NM

UML Unity Mining 0.010 — 0% (76%) 11 7 5 NM


DISCLAIMER



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Gold Developers & Explorers

Source: SNL

Nickel Sector

Source: SNL

Zinc & Poly-metallic Sector

Source: SNL

For further information, please contact:

JF Bertincourt

m +61 406 998 779

[email protected]


PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

ABU ABM Resources 0.35 ▼ (4%) 6% 96 10 85

AWV Anova Metals 0.040 — 0% 100% 9 1 7

AZM Azumah Resources 0.036 ▲ 6% 29% 14 4 12

BAB Bullabulling Gold 0.078 — 0% 73% 27 4 25

BLK Blackham Resources 0.13 ▼ (4%) (24%) 15 1 15

BSR Bassari Resources 0.016 — 0% 100% 19 - 19

CHN Chalice Gold Mines 0.12 ▲ 4% (11%) 34 44 (10)

CHZ Chesser Resources 0.15 — 0% 38% 32 1 33

DCN Dacian Gold 0.33 ▲ 3% 38% 24 11 13

EXG Excelsior Gold 0.061 ▼ (3%) (12%) 28 1 27

FML Focus Minerals 0.012 — 0% 0% 110 81 109

GCY Gascoyne Resources 0.14 ▼ (7%) 0% 23 1 22

GMR Golden Rim Resources 0.009 ▼ (10%) (18%) 10 1 11

GOR Gold Road Resources 0.27 ▲ 8% 173% 160 10 150

GRY Gryphon Minerals 0.12 ▼ (4%) (29%) 48 34 13

IDC Indochine Mining 0.016 — 0% (63%) 19 0 21

KGD Kula Gold 0.066 ▼ (15%) (37%) 10 3 10

MSR Manas Resources 0.024 ▼ (11%) (25%) 11 6 9

MUX Mungana Goldmines 0.150 ▲ 3% 456% 25 5 20

MYG Mutiny Gold 0.039 ▲ 15% 23% 26 3 23

OBS Orbis Gold 0.68 ▲ 61% 170% 169 5 164

OGX Orinoco Gold 0.094 ▲ 2% (27%) 12 1 13

PXG Phoenix Gold 0.09 ▼ (5%) (40%) 34 9 25

RED Red 5 0.087 ▲ 2% (1%) 66 38 28

RNI Resource & Investment 0.11 ▼ (8%) 108% 51 2 63

RNS Renaissance Minerals 0.073 ▲ 6% 22% 29 2 28

SIH Sihayo Gold 0.013 ▼ (28%) (56%) 13 0 9

SXG Southern Cross Goldfields 0.013 — 0% 0% 13 3 16

TAM Tanami Gold 0.016 ▲ 7% (27%) 19 1 25

WPG WPG Resources 0.046 ▲ 10% 59% 12 5 7


PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

TEV/

EBITDA

IGO Independence Group 4.20 ▲ 3% 35% 984 57 955 6.8x

MCR Mincor Resources 0.56 ▲ 1% (6%) 105 26 83 2.7x

PAN Panoramic Resources 0.58 ▼ (9%) 132% 187 64 131 2.7x

WSA Western Areas 4.34 ▲ 4% 83% 1,008 231 996 6.9x

AVQ Axiom Mining 0.018 ▼ (5%) 20% 59 0 58 NM

CZI Cassini Resources 0.19 ▲ 6% 270% 21 8 14 NM

LEG Legend Mining 0.008 ▼ (11%) 0% 16 5 12 NM

MLM Metallica Minerals 0.067 ▼ (4%) 34% 11 1 10 NM

PIO Pioneer Resources 0.02 ▲ 6% 42% 10 1 9 NM

POS Poseidon Nickel 0.17 ▼ (15%) 124% 88 4 118 NM

SEG Segue Resources 0.012 ▼ (8%) 200% 18 1 17 NM

SGQ St George Mining 0.09 ▼ (11%) (11%) 10 1 8 NA

SIR Sirius Resources 2.87 ▲ 4% 26% 980 59 921 NM

WIN Winward Resources 0.18 ▼ (10%) (10%) 11 6 5 NM


PriceWeek r YTD r

52 Week

Range

Market Cap

(A$m)

Cash

(A$m)

TEV

(A$m)

AQR Aeon Metals 0.13 — 0% 0% 40 5 47

CCU Cobar Consolidated 0.058 — 0% (52%) 19 6 31

DGR DGR Global 0.045 ▲ 41% 50% 19 0 19

HRR Heron Resources 0.15 — 0% 7% 54 33 21

IBG Ironbark Zinc 0.10 ▼ (2%) 69% 43 2 41

IPT Impact Minerals 0.027 ▲ 23% (33%) 15 1 15

IVR Investigator Resources 0.028 ▲ 12% (40%) 13 3 10

MRP MacPhersons Resources 0.13 ▼ (11%) (31%) 38 7 31

RDM Red Metal 0.17 ▲ 13% 13% 30 8 22

ROL Robust Resources 0.49 ▲ 3% 39% 95 17 82

RXL Rox Resources 0.042 ▼ (2%) 27% 36 3 33

TZN Terramin Australia 0.078 ▲ 8% 179% 103 5 152

VXR Venturex Resources 0.006 — 0% (40%) 9 3 6

oz metals 20141018

Economy & Finance