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Morning View:

Gold US$1,661/oz - Copper US$ 8,325/t – metals prices rise as Chinese buyers step in

· More money for the IMF means more inflation somewhere.

· Euro strength on IMF funding plans and relative US dollar weakness helps metals higher

· Central banks expected to be ongoing buyers of gold

· Soft landing in China and recovery in the US helps copper higher

Miners are preparing a deluge of positive press releases ahead of the Indaba conference, Cape Town February 6th – 9th February

The mining sector generally lifts through this period as African focussed miners find new support for their ventures

A spate of management changes is seen within the mining sector

· David Brown, CEO of Impala Platinum is leaving after 14 years in the post

· Steven Blumgart, senior executive at Glencore is to leave this year

· Philip Kenny, Chairman, Firestone Diamonds

These and other departures are symptomatic of pressure within the sector for companies to perform

Investors are focussed on miners more than ever in the current economic climate and activists are having their way

Economic News:

IMF – The IMF has today reportedly asked its member countries to add an extra $500bn to combat the ongoing global crisis. Currently the IMF has US$387bn in resources. 

· New estimates suggest that demand for bailout loans could total US$1 trillion over the next two years. 

· The latest information suggests that the loans would not be mandatory. 

· The US and the UK are reportedly reluctant to add to their contributions. 

· Last month Eurozone countries pledged circa US$200bn to the IMF. 

China – Stocks rose this morning as reports emerged that China is weighing up allowing the nation’s five biggest banks to increase Q1 lending and relax capital requirements. 

· The central bank will reportedly let the largest lenders increase new loans by a maximum of 5% 

· Chinese Premier Wen Jiabao has stated that China “completely rejects” Iran developing nuclear weapons and is supporting talks to find a resolution. 

· Wen also stated that Syria must stop the killing of civilians and that authorities must listen to the wishes of its people – A phrase regarding a pot and a kettle springs to mind…. 

Europe – France will test the debt markets today, aiming to raise as much as €9.5bn for the first time since its AAA credit rating was cut. 

· Forecasts expect the sale to progress successfully – with demand expected to be strong. 

· Yesterday Portugal 10 year government bonds yields hit euro era highs. 

· The Spanish Treasury plans to sell €4.5bn euros of notes and bonds today. 

· Concerns are circulating that previous strong demand may have been solely attributed the ECB buying. 

· Spanish ten year yields were at 5.15% yesterday – down from a 14 year high of 6.78% 

· Greek officials will continue to try and forge a deal with creditors today. Progress is reportedly being made although it is painstaking slow according to reports. 

· Luxembourg Prime Minister Jean- Claude Juncker has become the latest politician to call for more growth in the Euro zone to run alongside tightening government budgets. 

US – The prospects of further QE have led the S&P 500 to rise 4% since the start of the year – the best start since 1987. 

· About $460bn has been added to the value of US shares this year. 

· Latest GDP estimates have the country growing at 2.3% in 2012. 

· Consumer price index figures will be released later today. 

· Housing start figures will be released this afternoon. Forecasts suggest that housing starts declined by 5,000 in December. 

· Additionally initial jobless claims figures will be released later today. Forecasts are that claims fell by 15,000 the week ended January 14th – If accurate this provides further evidence that the jobs market in the US is stabilising. 

· 7 hedge fund managers and analysts have been charged in connection with an insider trading ring according to the FT. 

UK – Consumer confidence fell in December to near record lows on the back of rising unemployment and the euro crisis sapping consumer demand. 

· The index fell to 38 from 40 in November. 

Australia – 2011 was the worst year for unemployment for almost 2 years according to official figures. 

· The unemployment rate held at 5.2% in December. 

· The Queensland Resources Council has warned of the potential problems the industry in the country would face should the global economic slowdown intensify. 

· The Bureau of Meteorology said tropical and western areas including Pilbara may suffer from wetter-than-normal weather in the next quarter.

Japan – Consumer spending continues to show signs of improvement. Figures released today show nationwide department sales rose 0.8%. 

Brazil – The country’s Central Bank has signalled that it will continue to keep cutting interest rates at the current pace after it reduced borrowing costs by half a point for a 4th straight meeting. 

· The benchmark rate now sits at 10.5% 

· The country is reportedly studying measures to stem gains by the real, which has outperformed all major currencies since the start of the year. 

· The real has strengthened 5.4% this year. 

