Denver Gold Group - Metals & Mining · 2015-04-13 · our caution, expecting "riskier" stocks, to...

Metals & MiningFor FCA purposes this is a Marketing Communication

AnalystsCailey BarkerTel: +44 (0)20 7260 [email protected]

Phil SwinfenTel: +44 (0)20 7260 [email protected]

This research was preparedand approved by

Numis Securities LimitedThe London Stock Exchange Building10 Paternoster SquareLondon EC4M 7LT

+44 (0)20 7260 [email protected]

Registered No 02285918. Authorised andRegulated by The Financial ConductAuthority. A Member of the LondonStock Exchange

9 April 2015Metals & MiningIndustry Update

Treading Water

We revise our recommendations and target prices on the back of our newcommodity price forecasts. Q1 was another tough quarter - a brief bounce wasshort lived, as a dive in copper and iron ore dragged down the sector once again.We still expect little respite through this year with a headwind of depressed pricesand downward earnings momentum. Despite some improvement in businesses andlower input costs, we retain our view that only the strong will survive through whatappears to be close to the bottom of the cycle. We tweak our stock picks, keepingwith a theme of value and high quality assets; we recommend Acacia, Petra andHighfield Resources.

● Quality & value. We retain Acacia Mining as our pick, a quality company goingthrough a pivotal year with lots potential for substantial cash generation if it can deliver.We continue with Petra Diamonds, with its peer-leading management and assets plussteady growth profile. We include Dalradian Resources as our choice of the goldjuniors and elevate Highfield Resources to a pick as the best play in the potash space,both companies with quality, high return assets in developed jurisdictions. We retainour caution amongst the copper players and avoid iron ore.

● Downgrades aplenty. We expect further earnings downgrades this year and retainour caution, expecting "riskier" stocks, to remain under pressure. The sector continuesto price-in discounted gold and industrial prices, at an average 8% discount to spot(implied prices $1,107/oz gold, $2.69/lb copper, $59/t iron ore). Our TPs increase byan average of 2%. We are cautious but see value in some shares on a 1-3 year view,reflected by a number of Buy recommendations.

● M&A over-rated. We expect the spotlight to continue for the rest of the year on cost-cutting, free cashflow, balance sheets and shareholder returns. M&A is likely to remainin focus as stretched finances may offer opportunities in times of distress, althoughthere are limited quality assets on offer, in our view. We are ever cognisant of graderemaining a key attribute and those with low margin assets are likely remain underpressure.

● Commodities nearing bottom. Fx remains a key driver. For gold, we retain our$1,200/oz flat spot price based model, due to ongoing volatility, mixed directionalsignals, and a de-coupling from logical fundamental indicators. We expect industrials toremain subdued, with building surpluses and weakening Chinese demand; we chop ouriron ore forecasts (2015 NUMe $2.71/lb Cu, $55/t Fe). Diamonds are likely to remainflattish in the ST due to rolling liquidity constraints. Other commodities are generallysubdued, failing to respond to what may appear ambitious long term fundamentals.

For FCA purposes this marketing communication has not been prepared in accordancewith legal requirements designed to promote the independence of investment researchand is not subject to any prohibition on dealing ahead of the dissemination of suchresearch. Important disclosures are on pages 70 to 74 relating to Numis SecuritiesLimited, analyst certification, other requirements which restrict dealing ahead, relevantinvestment banking relationships, potential conflicts of interest and additionaldisclosures. See www.numis.com/x/regulatory.html for other disclosures.

Contents

Treading Water _______________________________________________________ 4

Stocks ______________________________________________________________ 6

Rocks vs. Stocks ______________________________________________________ 8

Beta ________________________________________________________________ 9

RSI _______________________________________________________________ 10

Volatility Reigns ______________________________________________________ 11

Economy ___________________________________________________________ 12

Commodities ________________________________________________________ 13

Gold _______________________________________________________________ 14

Silver ______________________________________________________________ 15

Copper ____________________________________________________________ 16

Nickel _____________________________________________________________ 17

Iron Ore ____________________________________________________________ 18

Ferrochrome ________________________________________________________ 19

Diamonds __________________________________________________________ 20

Tungsten ___________________________________________________________ 21

Uranium ____________________________________________________________ 22

Potash _____________________________________________________________ 23

Priced as at 7am on 7th April 2015; Exchange Rate £/$: 1.50, £/ZAR: 9.50.

Key sources are company data, including annual reports and analysts’ presentations.

Numis acts as an adviser/broker to Aureus Mining, Berkeley Resources, Caledonia Mining,

Chaarat Gold, Condor Gold, International Ferro Metals, Highfield Resources, Highland Gold, First

Quantum Minerals and Wolf Minerals.

9 April 2015

Registered No 02285918. Authorised and Regulated by The Financial Conduct Authority. A Member of the London Stock Exchange2

Figure 1: Research Universe

Source: Numis Securities Research, Bloomberg and company data

Company Ticker Rec. Share Target Return RSI Market P/NAV P/E P/CFEV/EBITDA EBITDA FCF Net Debt/ Gearing Growth Divi ROE

LN Price Price Cap 2015F 2015F 2015F Margin Yield EBITDA CF Yield

£ £ % £m x x x x % % x % % % %

GOLD & SILVER

Fresnillo FRES BUY 7.10 10.00 41 46 5,228 1.2 105.4 15.2 15.5 35 -5 1.4 46 -10 0.5 3

Randgold Resources RRS HOLD 48.52 51.00 5 50 4,505 1.9 39.0 15.8 15.2 27 3 -0.4 0 33 0.8 3

Acacia Mining ACA BUY 2.70 3.70 37 61 1,109 1.4 17.0 6.2 5.3 31 3 -0.6 6 -7 1.1 5

Centamin Egypt CEY HOLD 0.60 0.60 0 54 691 1.0 8.4 4.7 4.0 37 11 -1.1 0 17 3.8 8

Hochschild HOC HOLD 0.88 0.85 -3 54 323 4.4 197.5 2.6 5.0 31 -14 2.5 52 97 0.0 -1

Highland Gold* HGM BUY 0.41 0.80 96 58 133 0.7 7.9 2.7 4.6 31 5 2.5 36 -34 6.2 3

Timmins Gold TMM BUY 0.90 1.75 94 42 87 0.4 27.1 9.9 3.9 20 0 -0.8 5 -11 0.0 3

Aureus Mining* AUE BUY 0.24 0.40 69 57 87 0.7 14.2 4.6 5.4 42 -36 2.6 48 529 0.0 3

Dalradian DALR BUY 0.49 0.90 83 49 80 0.5 n.a. n.a. n.a. 0 -45 0.7 0 41 0.0 -5

Condor Gold* CNR BUY 0.64 0.90 42 64 29 0.5 n.a. n.a. n.a. 0 -10 2.3 0 32 0.0 n.m.

Chaarat Gold* CGH BUY 0.08 0.24 193 28 22 0.3 n.a. n.a. n.a. 0 0 0.3 0 -56 0.0 -15

Caledonia Mining* CMCL BUY 0.39 0.75 95 64 20 0.4 6.0 3.0 0.5 23 -20 -1.3 0 -27 9.1 6

Minera IRL MIRL BUY 0.03 0.10 208 54 8 0.3 n.a. n.a. 172.9 -8 -254 181.9 42 91 0.0 -4

Polyus Gold PGIL N/C 1.91 - - 44 5,784 - 15.1 10.9 8.3 44 4 0.4 112 13 1.2 -6

Polymetal POLY N/C 5.86 - - 60 2,474 - 11.5 6.4 6.6 42 8 1.1 152 9 3.3 -16

Kirkland Lake KGI N/C 3.00 - - 67 240 - 20.4 5.2 6.7 29 -14 0.4 57 271 0.0 4

Pan African PAF N/C 0.12 - - 52 215 - 10.7 9.0 5.6 24 0 0.4 3 -46 6.0 10

Petropavlovsk POG N/C 0.06 - - 55 184 - 3.0 0.6 5.3 -15 24 2.2 101 -50 0.0 0

Shanta Gold SHG N/C 0.09 - - 22 41 - 2.4 2.7 2.7 18 59 0.5 71 -8 0.0 8

Amara Mining AMA N/C 0.15 - - 57 63 - n.a. n.a. n.a. -6 -2 -6.0 0 -182 0.0 -12

Avocet Mining AVM N/C 0.05 - - 46 10 - n.a. 1.1 5.4 -7 -607 5.7 63 -217 0.0 -66

Average (Producers) 52 1,408 1.3 32.4 6.3 16.1 18.9 -66 0.6 46 52 2.1 2

Average (Non-Producers) 50 35 0.4 n.a. n.a. n.a. n.a. n.a. n.a. 17 34 0.0 -16

COPPER

Antofagasta ANTO REDUCE 7.31 6.00 -18 55 7,207 1.0 14.2 5.5 4.0 47 10 -0.1 21 47 2.5 10

First Quantum Minerals* FQM ADD 8.80 10.00 14 65 5,281 0.6 17.4 4.1 8.9 34 -2 3.3 59 154 2.8 5

Kaz Minerals KAZ REDUCE 2.16 1.90 -12 50 965 0.7 29.8 5.6 7.0 39 -94 8.6 167 543 0.3 2

Central Asia Metals CAML N/C 1.75 - - 64 195 - 7.8 6.4 4.5 63 6 -1.1 0 20 6.4 37

EMED EMED N/C 0.04 - - 42 54 - n.a. n.a. n.a. n.a. -16 -16.0 26 143 9.7 -35

Rambler RMM N/C 0.11 - - 26 16 - 4.4 2.4 2.2 37 58 0.5 29 -35 0.0 16

Average 50 2,286 0.8 14.7 4.8 5.3 35 -6 2.2 64 124 3.1 2

DIVERSIFIED

BHP Billiton BLT N/C 14.57 - - 45 81,159 - 15.0 6.4 6.4 44 7 1.1 41 -19 5.6 13

Rio Tinto RIO N/C 28.04 - - 47 52,159 - 13.7 7.3 6.9 41 8 1.0 46 -12 5.3 13

Glencore GLEN N/C 2.88 - - 51 37,638 - 17.1 5.1 9.1 5 1 3.4 102 10 4.0 5

Anglo American AAL N/C 10.15 - - 40 14,222 - 12.7 4.0 6.1 26 -2 2.0 58 -11 5.4 -9

Vedanta VED N/C 4.90 - - 48 1,316 - n.a. 1.2 6.4 36 25 2.2 94 -42 7.8 0

Average 46 37,299 14.6 4.8 7.0 30 8 1.9 68 -15 5.6 5

GEMSTONES

Petra Diamonds PDL BUY 1.83 2.50 37 54 941 0.5 14.9 6.2 6.3 41 -1 0.3 27 45 1.2 16

Gemfields GEM BUY 0.53 0.75 43 65 284 0.7 20.1 5.4 4.5 47 3 -0.2 9 18 0.0 3

Gem Diamonds GEMD N/C 1.40 - - 44 193 - 9.5 3.3 2.8 38 30 -0.9 10 -5 2.2 11

IRON ORE / COAL / STEEL

Ferrexpo FXPO HOLD 0.65 0.60 -8 63 383 0.6 6.5 2.1 4.9 24 40 2.0 119 -37 6.3 11

Evraz EVR N/C 1.92 - - 56 2,893 - 9.4 3.0 4.6 22 30 2.3 309 0 3.4 -34

New World Resources NWR N/C 0.01 - - 39 54 - n.a. 1.4 11.2 1 -159 9.3 256 -121 0.0 0

