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Morning View:

US – Figures released yesterday showed that manufacturing in the US grew in January at the fastest pace in 7 months. 

· The ISM index climbed to 54.1 from 53.1 in December. 

· Any figure above 50 indicates expansion. 

· The New orders measure climbed to 57.6 – the highest rate since April. 

· Manufacturing accounts for around 12% of the economy. 

· Additionally – ADP employment figures were released yesterday, showing that companies hired 170,000 workers in January. The figure was below estimates of 182,000 

· Construction spending increased 1.5% in December the largest gain since August. 

· Another positive. Chrysler Group announced that US sales rose 44% last month from the same period last year. 

· In the wider auto market, cars and light trucks reportedly sold at a 14.1m annual rate. 

· The main focus of the week remains the non farm payroll figures released tomorrow. 

· Initial jobless claims figures will be released later today. Forecast indicate that claims fell by 6,000 last month. 

· US Bloomberg consumer confidence figures will be released later today. Forecast suggest that confidence improved last month. 

Europe – News flow has slowed on Europe as the markets still wait to hear whether a deal has been reached with regard to Greece. 

· According to the FT, the Laos party (Junior partner in the Greek coalition) has asked for the terms of the country’s second bailout to be eased or risk triggering a “social explosion” 

· Greek officials are reportedly struggling to find consensus with regard to the austerity measures required. 

· Expectations are increasing that the ECB will hold out on revealing any plans to lessen the Greek debt burden until creditors have agreed to a deal.  At present the ECB has not joined the bond swap.

China – Stocks rose driving the benchmark index up to the largest gain in two weeks. 

· Premier Wen Jiabao has announced that the Government will support small companies with a $2.4bn fund on the back of moderating growth in the world’s second largest economy. 

· A Chinese Government report yesterday showed that exports orders fell last month even as manufacturing expanded. 

· Fitch Ratings has announced that it sees Chinese bank liquidity to continue to tighten this year. 

Japan - The country’s finance Minister has escalated his warning against strengthening in the yen.

· Jun Azumi comments may well indicate that the country is close to resuming intervention in the currency markets. 

· Stocks were up today on the back of the better than expected manufacturing data emerging from the US. 

UK – North Sea oil prices, being at the lowest level in 15 months compared with the Middle East, is leading to more oil being shipped from the region to Asia than at anytime in the last 8 years. 

Australia – Building approvals fell in December by 1%, where initial forecasts had suggested a 2% increase. 

· On an annual basis, approvals fell by 24.5%. 

India – Reports have emerged that officials want to introduce a commodities transaction tax in the budget to check speculation in non farm goods. 

Currency – The dollar is up today on the back of uncertainty in Europe and the improving picture in the US. 

· The yen is marginally off this morning. 

· The Euro has weakened today against its most traded counterparts as concerns remain that the Eurozone will be able reach agreement on Greece in the coming days. 

Economic news:

Commodity news:

Precious:

Gold US$1,749/oz vs US$1,736/oz yesterday – Gold prices are up this morning and hold around the highest level reached in 2 months of US$1,571.3/oz.

· Newmont Mining and the Peruvian government will define a new date to start the construction of a US$4.8bn gold mine following an environmental review competion, Mining Ministry said.

· Bank of America forecasts gold to reach US$2,000/oz by Q4 this year from US$1,850/oz in Q1.

· Newcrest Mining, the third biggest gold producer, expects gold to trade as high as US$2,500/z in the near term on weaker US dollar, financial turmoil in Europe and political instability in the world.

· Miners’ share prices growth will accelerate to close the gap between rising gold and producers’ share prices, Newcrest CEO said.

· Turkey imported 2.96t on gold in Jan, the Istanbul Gold Exchange said.

· South African gold producers are expected to report an increase in quarterly earnings as South African rand dropped by 13% quarter on quarter during Q4. 

· Holdings in gold backed ETPs increased by 0.2% to 2,376.21t yesterday.

· SPDR gold trust holdings remained at 1.271t (40.867moz) value US$71.081bn.

Platinum US$1,624/oz vs US$1,594/oz yesterday

· Rustenberg Platinum mine operated by Impala Platinum in South Africa is “at a standstill” due to a growing illegal strike at the site. 