India – Officials have stated that the country is to launch a $35bn wave of public sector investment to counteract the downward growth trend.

· The move will aim to boost growth from the 7% currently forecast back to double digit growth. 

· The Government has reportedly ordered 17 state owned companies to invest in infrastructure and energy projects. 

· Domestic stocks rose to a six week high on the back of the IMF’s plans to expand its lending powers – and the fact that any large scale action will shield the economy. 

· The gauge that measures food prices in the country fell for a 3rd straight week – boosting speculation that interest rates will be unchanged for a second month. 

Indonesia – Moody’s have upgraded the country investment level to Baa3 from Ba1. The upgrade brings the country to the lowest investment grade level. 

Malaysia – Growth will probably miss the government’s forecast this year amid the faltering global economy. 

· Southeast Asia’s 3rd largest economy will expand 3.7% in 2012 according to new official estimates. 

Thailand – The Government pension fund has announced that it will use some of its $16bn to invest in overseas assets to boost returns. The fund will raise the proportion of foreign stocks to 9% of total assets in 2012. 

Currency – The dollar is up this morning as evidence continues to emerge that the US economy is improving. 

· The yen is marginally off this morning against its most traded counterparts. 

· The rand yesterday advanced to the highest level in more than 2 months against the dollar on the back of improving commodity prices. 

· The Indian Rupee has climbed to a two month high on the back of the swing to positive sentiment regarding the countries growth. 

Commodity News:

Precious:

Gold US$1,661/oz vs US$1,658/oz yesterday – Gold held steady today around US$1,660/oz after prices climbed in the last 3 days on weaker dollar and a positive economic news flow from the US.

· Nord Gold, a gold miner with operations in West Africa, Russia and Kazakhstan, announced around 10.6% of its share capital will start trading in the form of GDRs on the LSE today.

· Yuzhuralzoloto, a Russian gold producer, plans a US$200m IPO in London. The company plans to sell 25% of its share capital.

· SPDR gold trust holdings remained at 1,256t (40.371moz) value US$66.475bn.

Platinum US$1,530/oz vs US$1,520/oz yesterday

· Anglo American Platinum shares dropped the most in more than 4 months in Johannesburg as company reported it expects full year earnings excluding one-time items to decline by 34% from 2010.

· The drop in earnings will be attributed to numerous safety stoppages, growing production costs and a US$1.07bn charge for the community development transaction.

Palladium US$668/oz vs US$655/oz yesterday

Silver US$30.48/oz vs US$30.23/oz yesterday

· A former blue chip company Kodak, a photographic equipment producer, filed for Chapter 11 in the US Bankruptcy Court today. It is estimated that the company bought about US$300m worth of silver in 2011.

· Photography was once a major consumer of silver, but an increasing use of digital equipment cut its share in total fabrication demand from 30% in 1990 to 8% in 2010.

Rhodium US$1,325/oz vs US$1,325/oz yesterday

Base metals:

Copper US$ 8,325/t vs US$8,210/t yesterday – Copper climbed above US$8,400/t, the highest reading in 4 months, on upbeat economic data from the US and expectations of credit easing in China.

· Copper market recorded a surplus of 46,200t in the first 11 months of 2011 compared to a deficit of 61,900t in FY 2010 according to the World Bureau of Metal Statistics.

· Freeport-McMoRan has resumed its shipments of copper concentrate at its Indonesian unit Grasberg.

· On Tuesday Vedanta commissioned a US$100m smelter at its Nchanga open pit copper mine in Zambia.

· Newmont Mining forecasts a drop in copper production in 2012 due to a striping stage at Batu Hijau mine in Indonesia as the company will be removing waste layers to reach new layers of ore.

Aluminium US$ 2,221/t vs US$2,209/t yesterday

· Norsk Hydro will shut 1 of the 3 production lines at Kurri Kurri smelter in Australia as part of its cost cutting programme.

· The stoppage of potline 1 will decrease 180,000tpy capacity of the plant by 60,000tpy and cost Hydro around US$20m.

Nickel US$ 19,579/t vs US$19,449/t yesterday

Zinc US$ 2,013/t vs US$1,995/t yesterday

Lead US$ 2,147/t vs US$2,103/t yesterday

Tin US$ 21,950/t vs US$21,710/t yesterday

Energy:

Oil US$111.37/bbl vs US$111.63/bbl yesterday – US Crude dropped $99.84 yesterday as news broke after close of floor trading that the Obama administration is not giving the go-ahead for the TransCanada Keystone XL Pipeline project.