Asia Resource Minerals ARMS N/C 0.14 - - 46 33 - n.a. n.a. 27.9 14 -359 32.5 66 0 0.0 -15

Coal of Africa CZA N/C 0.01 - - 46 20 - n.a. n.a. n.a. n.a. -87 12.4 2 0 0.0 -13

MINERAL SANDS

Sierra Rutile SRX N/C 0.20 - - 21 102 - 18.7 5.1 4.9 28 -6 1.0 23 206 0.0 -5

Kenmare Resources KMR N/C 0.04 - - 44 100 - n.a. 3.0 6.4 9 -36 4.2 54 n.a. 1.8 -11

Base Resources BSE N/C 0.06 - - 19 35 - 40.3 1.8 5.3 37 -193 3.2 112 -579 0.0 -9

PLATINUM

Lonmin LMI N/C 1.21 - - 40 707 - 74.1 7.0 6.7 -11 -34 0.4 5 -215 0.1 -10

Aquarius AQP N/C 0.09 - - 31 137 - n.a. 5.3 4.0 12 -3 -1.3 25 92 0.7 -14

FERROCHROME

International Ferro Metals* IFL BUY 0.04 0.25 590 44 20 0.1 n.a. 2.2 0.0 6 -6 -6.2 29 95 0.0 -2

Afarak AFRK N/C 0.33 - - 99 84 - 55.9 n.a. 12.5 7 -7 0.3 7 0 0.0 2

POTASH

Highfield Resources* HFR.AX BUY A$1.70 A$3.00 76 90 A$428 0.6 n.a. n.a. n.a. 0 -33 1.3 87 142 0.0 -29

Sirius Minerals SXX N/C 0.10 - - 75 210 - n.a. n.a. n.a. n.a. -4 3.1 4 -17 0.0 -8

OTHER

Wolf Minerals WLFE BUY 0.20 0.23 16 49 160 0.7 n.a. 19.3 23.2 6 -19 -2.8 27 154 0.0 1

Berkeley Resources* BKY BUY 0.12 0.40 233 54 22 0.3 n.a. n.a. n.a. 0 -17 0.0 0 143 0.0 -29

COMMODITY / FX SPOT FY13 FY14 FY15 FY16 FY17 LT RSI DATE COMPANY EVENT

Gold $/oz 1,211 1,412 1,266 1,205 1,200 1,200 1,200 58 10-Apr Vedanta Q4 prod results

Silver $/oz 16.9 23.9 19.1 16.7 17.6 18.6 18.5 54 15-Apr Fresnillo Q1 prod results

Platinum $/oz 1,175 1,487 1,385 1,161 1,243 1,330 1,500 57 16-Apr Ferrexpo Q1 IMS

Palladium $/oz 770 726 803 759 802 747 600 50 21-Apr Rio Tinto Q1 prod results

Copper $/lb 2.76 3.33 3.11 2.71 2.89 2.92 2.50 57 21-Apr Polymetal Q1 prod results

Lead $/lb 0.86 0.97 0.95 0.83 0.89 0.90 0.90 65 22-Apr BHP Billiton Q3 prod results

Zinc $/lb 0.97 0.87 0.98 0.95 0.95 0.95 0.95 66 22-Apr Hochschild Q1 prod results

Nickel $/lb 5.67 6.82 7.66 5.97 6.41 6.98 8.00 35 23-Apr Acacia Mining Q1 results

Aluminium $/lb 0.81 0.84 0.85 0.80 0.81 0.82 0.85 50 23-Apr Anglo American Q1 IMS

Ferrochrome $/lb 1.08 1.16 1.19 1.08 1.17 1.24 1.20 10 28-Apr Aquarius Q3 prod results

Iron ore $/t 49 135 97 55 59 60 60 20 29-Apr Antofagasta Q1 prod results

Thermal Coal $/t 57 81 72 60 62 66 75 34 29-Apr Petropavlvosk FY & Q1 prod results

Uranium $/lb 39 39 34 39 41 48 60 66 30-Apr KAZ Minerals Q1 prod results

Diamonds (polished) $/ct 133 140 145 134 136 140 187 46 05-May Glencore Q1 prod results

Potash $/t 305 379 297 303 300 300 300 - 07-May Randgold Q1 results

Tungsten (APT) $/mtu 258 372 357 264 313 406 450 20 11-May Lonmin H1 results

USD / GBP 1.49 1.56 1.65 1.50 1.50 1.50 1.50 49 13-May Centamin Q1 results

CAD / USD 1.24 1.03 1.10 1.25 1.25 1.25 1.25 42 14-May Vedanta FY results

ZAR / USD 11.79 9.65 10.85 11.87 11.13 10.13 9.50 44 18-May Centamin Capital Markets Day

AUD / USD 1.30 0.97 0.90 0.76 0.75 0.75 0.75 49 21-May Polymetal Investor Day

9 April 2015

Registered No 02285918. Authorised and Regulated by The Financial Conduct Authority. A Member of the London Stock Exchange 3

Treading Water

Q1 was another tough quarter - a brief bounce was short lived, as a dive in copper and

iron ore dragged down the sector once again. We still expect little respite through this

year with a headwind of depressed prices and downward earnings momentum. Despite

some improvement in businesses and lower input costs, we retain our view that only the

strong will survive through what appears to be close to the bottom of the cycle.

Stock Picks: Acacia, Petra, Highfield.

Gold: We retain Acacia Mining as our top pick. A quality company which still has to

prove its stripes, but has plenty potential for high reward. We continue to like Randgold

as a best in class gold play but the shares looks pricey at these levels. On the small cap

end, we like recently initiated Dalradian, a developer which offers an attractive, low

cost, high grade project in new and prospective gold belt and first world country.

Silver: During the quarter we removed Fresnillo from our pick list after a few negative

updates, despite its premium production profile and superior asset portfolio.

Copper: We are cautious on the space but prefer First Quantum, which is not a pick

due to a challenging year of project build out, peak capex and political risk.

Diamonds: Petra remains our preferred play; quality with steady production growth.

Others: As our favoured juniors, we continue to like Highfield and Berkeley, both with

highly attractive projects in developed jurisdictions. Highfield has completed a DFS on

its flagship project with low capex/opex and a very high 52% IRR; lots of value upside

and looks set to be the next cab off the rank in the potash world. Avoid iron ore.

Table 1: Recommendation & Target Price Changes (Average +2%, Gold +3%)

Company New Rec Old Rec New TP (£) Old TP (£) Change (%) Price (£) Return (%)

Gold

& S

ilver

Fresnillo BUY BUY 10.00 9.00 10 7.10 41

Randgold Resources HOLD HOLD 51.00 49.00 4 48.52 5

Acacia Mining BUY BUY 3.70 3.40 8 2.70 37

Centamin Egypt HOLD HOLD 0.60 0.60 0 0.60 0

Hochschild HOLD HOLD 0.85 0.75 12 0.88 (3)

Highland Gold* BUY BUY 0.80 0.80 0 0.41 95

Timmins Gold BUY BUY 1.75 1.60 9 0.90 94

Aureus Mining* BUY BUY 0.40 0.40 0 0.24 67

Dalradian BUY BUY 0.90 0.90 0 0.49 84

Condor Gold* BUY BUY 0.90 0.90 0 0.64 41

Chaarat Gold* BUY BUY 0.24 0.23 4 0.08 200

Caledonia Mining* BUY BUY 0.75 0.75 0 0.39 92

Minera IRL BUY BUY 0.10 0.10 0 0.03 233

Average 4 76

Copp

er Antofagasta REDUCE REDUCE 6.00 6.00 0 7.31 (18)

First Quantum Minerals* ADD BUY 10.00 10.50 (5) 8.80 14

Kazakhmys REDUCE SELL 1.90 1.80 5 2.16 (12)

Oth

er

Petra Diamonds BUY BUY 2.50 2.50 0 1.83 37

Gemfields BUY BUY 0.75 0.70 7 0.53 42

Ferrexpo HOLD HOLD 0.60 0.60 0 0.65 (8)

Highfield Resources* BUY BUY A$3.00 A$3.00 0 A$1.70 76

International Ferro Metals* BUY BUY 0.25 0.25 0 0.04 525

Wolf Minerals* BUY ADD 0.23 0.23 0 0.20 15

Berkeley Resources* BUY BUY 0.40 0.35 13 0.12 233

Average (all) 3 82

* is a corporate broking client of Numis Securities

Source: Numis Securities Research, Bloomberg

9 April 2015


Commodity Forecasts: Soggy Bulks Key changes: Iron ore -30%, Nickel -22%, Diamonds -7%, Tungsten -16%

We continue with our flat spot price based model for gold and silver due to ongoing

volatility, mixed directional signals and a de-coupling from logical fundamental

indicators. Gold stays flat while we tweak silver as remains over sold. Nickel looks under

pressure on weaker demand and we re-balance our forecasts. Iron ore has fallen

through the floor on over-supply and weak demand and we see little respite, pulling our

LT price down to $60/t, from $80/t. We forecast weaker ST diamond prices on lower

liquidity and inventory draw, weaker tungsten prices on a lack of demand.

Table 2: Commodity Price Forecasts

2015 YTD 2015F 2016F 2017F 2018F LT

Gold New $/oz 1,219 1,205 1,200 1,200 1,200 1,200

Old $/oz 1,200 1,200 1,200 1,200 1,200

Change (%) 0 0 0 0 0

Silver New $/oz 16.7 16.7 17.6 18.6 18.5 18.5

Old $/oz 16.9 18.5 18.5 18.5 18.5

Change (%) (2) (5) 1 0 0

Copper New $/lb 2.65 2.71 2.89 2.92 2.69 2.50

Old $/lb 2.75 2.97 2.80 2.61 2.50

Change (%) (1) (3) 4 3 0

Zinc New $/lb 0.94 0.95 0.95 0.95 0.95 0.95

Old $/lb 0.99 0.95 0.95 0.95 0.95

Change (%) (5) 0 0 0 0

Lead New $/lb 0.82 0.83 0.89 0.90 0.90 0.90

Old $/lb 0.91 0.95 0.93 0.91 0.90

Change (%) (9) (6) (3) (1) 0

Nickel New $/lb 6.53 5.97 6.41 6.98 7.52 8.00

Old $/lb 7.63 8.23 8.15 8.06 8.00

Change (%) (22) (22) (14) (7) 0

Ferrochrome, contract New $/lb 1.08 1.08 1.17 1.24 1.25 1.20

Old $/lb 1.14 1.20 1.25 1.25 1.20

Change (%) (6) (2) (1) 0 0

Platinum New $/oz 1,195 1,161 1,243 1,330 1,420 1,500

Old $/oz 1,275 1,360 1,411 1,466 1,500

Change (%) (9) (9) (6) (3) 0

Iron ore (China 62% CFR) New $/t 63 55 59 60 60 60

Old $/t 75 89 88 86 80

Change (%) (27) (33) (32) (31) (25)

Diamonds (rough index) New $/ct 224 227 246 247 243 215

Old $/ct 245 259 256 252 224

Change (%) (7) (5) (4) (4) (4)