Palladium US$698/oz vs US$688/oz yesterday

Silver US$33.77/oz vs US$33.27/oz yesterday

Rhodium US$1,418/oz vs US$1,375/oz yesterday                                                         

Base metals:

Copper US$ 8,428/t vs US$8,305/t yesterday – Prices are slightly off despite positive better-than-expected PMI data form major economies as investors fear a slow down in Chinese copper purchases and weak ADP employment numbers in the US.

· Chinese premiums on imported copper dropped below US$100/t for the first time since Aug on high inventories at local warehouses.

· Copper held in bonded warehouses in Shanghai have increased to 400kt from 300kt a month ago according to local sources.

· BHP will meet with contract workers at the Escondida copper mine in Chile tomorrow to discuss bonuses of miners. Workers threatened to go on a 24-hour strike if negotiations fail.

Aluminium US$ 2,275/t vs US$2,246/t yesterday

Nickel US$ 21,210/t vs US$20,700/t yesterday

Zinc US$ 2,125/t vs US$2,086/t yesterday

Lead US$ 2,236/t vs US$2,213/t yesterday

Tin US$ 24,300/t vs US$24,099/t yesterday

Energy:

Oil US$111.56/bbl vs US$111.56/bbl yesterday – Brent futures for March delivery gained 67 cents or 0.6% this morning, to $112.47/bbl off the back of increased U.S. stockpiles and declining fuel consumption.

· U.S. crude is at $97.61/bbl on the New York Mercantile exchange with WTI at the same $97.61/bbl on the London-based ICE futures exchange. 

· Bloomberg reports Russian oil production climbed to 10.36m/bblsd a day last month from 10.32m/bblsd in December according to the Energy Ministry’s CDU-TEK unit 

· Russian Prime Minister Vladimir Putin in his re-election campaign has called for Russia to pump more than 10m/bblsd for the next decade and lowered the tax rate on crude exports to encourage output. 

· Oil will be the battleground in the Scottish independence referendum claims Charles Henry the energy minister… Tell us something we hadn’t all ready guessed! 

· Mr Hendry also announced the launch of the 27th offshore oil and gas licensing round on Wednesday and said that an increase in field approvals is expected through 2012. 

· China National Offshore Oil Company (CNOOC Ltd) plans capital investment of $17bn this year as it aims to triple oil and gas output by 2030. 

Natural Gas US$2.382/mmbtu vs US$2.461/mmbtu yesterday – 

Uranium US$52.95/lbs vs US$53.45/lbs yesterday – the spot price for Ux U308 as of January 30th was $52/lb

Coal – India battles to ease blackouts with over half of its electricity reliant on coal.

· Delays in infrastructure works such as adding new rail lines and investor caution are causing mining operations to operate at around one-third capacity.

Other:

Rare Earths – Australia’s Lynas Corp shares jumped 19% to $1.60 their highest since September 13th 2011 following news that the world’s largest rare earth refinery in Malaysia has won approval from the Atomic Energy Licensing Board and government to start production at the plant.

Steel – Sumitomo Metal Industries, the third largest steelmaker in Japan, reported a 37.7bn yen (US$495m) loss in the 9 months to Dec compared a 34.9bn yen profit in 2010.

· The company forecasts a loss of 55bn yen for the financial year ending Mar 31. Sumitomo expected to break even in 2011 according to its estimates in Oct.

· Sumitomo prepares to merge the nation’s largest steel producer Nippo Steel on Oct 1 to form the second biggest steelmaker in the world and compete with Chinese and South Korean manufacturers.

· As previously reported, Nippon Steel expects operations to break even for the full year and JFE Holdings, the second biggest Japanese steelmaker, forecasts an annual loss in 2011.

Iron Ore – BHP Billiton approved a US$14.9bn expansion programme of the iron ore export harbour in Western Australia.

· The company has already agreed to spend US$779m on expansion of the Prot Hedland harbour.

Company news:

North River Resources (LON:NRRP) – Maiden resource at Malachite Pan & Upgrade to resource at Koperberg

· Resource at Malachite Pan: The company announced a maiden resource at Malachite Pan deposit at the Witvlei Copper Project in Namibia. 