· TransCanada may now look to Asian markets such as China to diversify its exports.

· 99% of Canada’s crude exports go to the U.S.

· Futures have gained since the API released its report that oil inventories declined 4.81m/bbls to 330.1m/bbls last week

· US crude is up at US$101.32/bbl on the New York Mercantile exchange with WTI at US$101.41/bbl on London-based ICE futures exchange.

· As Rockhopper seeks $2bn for development of the Sea Lion field, Borders and Southern Plc sit ready to drill the Stebbing prospect in February.

· Morgan Stanley ranks the wells among the world’s top 15 offshore prospects for 2012.

· Further drilling successes are going to increase the political tensions over Argentina’s claims to sovereignty over the Falkland Islands, South Georgia and the South Sandwich Islands, citing Britain is stealing its natural resources.

Natural Gas US$2.476/mmbtu vs US$2.515/mmbtu yesterday – Price are sinking as the boom in Shale drilling threatens to fill the U.S.’s storage network.

· A study is expected to be released today from the U.S. Department of Energy on the impacts of exporting LNG to higher-priced markets.

Uranium US$53.45/lbs vs US$53.70/lbs yesterday – A call by a key sub committee has requested that regulations be drafted prior to a vote on whether to lift a ban on Uranium mining in Virginia (VA), U.S.

· Concerns over water contamination still hinder mining companies’ progress in areas such as Coles Hill which is expected to hold around 119 million pounds of Uranium ore. 

· The same arguments for mining are being touted such as economic value and jobs creation. A moratorium has been in place since 1982 giving time for researchers from both sides research the deposits on sites such as Coles Hill. 

Coal- India’s Coal Minister Sriprakash Jaiswal has said that Coal India Ltd., the worlds largest producer will be urged to maintain prices even if the company agrees wage increases next week.

Company News:

Cluff Gold (LON:CLF) – Drill Results from Yaoure gold project (Angovia), Ivory Coast

· Cluff Gold have announced results from thee drilling of their sulphide resource at Yaoure Project in Cote d’Ivoire. 

· These results focus on the sulphide resource potential at Yaoure where the current sulphide measured and indicated resources total 249 oz (4.9 Mt at 1.6 g/t). 

· A total of 23 DC holes for 1,967m were completed at Yaoure Central by Dec 2011 – 13 holes to test east-west trending structures not included in the resource model – 11 results are reported. 

· 10 holes were drilled to test the main north-south trending structure of which 2 results were reported. Results of 10 holes remain to be announced. 

· The main objective of the programme was to test the N-S structure and the initial two holes drilled confirmed the width and grade of the main mineralised zone from historic RC results (30m at 3.64 g/t). 

· The aggregate composite drilling results for the N-S structure are shown below: 

- YD0021: 28.35 metres at 3.24 g/t Au from 35.3 m

- YD0014: 31.6 metres at 1.97 g/t Au from 31.8 m

· A second phase of diamond drilling focussing on the N-S structures consisting of 2,000 metres across 9 holes has commenced to follow up over a strike length of 700m and 250m down dip with results expected in March 2012. 

Drill results from the E-W structure include: 

      YD0001: 14.20 metres at 1.87 g/t Au from 48.70 metres

             YD0003: 21.05 metres at 2.45 g/t Au from 55.45 metres

             YD0004: 17.30 metres at 2.02 g/t Au from 27.22 metres and 2.80 metres at 25.26 g/t Au from 2.9 

             YD0008: 13.25 metres at 4.14 g/t Au from 31.90 metres.

· Initial metallurgical test work indicates that the sulphide mineralisation is not refractory and the relatively shallow dip of mineralisation indicate potential for an open pit resource. 

· Based on this the company have approved a US$6.6m budge for an aggressive 79,000 m exploration drill programme in 2012. 

· The company believe that as the project has good road access and also access to low cost hydroelectric power with 5 km of the property the focus of the company is to delineate a sufficient sulphide resource to sustain a CIL/CIP operation while at the same time continuing to search for oxide resources which could result in an early re-opening of its previous oxide heap leach operation. 

Conclusion: The company’s commitment to a US$6.6m budget for this project suggest they are confident of delineating a significant sulphide resource for this project and that the proximity of infrastructure will support a CIL/CIP operation.

Hambledon Mining (LON:HMB) – Drill results from Sekisovskoye

· The company have reported results from four drill holes of its underground drilling programme. 