Potash (KCl, MOP) New $/t 305 303 300 300 300 300

Old $/t 300 300 300 300 300

Change (%) 1 0 0 0 0

Tin New $/t 18,370 12,761 15,375 16,521 18,250 20,000

Old $/t 20,500 21,500 21,667 20,778 20,000

Change (%) (38) (28) (24) (12) 0

Tungsten - APT New $/t 281 264 313 406 450 450

Old $/t 315 381 438 453 450

Change (%) (16) (18) (7) (1) 0

Uranium New $/lb 38 39 41 48 55 60

Old $/lb 38 43 50 57 60

Change (%) 3 (3) (4) (3) 0


9 April 2015


Stocks Margins Improving but FCF Yields Still Low

P/NAV P/E

P/CF FCF Yield

EV/EBITDA EBITDA Margin

Source: Numis Securities Research, Bloomberg, Company Data

0.10.2

0.30.30.30.40.50.50.50.50.60.60.60.70.70.80.8

1.01.0

1.11.21.3

1.82.8

0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x

Inter Ferro MetalsBerkeleyChaarat

DalradianMinera

TimminsCaledonia

KazakhmysCondor

HighfieldPetra Diamonds

First QuantumHighland

AureusGemfields

Wolf MineralsAverage

AntofagastaCentaminFresnilloFerrexpo

Acacia MiningRandgold

Hochschild

(44)(27)

(15)(7)(6)(4)(3)

7 8 9 11 13 14 15 17 20 21 23 24

32 38

79 115

-60x -35x -10x 15x 40x 65x 90x 115x

Wolf MineralsDalradian

CondorInter Ferro Metals

BerkeleyChaaratMinera

CaledoniaHighlandFerrexpoCentamin

AureusAverage

Petra DiamondsAcacia MiningFirst Quantum

GemfieldsHighfieldTimmins

AntofagastaRandgold

KazakhmysFresnillo

(16)(16)

(10)(6)(6)

0 0 1 2 2 3 3 4 4 4 5 6 7 7 8

13 16

-30x -20x -10x 0x 10x 20x 30x

MineraCondorAureus

ChaaratBerkeleyHighfield

Petra DiamondsInter Ferro Metals

FerrexpoHighland

PetropavlovskHochschild

AverageCaledonia

First QuantumGemfields

KazakhmysAntofagasta

CentaminAcacia Mining

FresnilloRandgold

Wolf Minerals 53

-49%-38%-35%

-17%-16%-16%-15%

-6%-2%

0% 3% 3% 5% 7% 8% 9% 9% 11% 12% 13%

23% 48%

-60% -40% -20% 0% 20% 40% 60%

HighlandKazakhmys

CondorHighfield

CaledoniaBerkeley

DalradianFresnilloAverage

Petra DiamondsGemfieldsTimminsRandgold

HochschildFirst Quantum

AntofagastaWolf MineralsAcacia Mining

CentaminAureus

FerrexpoInter Ferro Metals

(32)(16)

(7)(5)

(2)(1)(0)(0)

01112344556667

151516

-40x -30x -20x -10x 0x 10x 20x

DalradianCondorMinera

ChaaratPetropavlovsk

Inter Ferro MetalsHighlandFerrexpoBerkeley

HochschildKazakhmys

AverageFirst Quantum

AureusHighfield

CaledoniaTimmins

GemfieldsCentamin

Petra DiamondsAcacia Mining

AntofagastaFresnillo

RandgoldWolf Minerals

6%7%

16%21%

23%24%

29%30%31%31%32%32%33%

35%35%35%37%

41%42%

44%48%

0% 10% 20% 30% 40% 50% 60%

MineraInter Ferro Metals

Wolf MineralsTimminsFerrexpo

CaledoniaHochschild

AverageHighfield

Acacia MiningHighland

KazakhmysFirst Quantum

FresnilloPetropavlovsk

AntofagastaCentaminRandgold

AureusPetra Diamonds

Gemfields

9 April 2015


Stocks Finances Improving, Growth/Cost Down, Divi Up

Net Debt/EBITDA Gearing

Growth Dividend Yield

Implied Prices Total Cash Cost & All-In Sustaining Cost

Source: Numis Securities Research, Bloomberg, Company Data

(11.0)(2.4)

(1.5)(1.0)(0.7)(0.7)(0.1)

0.30.30.40.81.11.32.12.22.32.32.32.5

3.74.3

9.5

-15x -10x -5x 0x 5x 10x 15x

AureusWolf Minerals

CaledoniaCentaminRandgold

Acacia MiningGemfields

AntofagastaChaarat

Petra DiamondsAverage

Inter Ferro MetalsFresnilloHighland

HochschildPetropavlovsk

CondorBerkeleyHighfieldFerrexpo

First QuantumKazakhmys

0%0%0%0%0%0%0%

5%6%9%

23%28%28%29%32%

36%41%43%46%46%

52%59%

83%122%

0% 20% 40% 60% 80% 100% 120% 140%

RandgoldCentamin

ChaaratCaledonia

CondorBerkeley

DalradianTimmins

Acacia MiningGemfields

Petra DiamondsWolf Minerals

Inter Ferro MetalsAntofagasta

AverageHighland

MineraHighfieldFresnillo

AureusHochschild


Ferrexpo

-91%

-35%-34%

-6%-4%-1%

1%9%11%16%16%16%22%25%28%

43%44%47%52%56%

68%90%

211%

-100% -50% 0% 50% 100% 150% 200% 250%

MineraAureus

DalradianChaarat

HighlandBerkeley

GemfieldsRandgoldHighfield

Wolf MineralsCentamin

Petra DiamondsCondor

AverageTimmins

CaledoniaFerrexpo

Acacia MiningFresnillo

First QuantumAntofagastaKazakhmys

Inter Ferro Metals

NAV/EPS2014F-2015F

0%0%

1%1%

1%1%

2%3%3%

4%4%5%

5%5%

6%7%7%

9%9%9%10%

0% 2% 4% 6% 8% 10% 12%

PetropavlovskKazakhmys

RandgoldAcacia MiningFirst Quantum

FresnilloPolyus Gold

PolymetalAntofagasta

EvrazAverage

Glencore XstrataRio Tinto

Anglo AmericanBHP BillitonPan African

Central Asia MetalsCaledoniaFerrexpo

Highland GoldVedanta

4659

113234

389

256 270 269 281

911 988

1,061 1,070 1,078 1,097 1,107 1,115 1,118 1,130 1,134

1,193 1,236 1,263

0 500 1,000 1,500 2,000

BerkeleyFerrexpo

Inter Ferro MetalsHighfield

Wolf


AverageAntofagasta

CaledoniaDalradianChaaratTimmins

AureusFresnilloAverageHighland

AcaciaMinera IRL

CondorRandgoldCentamin

Hochschild

Gold($/oz)

Copper(c/lb)

Other

($/mtu APT)($/t KCl)

($/t FeCr)($/t Fe)

($/lb U3O8)

779805807819825

864893899

927949954969975

1,0061,0061,026

1,0601,0691,0801,1011,105

1,1721,242

0 200 400 600 800 1,000 1,200

Eldorado

Randgold

Yamana

Newcrest

Polyus

Barrick

Polymetal

Highland

Newmont

Goldcorp

Agnico Eagle

Caledonia

Average

Kinross

Centamin

AngloGold

Gold Fields

Sibanye

Petropavlovsk

IAMGold

Acacia

Minera

Harmony

H1 '14$/oz

0

500

1,000

1,500

04 06 08 10 12 FY14TCC

AISCGold

FY14 $/oz

9 April 2015


Rocks vs. Stocks Miners Rout

Miners Losing to Market

Continuing to fall away from the broader market

Miners Follow Copper Spiral

Equities continue to follow coper, albeit with more volatile swings

Gold Equities Losing to Gold

Equities underperform gold, 30-50% discount, UK better than NA

UK Gold Miners Mixed bag

CEY best performer, ACA & RRS flat, POG in doldrums

Gold Safer but Equities Oversold

Historically gold has a better return but equities can outperform

Miners Losing to US Dollar

After a period of consolidation, reverse correlation restarts as $ rockets

Source: Numis Securities Research, Bloomberg, Barrons

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

10,000

15,000

20,000

Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15

FTSE 350 Mining (LS) FTSE 100 (RS)

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

2010 2011 2012 2013 2014 2015

Copper ($/t, LS) FTSE 350 Mining (RS)

Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14

0

50

100

150

200

Gold (£/oz) Numis Gold Index (re-based) HUI Index

Implied 30-50% discount to spot

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15

Petropavlovsk Centamin Acacia Mining Randgold

0

1,000

2,000

3,000

4,000

5,000

6,000

1960 1970 1980 1990 2000 2010

HUI/Barrons Mining Index Gold

70

75

80

85

90

95

100

250

350

450

550

Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15

Stoxx 600 Basic Resources (LS) Dollar Index (RS)

9 April 2015


Beta Back in Gold, AWOL in Base Metals

Beta Returning as Gold/Equities Reconnect

Equities once again offer significant leverage to the gold price

LT Chart – HUI vs Gold

Correlation broke down in 2011 but is returning

12m Chart – HUI vs Gold

Correlation returns to equities

Base Metal Equities – Beta Disappearing

Volatility abounds. Equities and copper price follow own path

Dislocation Closed – Copper Follows the Pain Trail

Base metals driven by the macro, equities focused on staying alive

R2 ranges from 0 to 10. Determines % of the equities’ movement that is explained by the underlying index/benchmark. 0 = no correlation, 100= full correlation. Measure

of “goodness of fit” of the data. Higher R-squared (>75) indicates a more useful Beta data. Thus R2 and Beta must be used in conjunction

Beta indicates how sensitive the measured equity is to the underlying market (index or commodity). A high Beta (above 1) indicates that the equity is more volatile than

the underlying, whilst a Beta of less than 1 indicates less volatility than the market.

Source: Numis Securities Research, Bloomberg,

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

HUI Gold Index Beta R2

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

0

100

200

300

400

500

600

700

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

HUI Index Gold

Equities lost thier way in 2011

$1,000

$1,050

$1,100

$1,150

$1,200

$1,250

$1,300

$1,350

$1,400

$1,450

$1,500

100

150

200

250

300

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15

HUI Index Gold

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

0.5

0.6

0.7

0.8

0.9

1.0

1.1

2009 2010 2011 2012 2013 2014

TSX Base Metals Beta R2

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

50

70

90

110

130

150

170

190

210

2009 2010 2011 2012 2013 2014

TSX/S&P Base Metals LME Copper

Correlation re-established again

9 April 2015


RSI Most Commodities Have Rebalanced

RSI Trend Close to Oversold:

Coking and thermal coal appear hugely oversold. Nickel, and iron

ore now oversold.

Volatility Remains:

Commodities remain volatile swinging between overbought and

oversold on a monthly basis.

General Explanation. A technical momentum indicator that compares the

magnitude of recent gains to recent losses in order to attempt to determine if

an asset/stock/metal/index is overbought or oversold. Traders generally

consider the market overbought approaching 70 and over, and oversold when

approaching 30 or below.