· The indicated JORC resource is for 2.6 mt at 1.36% copper for 35,699 contained copper and inferred of 2.4 Mt at 1.11% copper for 26,402 contained copper. 

· Resource at Koperberg: The JORC resource at Koperberg has been upgraded with an indicated resource of 762.6 kt at 1.14% copper giving 8,718 t of contained copper and inferred resource of 617.6 kt at 0.95% copper for 5,863 t of contained copper. 

· Both deposits are open down-dip and mineralisation at Malachite Pan is open to the south-east. 

· A further drilling programme is planned for Q2 2012 which will focus initially on Malachite Pan with a further 6,000 m of drilling planned. 

· The aim of the programme will be to increase the confidence of the resource estimate, improve the geological model and match up the RC drilling results with the DC drilling results. 

· The programme will also test for extensions to known resource along strike to the southeast at Malachite Pan. 

· Results are expected shortly from metallurgical test work at both deposits and further samples will be acquired during the planned drilling programme. 

· Both Malachite Pan and Koperberg are located in an area which is prospective for copper and the company’s exploration programme will look at upgrading other known prospects as well as targeting new prospects in the area. 

· The most advanced of prospects at Witvlei project is Okasewa, in a different geological setting 20 km southwest of Malachite Pan has 35,000 m of historic drilling and where there could be comparable grades and tonnages to Malachite Pan. 

· An airborne magnetic survey will be completed at Witvlei in Q1 2012.

Conclusion: 

The maiden resource at Malachite Pan deposit provides a significant advancement in the exploration programme for Witvlei copper project. 

The Witvlei licenses contain perhaps the best concentration of small copper deposits on the Kahalari copper belt.  There are 15 km of small projects along the licenses here

Malachite Pan has an old shaft and extensive open trenches dug by former owners.  

So far the Malachite Pan resource is shown to carry some 4.8mt of ore grading 1.3% cu at a cut off grade of 0.5%.  Silver grades of around 7g/t compliment the resource to give economic potential.  The original target here was for 250,000 t of contained copper although the target may now be reduced.  However new methods of exploration could uncover additional ore for larger scale operation.  

The ore lies within a fanglomerate, sedimentary structure.  Stacked mineral horizons could be controlled by faulting rather than folding and mineralisation is seen along the veining in some core from later stage intrusion.  It is thought that the copper could have been leached out of early sediments by hot fluids with mineralisation deposited and concentrated in the sedimentary boundary where PH levels change.  

There is potential for extensions to the deposit and other prospects close by. We look forward to receiving positive news flow from the next stage of drilling and also results of the airborne survey.

Kopperberg – a small copper concentrate mining opportunity, could give good cash flow from small plant to fund other, bigger things.  

Project is right on the road and near power lines.  One farmer self floats and refines copper plates from high grade ores in the area.  This suggests that a small plant established at Kopperberg could attract third party ores for processing and could see further expansion beyond the present 17,000t of contained metal at the plant. 

A small 4-5,000tpy copper mine could run for 4-5 years and provide significant cash flow for other larger operations.

Kopperberg ore lies at surface on a small but prominent mound.  Ore extends to around 30m below surface and should have a near zero strip ratio and very little dilution

*Fairfax acts as broker to North River Resources

* Fairfax analysts recently visited ther North River Resources assets in Namibia

Xstrata (LON:XTA) – Confirmation of approach from Glencore.

· Xstrata has today announced that it is in discussions with Glencore regarding an all share merger 

· The FT is reporting that a deal could be announced as early as next week. 

· Xstrata is set to report its annual results next Tuesday. 

· Estimates suggest that the merger could trigger a period of consolidation in the industry. 

· Glencore CEO Ivan Glasenberg has been chasing a deal for the last 5 years stating that it made “strategic sense” 

· There could be anti trust and competition concerns raised should the merger go through. 

· The potential combination would have a large market share, principally in thermal coal. 

Aureus Mining (LON:AUE) – Maiden Reserve and Technical update 

· Company announce maiden reserve for New Liberty Project in Liberia. 