· The ongoing programme is to validate and expand the geological resource base at Sekisovskoye.. 

· Sixty one drill holes have been completed and the main intersections since the last update include: 

o Hole D65 – 9m at 4.86g/t Au 

o Hole D49 – 2m at 3.5g/t Au 

o Hole D50 – 6m at 1.96g/t Au 

· These results are consistent with the previous geological and mineral resource modelling. 

· The Sekisovskoye deposit comprises around 10 large mineralised zones intermingled with numerous narrow mineralisation zones – widths vary from 0.35 n to 30 meters with a weighted average of 5.5 meters. 

· The underground ore body to be mined in 2012 ore body number 11 has drill results and mined grades which compare well with the geological model. 

· The company plan to have a team of UK geologists visiting the mine in mid-2012 for three months to carry out additional and specific structural mapping to add to the rock mass characterisation studies currently being undertaken. 

Conclusion: These drill results are positive and in line with grades for the resource targeted for underground mining which will enable them to progress towards their production target of 100,000 oz. The company are pushing forward with initiatives to better understand the underground resource and are awaiting a potential investment from the EBRD to push forward their development programmes.

Stellar Diamonds (LON:STEL) – Encouraging Grades and Values at Tongo Project

· Dyke 1 Sampling: The company reported final bulk sample grades of the 2.5 km Dyke 1 at the Tongo project in Sierra Leone. 

· The sample grade was 121 cpht with an average diamond value of $185 per carat giving an in-situ value of the kimberlite of $224/tonne. 

· So 1.9 km of the 2.5 km has been drilled – of the 32 holes drilled, 27 intersected kimberlite. 

· Several holes had multiple intersections of kimberlite that are cumulatively grouped together into two main dyke zones up to 150 cm in width.  

· A maiden resource for Dyke 1 is expected to be completed during the first quarter 2012. 

· As part of the resource estimation programme a number of samples have been sent to the lab for microdiamond analysis. 

· Of the first consignment of 23 drill core samples sent for analysis a total of 229 diamonds were recovered with two classified as commercial at a size over 0.85 mm. 

· Previous microdiamond analysis at Dyke 1 done in 2008 had yielded very good results. 

· Dyke 4 Sampling: Sampling of the nearby 1 km long Dyke 4 has also yielded high grade of 106 cpht indicating further kimberlite potentital nearby. 

· In November 18.36 dry tonnes of kimberlite were processed yielding 92.47 carats for a +1 mm dry grade of 105.9 cpht. 

· The kimberlite was very decomposed and the sampling dilution experienced was high. 

· Dyke 4 results are not expected to be part of the resource statement but indicate future potential. 

Conclusion: The trend for the bulk sampling at Dyke 1 show a positive trend with grades improving and higher potential in situ values for the resource. This is encouraging for the resource statement expected in the first quarter of 2012.

Russian mining news

Archangel Diamond Corporation (Russian liquidation company) 

– New claims filed in the US court against Lukoil seeking compensation in regards of a lost share in the Grib Pipe, a diamond project in Verkhotina Area, Russia

· In December 1993, Arkhangelskgeoldobycha (AGD) acquired exploration and mining license from a 400sq km “Verkhotina Area”, northwest of Archangelsk in Russia.

· In 1993-94 Archangel Diamond Corp (ADC) signed an agreement with ADC and acquired the right to earn a 40% share of earnings from the Verkhotina Area.

· The Grib Pipe at Verkhotina was discovered in 1996. According to De Beers assays prepared in 2000 the site contained 98mt of kimberlite to a depth of 500m with an estimated 67 million recoverable carats. De Beers estimates suggested grades of 69-82 carats per 100 tonnes.

· The dispute began in 1998 when ADC claimed that AGD violated previous agreements and did not transfer licences for the Grib Pipe to a joint venture company. In turn, AGD, which was acquired by Lukoil, a Russian oil giant, in 2001, says ADC failed to comply with the investment and operating requirements of the license.

· The case has been in court ever since with no resolution on the matter. The end of litigations nearly ended in 2008 when De Beers, the majority shareholder of ADC at the time, signed an agreement with Lukoil by which it would increase its stake in the Grib Pipe to 49.99% and commit more funding to the project. The deal broke down in Jan 2009 after ADC pulled out of agreement as the Federal Antimonopoly Service missed the deadline to approve terms of a diamond cutting and polishing conditions.