Commodity/Index 90 Day RSI Trajectory Latest RSI

FTSE 350 Mining 41

FTSE 100 41

FTSE All Share Mining 41

HUI Index 36

S&P/TSX Metals Mining 51

Gold 46

Silver 54

Platinum 47

Palladium 34

Copper 56

Nickel 28

Zinc 54

Lead 53

Iron Ore 24

Coking Coal 23

Thermal Coal 17

Overbought >70 Oversold<30

-10

10

30

50

70

90

0

20

40

60

80

100

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15

FTSE 350 Mining Oversold Overbought

0

20

40

60

80

0

20

40

60

80


FTSE All Share Mining Oversold Overbought

0

20

40

60

80

0

20

40

60

80


FTSE 100 Oversold Overbought

0

20

40

60

80

0

20

40

60

80


HUI Index Oversold Overbought

0

20

40

60

80

0

20

40

60

80


S&P/TSX Metals Mining Oversold Overbought

0

20

40

60

80

100

0

20

40

60

80

100


Iron Ore Oversold Overbought

9 April 2015


RSI Volatility Reigns


0

20

40

60

80

0

20

40

60

80


Gold Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Silver Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Platinum Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Palladium Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Copper Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Nickel Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Zinc Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Lead Oversold Overbought

0

20

40

60

80

0

20

40

60

80


Thermal Coal Oversold Overbought

0

20

40

60

80

100

0

20

40

60

80

100


Coking Coal Oversold Overbought

9 April 2015


Economy Oil hits US, China Faltering, Eurozone Fighting Back

Manufacturing PMI

Eurozone gathering pace, China flat, US softening

Industrial Production (YoY %)

China on a slippery slope, Eurozone fighting back, US picking up

Leading Indicators

Pointing down - not a great trend (except India), Europe sliding

GDP Growth (YoY %)

China down, US recovery slows, Eurozone soggy

Housing Trends (YoY %)

China shows a big slowdown, US mixed, Eurozone dead

Auto Sales (YoY %)

Mixed bag, broadly sideways but green-shoots in US

US: Manufacturing output growth continues to slow in the US lead by contraction in oil and coal sector and negative effects of the dollar.

Eurozone: Q1 saw an increase in activity with the Eurozone PMI growing at the fast rate for four years fuelled by growth in German industrial output.

The ECB’s QE programme is now set against a backdrop of economic growth, but Greek exit fears still hang heavily on recovery.

China: China manufacturing PMI continues to flat-line, although overall growth remains resilient and broadly in line with the 7.5% growth target for

2014. Chinese economic data continues to cause concern with PMI remaining below 50 and house prices continue to deteriorate. Authorities have

begun to introduce more stimulus measures with cuts in rates in recent weeks.29 of the 31 Chinese provinces have lowered their 2015 GDP targets.

Source: Numis Securities Research, Bloomberg, Longview Economics

40

45

50

55

60

Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14

China USA Eurozone

Expansion

Contraction

-15

-5

5

15


China USA Eurozone

-5

0

5

10

15


China India USA Europe OECD

-5

0

5

10


China USA Eurozone

-20

-10

0

10

20

30

40

50


China USA Eurozone

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14

China USA Eurozone

9 April 2015


Commodities Grim Reading

Palladium, Gold Best; Nickel, Iron Ore & Coal Grim. The down turn in commodities across the board makes grim reading. The charts

above plot the change in commodity prices from current back to 5 years. Palladium has been the only clear winner. The data represents a snapshot

in time so the peaks and troughs are not captured here. Returns can be made by getting in and out quickly – hardly useful for companies building a

long-term sustainable business. Either way, the graphs above show that most commodities are at 5 year lows – a good entry point?

Source: Bloomberg

Commodity 5 year 4 year 3 Year 2 Year 1 Year 6m

Coking Coal -30% -66% -46% -34% -1% -2%

Gold 6% -17% -29% -26% -8% -2%

Silver -5% -56% -49% -41% -16% -2%

Palladium 53% -4% 13% -5% -5% -5%

Aluminium -22% -32% -14% -5% 3% -7%

Thermal Coal -23% -48% -40% -22% -16% -7%

Zinc -10% -11% 5% 13% 7% -8%

Copper -21% -35% -28% -19% -8% -9%

Lead -14% -33% -10% -13% -11% -13%

Platinum -31% -36% -31% -28% -21% -13%

Tin -8% -47% -25% -27% -26% -16%

Nickel -49% -51% -28% -23% -19% -21%

Iron Ore -14% -70% -64% -62% -55% -32%

-32%-21%

-16%-13%-13%

-9%-8%-7%-7%

-5%-2%-2%-2%

-40% -20% 0%

Iron OreNickel

TinPlatinum

LeadCopper

ZincThermal Coal

AluminiumPalladium

SilverGold

Coking Coal

6m

-55%-26%

-21%-19%

-16%-16%

-11%-8%-8%

-5%-1%

3%7%

-60% -40% -20% 0% 20%

Iron OreTin

PlatinumNickel

Thermal CoalSilverLead

CopperGold

PalladiumCoking Coal

AluminiumZinc

1 Year

-62%-41%

-34%-28%-27%-26%

-23%-22%

-19%-13%

-5%-5%

13%

-80% -60% -40% -20% 0% 20%

Iron OreSilver

Coking CoalPlatinum

TinGold

NickelThermal Coal

CopperLead

PalladiumAluminium

Zinc

2 Year

-64%-49%

-46%-40%

-31%-29%-28%-28%

-25%-14%

-10%5%

13%

-80% -60% -40% -20% 0% 20%

Iron OreSilver

Coking CoalThermal Coal

PlatinumGold

CopperNickel

TinAluminium

LeadZinc

Palladium

3 Year

-70%-66%

-56%-51%

-48%-47%

-36%-35%

-33%-32%

-17%-11%

-4%

-80% -60% -40% -20% 0%

Iron OreCoking Coal

SilverNickel

Thermal CoalTin

PlatinumCopper

LeadAluminium

GoldZinc

Palladium

4 Year

-49%-31%-30%

-23%-22%-21%

-14%-14%

-10%-8%

-5%6%

53%

-60% -40% -20% 0% 20% 40% 60%

Nickel

Platinum

Coking Coal

Thermal Coal

Aluminium

Copper

Iron Ore

Lead

Zinc

Tin

Silver

Gold

Palladium5 Year

9 April 2015


Gold Neutral on Limited Drivers Money Supply Remains the Key Driver

FRB’s tightening fiscal policy weighing down but outperforms copper

Historical Prices Indicate Room to Trend Upwards

TMS-adjusted price average of c.$1,400/oz, above current price

Investment Appetite Continues to Wane

Net long positions down at 169t; shorts up; ETF’s flat at 1,675

Physical Mixed but Irrelevant (3% of 175kt Inventory)

Rising jewellery demand, less central bank purchases, more supply

Seasonal Trends Clouded; Indian Wedding Season Fails

Indian wedding season: Sept; Chinese New Year: Late Jan-Mid Feb

Interest Rates Relationship Decoupled

US bond yields fall back again, now on same short-term trend as gold

Source: Numis Securities Research, Bloomberg, FRB Statistics, GFMS, Company Data

1982 1987 1992 1997 2002 2007 2012

TMS YoY % Gold/Copper

100

1,000

10,000

1960 1970 1980 1990 2000 2010

Gold TMS-adj TMS ($bn)

Peak ~$8,000/oz

Ranges from $800-2,000/oz

Average $1,400/oz

0

500

1,000

1,500

2,000

2,500

3,000

3,500

-500

-300

-100

100

300

500

700

900

1,100

2005 2007 2009 2011 2013 2015

Net Non-Commercial Positions (t, LS) ETFs (t, RS)

Short

Long

2,000

1,000

0

1,000

2,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mine production Scrap Hedging

Jewellery & Industrial Central Bank Retail Investment

Gold price TCC AISC

Supply

Demand

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Seasonal trend since 1985 2013 gold price (normalised)

0

1

2

3

4

5

6

7

8

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2000 2002 2004 2006 2008 2010 2012 2014

Gold ($/oz, LS) US 10 Year Yield (%, RS)

Market Balance (t) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014 LT

Supply (Production, Scrap) 2,947 3,372 3,194 3,072 3,423 4,105 4,346 4,509 4,455 4,254 3,181

% movement -11.6% 14.4% -5.3% -3.8% 11.4% 19.9% 5.9% 3.8% -1.2% -4.5% 0.0%

Demand (Physical & Monetary) 3,136 3,147 3,128 3,104 3,805 3,685 4,245 4,692 4,583 3,977 3,311

% movement -5.9% 0.4% -0.6% -0.8% 22.6% -3.2% 15.2% 10.5% -2.3% -13.2% 0.0%

Surplus (Deficit) (189) 225 66 (33) (382) 420 101 (183) (128) 277 (130)

Gold Price ($/oz) 363 409 444 604 695 872 972 1,225 1,572 1,669 1,266 1,200

Total Cash Cost ($/oz) 216 281 328 405 469 468 625 743 841 734 754

All-In Sustaining Cost ($/oz) 929 1,114 1,047 1,002

Free Cash Flow M argin 24% 29% 37% 21%

9 April 2015


Silver Gold’s Poor Cousin A Cheaper, More Volatile & Illiquid Gold

Tracker with volatile peaks and troughs; sheep mentality to remain

Gold-Silver Ratio - Silver Seemingly Oversold

Trading at 74:1 currently, above 60:1 historic average

Historical Prices Paint a Bear LT Picture

Tracker currency (uncertain) vs industrial commodity (normal); $7/oz

Investment Appetite Remains Strong

Long positons & ETF’s sideways, net neutral - shorts at all-time highs

Physical Market Remains in Increasing Surplus

Mine supply increasing, lower scrap, jewellery/industrial demand flat

Cost Floors Irrelevant as Secondary Producers Dominant

70% supply is through by-product credits from base metal/gold mines

*YTD 2014 to October. Source: Numis Securities Research, Bloomberg, Company Data, GFMS

0

500

1,000

1,500

2,000

0

10

20

30

40

50

1970 1980 1990 2000 2010

Silver ($/oz, LS) Gold ($oz, RS)

0

10

20

30

40

50

60

70

80

90

100

1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015

Historic Average (60:1)

1

10

100

1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013

Inflation Adjusted Silver Price Spot Silver Price

Historic Average ($7/oz)

0

100

200

300

400

500

600

700

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010 2011 2012 2013 2014 2015

Net Non-Commercial Positions (Moz, LS) ETFs (Moz, RS)

Short

Long

20

10

0

10

20

30

40

50

-500

-250

0

250

500

750

1,000

1,250

2004 2006 2008 2010 2012 2014

Mine production (Moz) Scrap Hedging

Jewellery & Industrial Central Bank Retail Investment

Silver price ($/oz) Total Cash Cost

Supply

Demand

Primary29%

Gold13%

Lead/Zinc38%

Copper20%

Market Balance (Moz) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD 2014* LT

Supply (Production, Scrap) 872 954 916 887 906 912 1,071 1,038 1,005 978 874

% movement 2.7% 9.4% -4.0% -3.1% 2.1% 0.7% 17.4% -3.1% -3.1% -2.7% 0.0%

Demand (Physical & Monetary) 897 962 1,082 1,029 1,171 998 1,158 1,057 1,072 1,091 0

% movement 5.6% 7.2% 12.5% -4.9% 13.8% -14.8% 16.0% -8.7% 1.4% 1.8% 0.0%

Surplus (Deficit) (25) (8) (166) (141) (265) (86) (87) (20) (66) (113) 874

Silver Price ($/oz) 6.7 7.3 11.5 13.4 15.0 14.7 20.2 35.1 31.2 23.8 19.1 18.5

Total Cash Cost ($/oz) 3.7 3.7 2.6 3.9 5.9 5.3 5.9 8.1 9.2 9.3 9.4

Cash M argin 45% 49% 77% 71% 60% 64% 71% 77% 71% 61% 51%

9 April 2015


Copper Balanced but Vulnerable

Prices and Inventories Rebound off 6 year Lows

Prices bounce off lows; stocks re-build; China off-exchange?