· Reserve of 873,000oz with a  grade 3.1 g/t within an optimized open pit with an eight year mine life. 

· The company is targeting an average annual production of approx 123,000oz in the first 4 years with a head grade of 3.7g/t leading to a total recovered gold of 812,000oz. 

· The forecast operating cash costs of US$ 632 per ounce of gold. 

· Initial capital costs of US$113.1 million include the proposed 1.1Mt per annum plant plus all infrastructure and pre-strip costs. 

Mwana Africa (LON:MWA) – 41% increase in Zani-Kodo gold JORC resource

· The company announced a 41.5% increase in total resource to 2.01moz at a 0.5g/t cut off grade at its 80% owned Zani-Kodo project in the Itur region of north eastern DRC.

· Zani-Kodo gold prospect consists of Kodo Main, Badolite and Zani Central.

· Kodo Main: Indicated resource increase by 44.4% to 449koz at 3.94g/t. Inferred resource increased by 3.4% to 9947koz at 4.06g/t. Total resource currently stands at 1.4moz at an average grade of 4.02g/t.

· Badolite: Inferred resource climbed by 9.2% to 211koz at an average grade of 2.34g/t.

· Zani Central: A maiden inferred resource was estimated at 399koz at an average grade of 1.28g/t.

· The company plans to continue with drilling programme along the strike of the Zani-Kodo trend focusing on 4 areas: Gombiri (south of Zani Central), Kodo Northern Extension, Zani South (southern extension of Zani-Kodo) and Lelumodi  area.

Sable Mining Africa (LON:SBLM) – Acquisition of an exploration permit in the Mount Nimba, south east Guinea

· The company acquired a 123.5 sq km exploration permit in the Mount Nimba through its 80% owned Guinea subsidiary.

· The area is believed to be highly prospective for iron ore.

· Previous reconnaissance and sampling have confirmed a high-quality iron ore mineralisation with exposures of more than 15m in thickness.

· The permit is adjacent to the BHP Billiton/Newmont/Areva 600mt Nimba iron ore operations.

· The company plans a reconnaissance drilling to confirm the thickness and grades at depth of the mineralisation before the start of wet season in May.

Central Asia Metals (LON:CAML) – Operational update on the Kounrad copper project in Kazakhstan and an increase in the project’s ownership to 100%

· First copper is expected in Apr 2012 with a production of 5,000t of copper cathode.

· Construction of the plant is completed with capital costs below budget.

· Commissioning of the SX-EW plant is expected at the end of Feb 2012.

· The company agreed to acquire the 40% interest in the Kounrad project from the SAT Group in exchange for 8.6m shares in CAML, equivalent to 9..1% of the aggregate share capital following a completion of the transaction.

Mining this week: 

Ariana Resources (LON:AAU) - New Vein Systems Found at Red Rabbit Project

ENRC (LON:ENRC) – Operations update for Q4 2011

Hummingbird Resources (LON:HUM) – Maiden Resource at Tuzon Deposit Raises Total Resource to 3.7 m oz

Ampella Mining* (ASX:AMP) – Quarterly report highlights scope for future resources

African Minerals (LON:AMI) -  New Convertible Loan and Refinancing Package

Coal of Africa (LON:CZA) – Quarter end Report for Dec 2011

Impala Platinum (IMP SJ) – New ceo Terence Goodlace appointed to take over from David Brown

Stellar Diamonds (LON:STEL) – Interim Results to 31 Dec 2011

Sumatra Copper & Gold (ASX:SUM) – Fast track to underground mining Quarterly Update

Ampella Mining* (ASX:AMP) – Metallurgical work at Konkera show 88%-98% recovery

Bellzone Mining (LON:BZM) – Forecariah JV Progress Update

Diamond Corp (LON:DCP) – Operational Update

Discovery Metals (LON:DME) – Delisting from AIM, Retaining ASX and Botswana Stock Exchange Listings

Goldplat (LON:GDP) – Operations Update on Recovery Operations

Vital Metals (ASX:VML) – Drill results from Kollo and Boungou look encouraging

Medusa Mining (LON:MML) – Quarterly Activities Report