· ADC, 56% of which controlled by De Beers, revived the litigation in the end of 2009.

· The company filed for bankruptcy in 2010 and is a liquidation trust with its major assets being the litigation claims against Lukoil as of Jan 2011.

· The company charges Lukoil with various illegal financial activities and seeks compensation of nearly US$4.8bn. On Oct 2011 the city judge of Denver, Colorado, declined to proceed with the case as charges over Lukoil failed to match the jurisdiction for the court. On Jan 6 the company filed new claims in the US District Court of Colorado. Attorneys of ADC said the case may be taken to the federal court.

Conclusion: The litigation process has seriously shifted the development and mining schedule for the Grib Pipe, one of the largest undeveloped kimberlite deposits. Open pit mining activities are not expected to start before the end of 2013 with expected life span of the pipe of 25-35 years. The result of the more than a decade long court dispute remains to be seen.

Nord Gold (private) – Q4 and FY 2011 production results

· Production: Quarterly output was up by 14% at 204koz of gold equivalent compared to Q3. 

· FY production increased by 28% yoy to 754koz running on the upper end of the company’s annual guidance. 

· The company processed less ore but at a higher grade in the final quarter – 3,491kt (Q3: 4,588kt) at 1.87g/t (1.65g/t). 

· Total ore processed gained 61% yoy to 15,562kt with a 20% drop in average grade to 1.85gt. 

· Recoveries held steady at 80% with a FY average of 81%. 

· The average gold price achieved was US$1,652/oz in Q4, 3% down from Q3, and US$1,567/oz in FY, 25% up from FY 2010. 

· Revenues were US$386m 52% higher than Q3. Total revenues for 2011 jumped by 57% to US$1,182m. 

· The company targets a record production of 800-850koz in 2012 and 1moz by 2013. 

· Development: The Company focuses on 2 primary targets – Bissa project in Burkina Faso and Gross project, 4km away from operating mine Neryungri in Yakutia, Russia. 

· Bissa is on track to produce first gold in H1 2013 with most of engineering works completed by this time. The project is forecasted to produce 93koz in 2013 and 161koz in 2014. JORC resource was at 2.9moz as of Nov 1 2010. 

· Gross is planned to complete pre-feasibility stage soon. Production is expected at 61 and 110koz in 2013 and 2014, respectively. JORC resource was at 5.4moz as of Nov 1 2010. 

· Exploration: Approximately US$124m spent on exploration activity during the year and an updated Mineral Expert Report is expected in Q1 2012. 

· The company targets several areas for exploration in Guinea, Burkina Faso and Russia. Among key exploration projects is Prognoz, one of the biggest high grade undeveloped silver deposits with JORC resources currently at 205moz of silver. 

Conclusion: Nord Gold continues to report strong production results. An extensive exploration activity and commissioning of Bissa and Gross projects should help the company to ramp up production in the future.

Mining this week: 

BHP Billiton (LON:BLT) – Quarterly Exploration & Development Report shows 700% increase in Spence Mine Resource in Northern Chile

Cape Lambert (ASX:CFE) –  Plans A$500m Iron Ore IPO

Carbine Resources* (ASX:CRB) – Key exploration director resigns from Carbine

Discovery Metals (LON:DME) - High Grade Copper Zone at Zeta North

North River Resources (LON:NRRP) – Update at Namib Lead Zinc Mine and Agreement on Nuclear Fuels with Extract

Ncondezi Coal Company (LON:NCCL) - Infrastructure Agreement in Mozambique

Firestone Diamonds (LON:FDI) – Philip Kenny resignes as Chairman of Firestone

Goldplat (LON:GDP) – First Gold Pour at Kilimapesa Gold Mine

London Mining (LON:LOND) – Operations Update from Marampa

Medusa Mining (LON:MML) - Drilling Update at Banaghilig Deposit

Anglo Asian Mining* (LON:AAZ) – Mined gold grades rise at Gedabek gold / copper mine

Alecto Minerals (LON:ALO) – Drill Programme Finalised for Wad Amour Copper/gold Project

EMED Mining (LON:EMED) – Quarterly highlights timetable to re-start Rio Tinto in Q3

North River Resources (LON:NRRP) – Drill Results from Tsawichas Prospect at Ubib Copper-Gold Project

Paragon Diamonds (LON:PRG) – Initial diamond grade and volume estimate for Motete Dyke