Market Tight with Apparent Surplus to Come

Balanced in 2014,switching to surplus in 2015 but supply risk remains

China Continues to be Key Driver

Correlation to China PMI; industrial activity running out of steam Investment Appetite Looks Shaky

Net long positons spike, weak PMI data, reduced trading activity

Chinese Consumption Remains High

Consumption continues to rise but stalls this year Backwardation Narrows as Premiums Fall

Backwardation narrows to $25/t, Shanghai physical premia remains low

Source: Numis Securities Research, Bloomberg, SNL Metals & Mining

0

250

500

750

1000

1.00

2.00

3.00

4.00

5.00

2008 2009 2010 2011 2012 2013 2014

LME SHFE COMEX Copper ($/lb, LS)

-1,500

-1,000

-500

0

500

1,000

1,500

14,000

16,000

18,000

20,000

22,000

24,000

26,000

2000 2002 2004 2006 2008 2010 2012 2014 2016

Surplus/Deficit (RS) Refined ProductionRefined Demand Demand at 2.5% paDemand at 5% pa

Surplus

Deficit

35

40

45

50

55

60

65

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

LME 3m Copper ($/t, LS) China PMI (RS)

-100

0

100

200

300

400

500

600

700

800

900

0

50

100

150

200

250

300

350

400

450

500

2007 2008 2009 2010 2011 2012 2013 2014 2015

Comex Positions (kt, RS) Copper Price (c/lb, RS)

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

400

500

600

700

800

900

1,000


China Refined Consumption China Refined ProductionLME Copper Price

-125

-75

-25

25

75

125

175

225

0

250

500

750

1,000

Jun-11 Jun-12 Jun-13 Jun-14

LME Stocks (kt, LS) Shanghai Stocks (kt, LS)

Contango/Backwdation Shanghai Premium ($/t, RS)

Backwardation

Contango

Market Balance (kt) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Refined Production 14,844 15,364 15,196 15,277 15,878 16,607 17,350 18,026 18,236 18,473 19,044 19,697 20,314 21,024 21,693 22,362 23,128 23,911 24,720

% movement 3.5% 3.5% -1.1% 0.5% 3.9% 4.6% 4.5% 3.9% 1.2% 1.3% 3.1% 3.4% 3.1% 3.5% 3.2% 3.1% 3.4% 3.4% 3.4%

Refined Demand 15,160 14,759 15,012 15,673 16,903 16,938 17,520 18,093 18,001 17,447 19,218 19,888 20,107 21,013 21,684 22,248 23,006 23,581 24,171

% movement 7.3% -2.6% 1.7% 4.4% 7.8% 0.2% 3.4% 3.3% -0.5% -3.1% 10.2% 3.5% 1.1% 4.5% 3.2% 2.5% 2.5% 2.5% 2.5%

Surplus (Deficit) (317) 605 184 (396) (1,025) (331) (170) (67) 235 1,026 (174) (191) 207 11 9 114 122 330 549

Long Term

Copper Price ($/lb) 0.82 0.72 0.71 0.81 1.30 1.61 3.04 3.23 3.12 2.34 3.42 4.00 3.61 3.33 3.11 2.71 2.89 2.92 2.50

Copper Price ($/t) 1,814 1,580 1,559 1,780 2,866 3,554 6,711 7,113 6,877 5,165 7,538 8,828 7,959 7,333 6,863 5,978 6,366 6,430 5,512

C1 cost ($/lb) 1.06 1.00 1.12 1.40 1.55 1.61 1.50

9 April 2015


Nickel LT Supply Squeeze not a Driver Yet Ban Rally Reversed to 6 Year Low

LME stocks continue to build, short term supply abundant

Weaker Demand Growth, Neutral Market for next 3yrs

Deficit of 250kt by 2020. Long term supply growth looking shaky

China Stainless Steel Continues Waiver

Question marks over level of domestic stocks, China economy weaker

China Dominates Consumption & Refining

Supply patterns likely to change

Indonesia Gone, Philippines Fills the Gap

No Indo exports, replaced by lower grade ore from Philippines Falling Chinese Nickel Pig Iron Production may Fuel Deficit

NPI production to depend on lower grade Philippines ore

Source: Numis Securities Research, Bloomberg, Anglo American, Wood Mackenzie, Glencore , Bloomberg

100

150

200

250

300

350

400

450

500

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15

LME Stocks (kt, RS) Nickel Price ($/t, LS) Open Interest (kt)

Indonesian Export BanAnnounced

-400

-300

-200

-100

0

100

200

300

400

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2006 2008 2010 2012 2014 2016 2018 2020

Surplus/Deficit (RS) Refined Supply Consumption Demand

Surplus

Deficit

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

2,000

2,200

2,400

2,600

2,800

3,000

3,200

Stainless Steel Price ($/t, LS) Nickel Price ($/t, RS)

0

200

400

600

800

Ch

ina

Eu

rope

Ja

pan

N.A

me

rica

Ro

W

So

uth

Ko

rea

India

Taiw

an

Ru

ssia

2013 Refined Nickel Consumption (Ktpa)

0

200

400

600

800

Ch

ina

Ro

W

Ru

ssia

Ja

pan

Ca

na

da

Au

str

alia

Eu

rope

Bra

zil

2013 Nickel Refinery Production (Ktpa)

0.0

0.5

1.0

1.5

2.0

2.5

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Mine Production (Mt)

Indonesia Philippines Russia

Australia China RoW

0

1

2

3

4

5

6

7

8

9

Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15

Indonesia Imports (Mt Ni) Philippine Imports ROW Imports

Export Ban

200

300

400

500

600

20

13

20

14

F

20

15

F

20

16

F

20

17

F

20

18

F

20

19

F

China NPI (Kt)

Market Balance (kt) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Refined Supply 1,349 1,460 1,399 1,355 1,436 1,664 1,856 1,985 1,885 1,864 1,988 2,082 2,106 2,136 2,106

% movement - 8.3% -4.2% -3.1% 6.0% 15.8% 11.6% 6.9% -5.0% -1.1% 6.7% 4.7% 1.1% 1.4% -1.4%

Consumption Demand 1,375 1,354 1,333 1,315 1,427 1,661 1,729 1,801 1,868 1,941 2,017 2,095 2,177 2,262 2,350

% movement -1.5% -1.5% -1.4% 8.5% 16.4% 4.1% 4.1% 3.7% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9%

Surplus (Deficit) (26) 107 65 40 9 2 127 184 17 (77) (28) (13) (71) (126) (244)

Long Term

Nickel Price ($/lb) 10.55 16.41 9.66 6.66 9.89 10.39 7.96 6.82 7.66 5.97 6.41 6.98 7.52 7.97 8.00

Nickel Price ($/t) 23,263 36,171 21,302 14,676 21,810 22,911 17,552 15,031 16,893 13,161 14,129 15,382 16,585 17,562 17,637

9 April 2015


Iron Ore Avoid as Oversupply Swamp gets Deeper

Prices at 10 Year Low – Further Pain to come

China’s war on pollution could shut more steel mills

Prolonged Period of Surplus on Large Expansions

Chinese demand growth soft, Awash with low cost supply from majors

Coking Coal – 6 yr Low, Shrinking Steel Output

Production cuts so far a mere drop in the ocean Port Inventories Level Off, Plenty of Tonnes Around

Coking coal stocks at Chinese ports building, iron ore flat

Prices Plummet but Aus Exports Remain Strong

BHP & Rio etc still pulling in decent margins, no incentive to pullback

China Steel Usage Continues to Grow – But for How Long?

China steel use per capita is still growing, outstripping the world ave

Source: Numis Securities Research, World Steel Association, World Bank, Bloomberg

-5%

0%

5%

10%

15%

20%

25%

30%

40

60

80

100

120

140

160

180

2012 2013 2014 2015

$/t

on

ne

Fines 62% Fines 58% Premia 58% vs 62%

No Premium for Quality

-100

-50

0

50

100

150

200

250

300

350

400

0

500

1,000

1,500

2,000

2006 2008 2010 2012 2014 2016 2018 2020

Iron Ore Supply (Mt, LS) Surplus/Deficit (RS) Import Demand

Surplus

Deficit

50%

75%

100%

125%

150%

175%

200%

0

50

100

150

200

250

300

350

2011 2012 2013 2014 2015

Premium (RS) Coking Coal ($/t, LS) Thermal Coal ($/t, LS)

0

20

40

60

80

100

120

140

160

180

50

70

90

110

130

150

Jan-2013 Jul-2013 Jan-2014 Jul-2014 Jan-2015

Iron ore Mt (LHS) Coking Coal Mt (LHS) Fines 62% (RHS)

50

70

90

110

130

150

170

15

20

25

30

35

40

02/2012 08/2012 02/2013 08/2013 02/2014 08/2014 02/2015

Port Hedland Exports Mt (LHS) Fe 62% Fines China $/t (RHS)

400

450

500

550

600

650

700

750

800

850

900

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2013

World Avg (kg, LS) China

Taiwan China Steel Production (Mt)

Market Balance (Mt) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Total supply 633 684 750 889 974 1,065 1,095 1,210 1,269 1,330 1,429 1,479 1,482 1,468 1,473

% movement - 8.0% 9.7% 18.5% 9.6% 9.3% 2.8% 10.5% 4.9% 4.8% 7.4% 3.5% 0.2% -0.9% 0.3%

Import Demand 633 684 750 889 974 1,065 1,095 1,210 1,234 1,259 1,284 1,310 1,336 1,362 1,390

% movement 8.0% 9.7% 18.5% 9.6% 9.3% 2.8% 10.5% 2.0% 2.0% 2.0% 2.0% 2.0% 1.9% 2.1%

Surplus (Deficit) 35 71 145 169 146 106 83

Long Term

Iron Ore Price ($/t) 70 78 129 80 147 168 129 135 97 55 59 60 60 60 60

9 April 2015


Ferrochrome Neutral on Margin Pressure

Both Contract and China Spot under Pressure

Benchmark $1.08/lb vs China $80/lb; remains in gentle decline

Peak Surplus Expected to Decline

Peak surplus of 280kt, declining into LT deficit, consumption levels up

China to Build out Production Capacity

Chinese production to increase, SA gentle YoY growth, rest flat

Capacity Utilisation Gently Increasing

Capacity at +70% and expected to increase further as demand picks up

China Driving Demand Increase

Demand to increase across board due to higher SS production

Stainless Steel Production Expected to Rise Further

Set to increase further around world if construction activities improves

Source: Numis Securities Research, Bloomberg, CRU

0.00

0.50

1.00

1.50

2.00

2.50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

European Benchmark Charge Chrome ($/lb, 50%) China Import CIF

25

20

15

10

5

0

5

10

15

20

25

-800

-600

-400

-200

0

200

400

600

800

2003 2005 2007 2009 2011 2013 2015 2017

Market Balance (kt, LS) Stocks Weeks of Consumption (kt, RS)

Surplus

Deficit

0

2

4

6

8

10

12

14

2003 2005 2007 2009 2011 2013 2015 2017

China (Mt) South Africa Kazakhstan India RoW

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2003 2005 2007 2009 2011 2013 2015 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Utilisation (%, RS) Ferrochrome Price ($/lb, LS)

0

10

20

30

40

50

0

2

4

6

8

10

12

14

2003 2005 2007 2009 2011 2013 2015 2017

China (Mt, LS) AsiaEurope IndiaRoW Stainless Steel (Mt, RS)

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

2003 2005 2007 2009 2011 2013 2015 2017

China (Mt, LS) Europe

Japan USA

RoW FCr Consumption (Mt, RS)

Market Balance (Mt) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply 5.4 6.0 6.1 6.6 7.7 7.5 6.1 8.8 8.9 9.0 10.4 11.4 11.9 12.3 12.7 12.9

% movement 23.9% 10.2% 1.3% 7.9% 18.2% -3.5% -18.0% 42.9% 1.3% 1.2% 15.3% 9.8% 4.6% 3.6% 3.2% 1.6%

Consumption 5.5 6.0 5.9 6.8 7.6 6.8 7.0 8.5 8.7 9.0 10.2 11.1 11.7 12.2 12.7 13.2

% movement 9.9% 8.4% -1.6% 15.3% 11.7% -11.1% 3.0% 22.5% 1.5% 4.1% 13.2% 8.8% 5.5% 4.3% 4.2% 4.1%

Surplus (Deficit) (102) (12) 164 (258) 138 712 (834) 232 218 (23) 164 283 193 121 (1) (321)

Long Term

Ferrochrome Price ($/lb) 1.0 1.1 0.74 0.71 0.91 1.80 0.92 1.24 1.25 1.22 1.16 1.19 1.08 1.17 1.24 1.20

9 April 2015


Diamonds Liquidity Drought Starting to Bite

Price Level Looks Sustainable Despite Uncertainty

Polished & rough show recent weakness; liquidity tight

Best Fundamentals with Flat Supply & Increasing Demand

Demand increasing with no supply response; increasing deficit & prices

Supply Constraints Leads to Unhealthy Industry

Less reserves/production, less exploration, no major discoveries

Top Producers Dominate but Margin is Key

Top 3 producers 60% supply; Canada high rock value but low margin

Demand Driven on US with China/India to Rise

US primary driver (37%), China rises (18%) as middle class grow

Demand Drivers show Plenty of Reasons to be Bullish

Increasing population, spending, jewellery demand/value, plus China

Source: Numis Securities Research, Bloomberg, Company Data, Bain & Co, Kimberley Process, WWW Diamond Forecasts Ltd, Metals Economic Group

100

150

200

250

300

350

2005 2007 2009 2011 2013 2015 2017 2019

Rough Price Index Polished Price Index

40

20

0

20

40

60

80

100

-10

-5

0

5

10

15

20

25

2004 2006 2008 2010 2012 2014 2016 2018

Jewellery Demand ($bn, RS) Surplus (Deficit)

Supply ($bn, LS) Rough Demand ($bn, LS)

Surplus

Decficit

2,023

1,663

2,584

2,316160

134

1,085

520

2

15

2000 2012 2000 2012 2004 2013 2008 2012 2000 2013

Russia Botswana DRC Australia South Africa Canada RoW

Resources(Mcts)

Reserves

(Mcts)Production

(Mcts)ExplorationSpend ($m)

Discovery(years ago)

Alrosa (72%)

De Beers (23%)

Rio Tinto (30%)

Dominion (24%)

Petra (73%) Gem (58%)Lucara (68%)

0

50

100

150

200

250

0 250 500 750 1,000 1,250 1,500

Ave

rag

e g

rad

e (

cp

ht)

Average value ($/ct)

300

150

75

25

Rock Value

Margin in Brackets

48%37% 34%

3%13% 18%

9%14%18%

10%7%5% 8%9%

16% 8%5%

10% 15% 13%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2012 2017

USA China/HK India Japan Gulf Europe RoW

0%

25%

50%

75%

100%

125%

150%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Disposable Income (China) GDP (China)Middle Class (China) Luxury Goods ValueGDP/Capita Jewellery DemandPopulation

Market Balance 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Production (Mcts) 159 177 176 168 163 120 128 123 128 134 143 149 157 161 165

Production ($bn) 10.2 11.6 12.0 11.9 12.7 8.3 11.4 14.1 12.6 15.5 17.5 17.0 19.4 19.9 20.1

% movement 0.0% 11.0% -0.4% -4.5% -3.0% -26.2% 6.7% -4.3% 4.2% 4.3% 7.3% 4.0% 5.4% 2.2% 2.7%

Rough Demand ($bn) 15.3 17.3 18.0 17.8 19.0 13.0 15.0 15.0 15.0 16.0 17.0 18.0 18.9 19.7 20.5

Jew ellery Demand ($bn) 62.8 71.3 74.0 73.3 78.2 67.2 73.5 74.0 74.7 77.6 83.0 88.0 92.4 96.1 100.0

% movement 0.0% 13.5% 3.8% -0.9% 6.7% -14.1% 9.4% 0.7% 0.9% 3.9% 7.0% 6.0% 5.0% 4.0% 4.0%

Surplus (Deficit) (5.0) (5.7) (5.9) (5.9) (6.3) (4.7) (3.6) (0.9) (2.4) (0.5) 0.5 (1.0) 0.5 0.2 (0.4)

Rough Diamond Price Index 123 138 129 143 166 144 215 257 226 230 243 227 246 247 243

Polished Diamond Price Index 113 122 125 127 131 113 123 153 147 140 145 134 136 140 143

9 April 2015


Tungsten Fundamentals Good but Weak Price Response

Yet to see Meaningful Price Response

Directionless price decline and no solid rise yet as forecast

Peak Deficit as Projects Slow to Respond to Demand

Small 80kt market, peak 4kt deficit due to flat production/rising demand

Production Growth in 2016-18 as Projects Start

Projects in Canada, Oz & UK start-up; main producer China flat

Demand for ‘Strategic Metal’ to Rise 4-5%

Market to rise 4-5% to 100kt in 2017 as China steel production grows

New Supply Drags Continues to Disappoint

Projects delayed by 2-3 yrs due to financing, permitting etc

Global Cost Curve Dictated by China

Average $140-150/mtu, new projects at similar level (Wolf $109/mtu)

Source: Numis Securities Research, Bloomberg, Company Data, Tungsten Market Research Ltd

0

50,000

100,000

150,000

200,000

0

100

200

300

400

500

2004 2006 2008 2010 2012 2014

APT Europe ($/mtu, LS) Concentrate China (RMB/t, RS)

0

100

200

300

400

500

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000

2003 2005 2007 2009 2011 2013 2015 2017

Market Balance (t W, LS) Tungsten Price (APT $/mtu, RS)

Deficit

0

20,000

40,000

60,000

80,000

100,000

120,000

2004 2006 2008 2010 2012 2014 2016 2018

China Canada Vietnam Russia UK Spain Australia RoW

0

500

1,000

1,500

2,000

0

20,000

40,000

60,000

80,000

100,000

120,000

2004 2006 2008 2010 2012 2014 2016 2018

China (t W, LS) Europe

USA RoW

Japan Steel Production (Mt, RS)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2013 2014 2015 2016 2017 2018+

Original Current

Chinese Producers

Panasquie

ra

0

100

200

300

Mittersill

Los SantosPasta Bueno

Cantung

Wolfram Camp

Average ($140-150/mtu)

Market Balance (t W) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply 57,200 51,100 55,500 55,700 54,357 64,680 66,020 76,920 83,555 80,155 79,350 80,850 86,750 92,000 100,250 105,250

% movement 5.0% -10.7% 8.6% 0.4% -2.4% 19.0% 2.1% 16.5% 8.6% -4.1% -1.0% 1.9% 7.3% 6.1% 9.0% 5.0%

Demand 53,100 52,700 62,550 72,500 68,100 66,100 52,400 70,750 79,600 76,150 80,000 84,850 89,450 94,800 100,150 105,500

% movement 5.0% -0.8% 18.7% 15.9% -6.1% -2.9% -20.7% 35.0% 12.5% -4.3% 5.1% 6.1% 5.4% 6.0% 5.6% 5.3%

Surplus (Deficit) 4,100 (1,600) (7,050) (16,800) (13,743) (1,420) 13,620 6,170 3,955 4,005 (650) (4,000) (2,700) (2,800) 100 (250)

Long Term

Tungsten Price (APT $/mtu) 62 84 221 260 248 249 203 243 430 385 372 357 284 363 438 450

9 April 2015


Uranium Bright Future but a Slow Starter

Building Momentum from 9 year Low

Utilities well covered, opportunistic buying on spot market only

Deficit by 2019, Widening Supply Gap

New mine pipeline slow, mothballed mines, lower secondary supplies

Contracting Activity Modest, Utilities yet to Return

Spot vol normal, LT vol only 50% of annual reactor requirements

Prices Below Marginal Cost, No New Supply

Most producers under-water, incentive price for new production c$70/lb

World Electricity Demand Only Going One Way

China, Russia, India are key. Nuclear 11% of world’s generation

Global Reactor Build-out will Underpin LT Demand

Price catalyst – Japan restarts. 73 new reactors req. 50Mlbs U3O8

Source: Numis Securities Research, Bloomberg, World Nuclear Association, Bloomberg, Cameco IAEA

0%

10%

20%

30%

40%

50%

60%

70%

20

30

40

50

60

70

80

2010 2011 2012 2013 2014 2015

Contract Premia (RS) U3O8 Spot ($/lb, LS) U3O8 Term

Fukushima

-50

-25

0

25

50

-40

10

60

110

160

210

260

2012 2014 2016 2018 2020 2022

Primary Production (Mlbs) Mines under development

Planned Mines Secondary Supply

Surplus/Deficit (RS) Total demand

Surplus

Deficit

240

200

250

130

150

250

120

194

24

82

36 3520

4354 50 55

43 5042

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Long-term market (Mlbs U3O8) Spot market

190Mlbs 2005-2012

avg LT volume

0

5

10

15

20

25

30

35

40

45

50

0 10 20 30 40 50 60 70 80 90 100 110 120

Cash

Co

st ($

/lb

U3O

8)

Cumulative Production (Mlbs U3O8)

U3O8 spot $39/lb

90th percentile $37/lb

U3O8 Term $49/lb

World avg prod cost $44/lb

5,710

10,085

19,005

32,150

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1980 1990 2011 2035

TW

h

OECD Non-OECD

2357

12129

57

118

31

18

22

35

0

50

100

150

200

250

0

50

100

150

200

250

300

350

400

Under Construction Planned Proposed

Re

qu

ire

d U

3O

8 (

Mlb

s)

Nu

mb

er

of re

acto

rs

ROW China Russia India USA Saudi Arabia U3O8 Req'd

73 reactors

172 reactors

309 reactors48

Offline

Current Reactors Operable

ROW Japan

Total:434 Reactors

171 MlbsU3O8 required

Market Balance 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Production (existing & new ) 103 107 114 132 141 141 152 156 147 147 152 160 171 175 184 188 190 196

% movement -4.6% 3.9% 6.5% 15.8% 6.8% 0.0% 7.8% 2.6% -5.8% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5% -0.6%

Secondary Supply 58 51 51 54 50 45 49 52 35 34 33 32 31 30 30 30 30 30

Total Consumption 177 174 167 169 172 160 165 167 155 166 177 188 199 209 220 231 242 253

% movement 1.1% -1.7% -4.0% 1.2% 1.8% -7.0% 3.1% 1.2% -7.2% 7.0% 6.6% 6.2% 5.8% 5.5% 5.2% 4.9% 4.7% 4.5%

Surplus (Deficit) (16) (16) (2) 17 19 26 36 41 27 15 8 4 3 (4) (6) (13) (22) (27)

Long Term

Spot Uranium Price ($/lb) 48 99 64 47 46 56 49 39 34 39 41 48 55 60 60 60 60 60

Term Uranium Price ($/lb) 50 91 83 66 61 67 60 54 46 - - - - - - - - -

9 April 2015


Potash Under ST Pressure

Prices Continue to Look Under Pressure

Drifting lower since 2011 peak, bottoming out for now

Supply Set to Grow Alongside Capacity Utilisation

60Mt market, supply +3% pa, capacity +2.5% pa, utilisation 75%

Top 4 Dominate Supply with Challenging Growth

Top 4 = 80%, Canada/FSU 60%, high capex/development issues

Canada & FSU Have all the Cards

Canada & FSU have largest and highest grade reserves globally

Demand Growth of 3% pa Driven by Americas

95% agriculture use with Americas 40% consumers & China 14%

Demand Drivers show Plenty of Reasons to be LT Bullish

Increasing population, middle class & diet, less arable land, biofuels

Source: Numis Securities Research, Bloomberg, USGS, IFA, K+S, Company Data

0

200

400

600

800

1,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

MOP $/t, Standard FOB Vancouver

40

50

60

70

80

90

100

0

20

40

60

80

100

2003 2005 2007 2009 2011 2013 2015 2017 2019

Production (Mt, LS) Capacity Utilisation (%, RS)

Former BPC (Uralkali &

Belaruskali), 31%

Canpotex (Agrium,

Mosiac, Potash Crop), 28%

K+S (inc. Potash One), 10%

ICL, 8%

SQM, 3%

APC, 3%

China, 13%

Others, 4%

0%

10%

20%

30%

40%

0

1,000

2,000

3,000

4,000

5,000

Can

ada

Russia

Be

laru

s

Bra

zil

Chile

Chin

a

Ge

rma

ny

US

RoW

Reserves (Mt, LS) Grade (% KCl, RS)

North America, 19%

China, 14%

South America, 23%

India, 7%

Other Asia, 19%

RoW, 18%

-20%

0%

20%

40%

60%

80%

100%

120%

2003 2005 2007 2009 2011 2013

Potash Consumption Harvested Land per PersonPopulation Meat Consumption (BRIC)GDP/Capita BiofuelsHarvested Land

Market Balance (Mt) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply 46.9 52.6 55.4 49.8 57.2 55.2 33.8 55.2 56.5 52.5 53.0 57.0 61.6 63.4 65.4 67.3

% movement 5.0% 12.2% 5.3% -10.1% 14.9% -3.5% -38.8% 63.3% 2.4% -7.1% 1.0% 7.5% 8.1% 3.0% 3.0% 3.0%

Capacity 55.9 58.4 59.1 59.6 62.3 64.7 66.6 67.2 69.4 70.5 76.9 80.5 82.5 84.6 86.7 88.9

% movement 5.0% 4.5% 1.2% 0.8% 4.5% 3.9% 2.9% 0.9% 3.3% 1.6% 9.1% 4.7% 2.5% 2.5% 2.5% 2.5%

Utilisation (%) 84 90 94 84 92 85 51 82 81 74 69 71 75 75 75 76

Long Term

Potash Price ($/t) 113 125 159 175 201 578 624 332 435 459 379 297 300 300 300 300

9 April 2015









9 April 2015

BUY

Current Share Price 270pTarget Price 370pMarket Capitalisation £1.1bnShares In Issue 410mRIC/BLBG ACAA.L/ACA LNAvg. Daily Volume (3M) 665,245

Current share price(s) timed at 7:00AM on 07/04/15

Apr- 14 Jul- 14 Oct- 14 Jan- 15 Apr- 15

340320300280260240220200180

Share Price

Acacia MiningRelat ive to UK Market

Performance (%) 1M 3M 12M

Absolute 11 2 9

Relative 11 -6 4

Source: Datastream (relative to UK-DS Market index)

Acacia MiningEstimate Changes

The Money Tree

We maintain our BUY recommendation and increase our TP to 370p, from 340p,due to our new commodity price forecasts and changes to our model. Remains ourgold pick.

● Company Snapshot. Mid-tier African gold producer with three operating mines inTanzania and exploration properties in Kenya. Spun out of Barrick in April 2010(previously named African Barrick). ABX owns 64%.

● Investment Thesis. Buly is key – Group production of +750kozpa at AISC of <$900/ozover 5 years; Buly at 350kozpa at AISC <$900/oz from current 200koz by end 2015(50koz grade/productivity, 60koz Upper East, 40koz CIL expansion). Key is achievingsustainable reserve grade of 9.5g/t. LT potential for +400kozpa with exploration tofirm up an additional 5Moz. We believe establishing additional production centres toprovide operational flexibility will be key. North Mara at 250kozpa at $900/oz withGokona underground to bring CFs forwards, reduce footprint and ease illegal miningissues. Buzwagi on 5 year LOM plan. FCF focus – New management are drivingcosts down, improving efficiencies and rationalising the business. We expect to seecontinued better numbers with a few speed bumps on the way. Barrick - Barrick islikely to reduce its interest further at some point, caping potential gains.

● Guidance - 2015: 750-800koz (up 9%) at TCC of $695-725/oz and AISC of$1,050-1,100/oz (down 5%). H2 weighted with Buly 300-330koz at $950-1,000/oz.Capex $220-240m.

● Preview Q1 (23 Apr). Flat quarter with production of 180koz at a cash cost of $737/ozand AISC of $1,069/oz (Q4 181koz at $744/oz, AISC $1,088/oz). Buly flat at 66koz withelevated tonnages maintained as Upper East and CIL expansion commissioning; NorthMara and Buzwagi flat with marginally lower planned grades. FY guidance maintained.Financials: EPS of $0.06 (Q1/Q4 2014 $0.05), up q-o-q on higher gold prices andy-o-y on higher production. EBITDA up sharply q-o-q at $67m. Balance sheet flatwith minimal $2m in FCF, up at $292m (debt $142m). We look to see how the BulyCIL expansion is performing plus Upper East (Buly) and Gokona underground (NorthMara).

● Valuation. Blend of 1.5x NAV/5x P/CF (middle of 1-2x NAV/5-15x P/CF range forgolds).

● Risks. Medium - Tanzanian politics, social unrest at North Mara, VAT receivables &back tax claims, operational delivery risk, Barrick interest


1

Figure 1: Model summary

Source: Company & Numis Securities Research

Acacia Mining Ticker ACA.L Market Capitalisation £1,107m Financial Year End Dec

BUY Current Share Price £2.70 Enterprise Value (EV) £1,007m Reporting Currency US$

£3.70 Implied Return 37% Net Debt (Cash) -$150m Shares in Issue 410m

Valuation Key Metrics 2013 2014 2015F 2016F 2017F

Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) - Underlying 0.26 0.22 0.24 0.44 0.44

Bulyanhulu (100%) 10% 72% 960 2.34 1.56 EPS Growth 79% -15% 9% 82% 1%

Buzwagi (100%) 10% 10% 128 0.31 0.21 P/E 15.6x 18.4x 16.8x 9.2x 9.2x

North Mara (100%) 10% 23% 305 0.74 0.50 CFPS ($/sh) 0.46 0.71 0.66 0.90 0.94

Nyanzaga (100%) 12% 4% 48 0.12 0.08 P/CFPS 8.9x 5.7x 6.1x 4.5x 4.3x

Sub-total 1,441 3.51 2.34 FCFPS ($/sh) (0.34) 0.07 0.14 0.45 0.47

Cash & Equivalents 22% 292 0.71 0.47 P/FCFPS n.m 62.3x 28.2x 9.1x 8.5x

Debt (11%) (142) (0.35) (0.23) FCF Yield -9% 2% 4% 11% 12%

Corporate G&A / Other (20%) (263) (0.64) (0.43) EV/EBITDA 5.5x 6.0x 5.2x 4.0x 4.0x

Total 1,328 3.24 £2.16 EBITDA Margin 30% 27% 31% 37% 40%

Current NAV Multiple (Implied) 1.25x Dividend Per Share ($/sh) 0.13 0.03 0.04 0.06 0.12

Cash Flow Value $/sh £/sh Dividend Yield 3.3% 0.8% 1.1% 1.4% 2.9%

CFPS (1 year forward) 0.72 0.48 Return on Assets (ROA) -32% 3% 4% 6% 6%

Current P/CF multiple (implied) 5.6x Return on Equity (ROE) -40% 5% 5% 8% 7%

Blended Valuation Target Multiple Weight Return on Capital Employed (ROCE) -41% 5% 6% 10% 10%

NAV valuation 1.75x 50% £3.78 Net Debt/EBITDA -0.5x -0.6x -0.6x -0.9x -1.3x

Cash Flow valuation 7.5x 50% £3.61 Gearing (Debt/Equity) 7% 7% 6% 4% 3%

VALUATION £3.69 Interest Cover n.m -0.1x 0.0x 0.0x 0.0x

Shares Outstanding (m) 410 410 410 410 410

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Income Statement 2013 2014 2015F 2016F 2017F

Base case gold price forecast 2.16 0.24 0.66 Revenue 929 930 930 1,002 958

Base case +10% 3.05 0.39 0.88 Cost of Sales (561) (563) (574) (561) (511)

Base case -10% 1.25 0.09 0.44 G&A (32) (41) (38) (36) (35)

Flat gold price (at spot $1,200/oz) 2.02 0.24 0.66 Exploration (17) (18) (20) (20) (21)

News Catalysts H2 14 H1 15 H2 15 2016 Other (43) (55) (10) (10) (10)

Buly CIL expansion starts EBITDA 276 253 288 375 381

Upper East production starts DD&A (153) (125) (136) (111) (91)

Gokona u/g feasibility (North Mara) EBIT (921) 124 152 264 290

Gokona u/g production starts Net Interest Expense (8) (9) (7) (7) (4)

PBT (929) 115 145 257 286

Reserves & Resources (attributable) Gold Copper Gold Eq EV/oz Non-Recurring Items/Other (40) 1 0 0 0

Reserves (P&P) Moz / Mlbs 12.5 427 13.5 112 Taxes/Recovery 188 (26) (47) (77) (105)

Resources (M&I) Moz / Mlbs 24.3 683 25.9 58 Net Profit (Loss) - attributable (781) 90 99 180 181

Production & Cost (attributable) 2014 2015F 2016F 2017F Minority Interest (17) (0) 0 0 0

Gold Production 000oz 719 768 822 762 Cashflow 2013 2014 2015F 2016F 2017F

Silver Production 000oz 289 314 322 337 Net Profit (Loss) (798) 90 99 180 181

Copper Production 000t 6 6 6 6 DD&A 153 125 136 111 91

Gold Eq. Production 000oz 757 802 860 801 Non Recurring/Other 877 58 53 84 109

EV/oz Production $/oz AuEq 1,996 1,884 1,757 1,887 Working Cap. Changes (41) 20 (10) 2 10

Total Cash Cost (net by-products) $/oz 732 729 661 681 Cash Flow From Operations 187 290 271 370 387

All-in Sustaining Cost $/oz 1,105 1,073 942 907 Capital Expenditure (373) (247) (229) (191) (186)

Acquis./Investments (14) (10) 0 0 0

Cash Flow From Investing (387) (257) (229) (191) (186)

Equity Issues (Net of Costs) 0 0 0 0 0

Net Borrowings 142 0 (15) (30) (20)

Dividends Paid & Other (60) (19) (18) (23) (49)

Cash Flow From Financing 82 (19) (33) (53) (69)

Net Change in Cash (119) 11 9 126 132

Free Cash Flow (141) 27 59 183 195

Balance Sheet 2013 2014 2015F 2016F 2017F

Cash & Equivalents 282 294 303 429 561

Total Current Assets 676 671 717 838 946

PP&E & Mining Interests 1,281 1,425 1,519 1,599 1,694

Deferred taxation 51 51 51 51 51

Other 424 436 436 436 436

Total Assets 2,432 2,583 2,723 2,924 3,126

Short Term Debt 0 14 14 14 14

Current Liabilities 183 215 241 238 224

Long Term Debt 142 128 113 83 63

Assumptions (Real) 2014 2015F 2016F 2017F LT Other Long Term Liabilities 179 239 239 239 239

Gold Price ($/oz) 1,266 1,205 1,200 1,200 1,200 Total Liabilities 505 581 593 560 525

Copper Price ($/lb) 3.11 2.71 2.89 2.92 2.50 Shareholder Equity 1,927 2,002 2,130 2,364 2,601

Exchange Rate (US$:£) 1.65 1.50 1.50 1.50 1.50 Total Liab. & S/Holder Equity 2,432 2,583 2,723 2,924 3,126

Working Capital 493 457 476 600 722

Net Debt (Cash) (140) (152) (176) (332) (484)

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Attrib. Gold Production ('000oz) Total Cash Cost / AISC ($/oz AuEq)

Acacia Mining 9 April 2015









9 April 2015

REDUCE

Current Share Price 731pTarget Price 600pMarket Capitalisation £7.2bnShares In Issue 986mRIC/BLBG ANTO.L/ANTO LNAvg. Daily Volume (3M) 3,363,323Net Cash/(Debt) (m) (12/15F) $(495.3)m



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850

800

750

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Share Price

AntofagastaRelat ive to UK Market


Absolute -1 3 -13

Relative -2 -5 -17


AntofagastaEstimate Changes

Red Light

We maintain our REDUCE recommendation and £6 TP, despite our revisedcommodity price forecasts and changes to our model.

● Company Snapshot. FTSE100 major copper producer with four operating mines inChile, producing 700ktpa, plus three development projects. Also has the Twin MetalsProject in USA and water and transport distribution. 65% owned by Luksic Group.

● Investment Thesis. A stable and conservative business with steady, mostly brownfieldgrowth. Given high capex requirements over the next few years, repeat specialdividends are unlikely, in our view, but may be higher than 35% payout. ST growth- Immediate production plan is to reach 900kt by 2018 due to brownfield expansionsat Centinela Concentrates (Esperanza, 105ktpd debottlenecking; 10-12ktpa Cu fromend 2015, capex $110m), Los Pelambres (15% increase to 205ktpd; 95ktpa Cu from+2018, feasibility end 2016), Centinela Cathodes (50ktpa from H2 2016, maintains ElTesoro at 100ktpa, capex $636m), Centinela moly plant (2.4ktpa from H2 2016, capex$125m). Antucoya is progressing on schedule and budget. LT growth - Centinelasecond concentrator (140ktpa Cu & 150kozpa Au, capex $2.7bn, likely +2019, notin our model). Los Pelambres has potential to be doubled but full evaluation andpermitting is expected to take a number of years. Twin Metals has been bought andundergoing evaluation but likely one for the future.

● Guidance. 2015: 710kt copper (less 8kt loss for protect +/- flooding disruptions),250koz gold, 7.5kt moly at C1 cost of $1.50/lb net by-products ($1.85/lb gross), Capex$1.3bn.

● Preview Q1 (29 Apr). Production down 14% q-o-q and 5% y-o-y at 161kt copper (Q4187kt, Q1 2014 170kt) due to production disruptions from the protests and flooding.Gold and moly also down at 64koz and 1.9kt (Q4 82koz & 2.4kt). Cash costs up 6%q-o-q at $1.88/lb (gross) and $1.49/lb (net). Tonnages and grades down across theboard. 2015 guidance expected maintained for now, with losses expected to be madeup in the year. Antucoya on track for start-up this quarter.

● Valuation. Blend of 1x NAV/15x P/E (top of 7-15x P/E range for copper producers).

● Risks. Low - Proposed tax changes in Chile (being evaluated, with $105-150mdeferred tax provision), Chilean politics.


1



Antofagasta Ticker ANTO.L Market Capitalisation £7,207m Financial Year End Dec

REDUCE Share Price £7.31 Enterprise Value (EV) £7,208m Reporting Currency US$

£6.00 Implied Return -18% Net Debt (Cash) $2m Shares in Issue 986m



Los Pelambres (60%) 8% 54% 6,000 6.09 4.06 EPS Growth (36%) (30%) (26%) 114% 6%

Centinela Concs (Esperanza) (70%) 8% 24% 2,735 2.77 1.85 P/E 21.6x 27.9x 31.8x 14.9x 14.0x

Centinela Cathodes (El Tesoro) (70%) 8% 4% 409 0.42 0.28 CFPS ($/sh) 1.73 1.85 1.25 1.93 2.14

Michilla (74%) 8% 0% 14 0.01 0.01 P/CFPS 6.3x 5.9x 8.8x 5.7x 5.1x

Antucoya (70%) 10% 8% 874 0.89 0.59 FCFPS ($/sh) 0.27 0.18 (0.08) 0.97 1.01

Centinela exploration 4% 500 0.51 0.34 P/FCFPS 40.8x 61.9x (132.0)x 11.3x 10.9x

Nokomis (Twin Metals, 100%) 1% 100 0.10 0.07 FCF Yield 2% 2% -1% 9% 9%

Railway & other transport (100%) 8% 1% 72 0.07 0.05 EV/EBITDA 4.8x 5.8x 6.9x 4.1x 3.6x

Water concession (100%) 8% 5% 592 0.60 0.40 EBITDA margin 45% 42% 35% 46% 48%

Sub-total 11,297 11.46 7.64 Dividend Per Share ($/sh) 0.95 0.22 0.12 0.26 0.27

Corporate G&A / Other 10% (3%) (319) (0.32) (0.22) Dividend Yield 6.58% 1.65% 1.10% 2.35% 2.50%

Investments (book value) 2% 216 0.22 0.15 Return on Assets (ROA) 10% 7% 5% 10% 10%

Cash & equivalents 21% 2,375 2.41 1.61 Return on Equity (ROE) 14% 11% 7% 14% 14%

Debt (21%) (2,376) (2.41) (1.61) Return on Capital Employed (ROCE) 19% 14% 9% 16% 16%

Total 11,193 11.35 £7.57 Net Debt/EBITDA -0.5x 0.0x 0.3x -0.1x -0.3x

Current NAV multiple (Implied) 0.97x Gearing (Debt/Equity) 15.9% 29.6% 28.8% 21.2% 15.4%

Earnings Value $/sh £/sh Interest Cover -35.0x -36.8x -12.5x -21.8x -23.6x

EPS - 12 months forward 0.47 0.31 Shares Outstanding (m) 986 986 986 986 986

Current P/E multiple (implied) 23.6x Income Statement 2013 2014 2015F 2016F 2017F

Blended Valuation Target Multiple Weight Revenue 5,972 5,290 4,652 5,646 5,795

NAV valuation 1.00x 50% £7.57 Cost of sales (2,905) (2,828) (2,775) (2,789) (2,748)

Earnings valuation 15.0x 50% £4.66 G&A (83) (73) (72) (73) (74)

VALUATION £6.11 Exploration write-down (275) (168) (160) (182) (200)

Sensitivity Analysis Valuation NAV/sh 16F EPS 16F CFPS EBITDA 2,702 2,222 1,645 2,603 2,772

Base case metal price forecast £6.11 £7.57 $0.74 $1.93 DD&A (518) (606) (613) (613) (645)

Base case +10% £7.06 £9.47 $0.98 $2.37 Excpetional items (12) 24 0 0 0

Base case -10% £5.15 £5.65 $0.50 $1.49 EBIT 2,172 1,640 1,032 1,990 2,127

Flat copper price (at spot $2.70/lb) £6.54 £8.48 $0.59 $1.67 Net finance income (expense) (89) (66) (67) (75) (71)

Growth catalysts H1 15 H2 15 2016 2017 PBT 2,084 1,574 965 1,915 2,056

Antucoya first production Q2 Tax (844) (723) (347) (594) (653)

Centinela Concs optimisation (105ktpd) Net Profit (Loss) 1,240 851 618 1,321 1,403

Centinela 2nd Concentrator PFS (140-150ktpa) Profit attributable to equity 660 460 340 727 772

Los Pelambres EIA submission & feas study (205ktpd) Profit attributable to minority interest 580 391 278 594 631

Encuentro Oxides start production H2 Cashflow 2013 2014 2015F 2016F 2017F

Reserves (attributable) Tonnes Grade Metal EV/lb Net profit (loss) 1,240 851 618 1,321 1,403

Copper reserves (P&P): Cu-equiv 2,739 Mt 0.58% 15,885kt $0.31 /lb Working capital change 179 100 1 (29) (4)

Copper resources (M&I): Cu-equiv 2,401 Mt 0.55% 13,315kt $0.37 /lb DD&A 506 595 613 613 645

Production & cost 2014 2015F 2016F 2017F 2018F Non-recurring/other (219) 275 0 (2) 66

Copper prod (kt) - consolidated 705 704 779 788 828 Cash Flow From Operations 1,706 1,821 1,232 1,903 2,111

Gold production (koz) 271 254 245 255 259 Capital expenditure (1,441) (1,646) (1,314) (944) (1,117)

EV per lb Cu prodn ($/lb Cu) 6.96 6.97 6.30 6.22 5.92 Acquis./investments/adjustments 399 411 829 0 0

C1 Cash Cost (gross by-products) 1.86 1.86 1.66 1.55 1.48 Cash Flow From Investing (1,041) (1,235) (485) (944) (1,117)

C1 Cash Cost (net by-products) 1.43 1.50 1.34 1.23 1.15 Borrowings (515) 1,002 0 (400) (400)

All-in Sustaining Cost ($/lb) 1.92 1.95 1.77 1.66 1.58 Dividends paid (3,281) (1,748) (412) (239) (467)

Other 1,951 419 0 0 0

Cash Flow From Financing (1,846) (326) (412) (639) (867)

Net Change in Cash (1,181) 259 335 321 127

Free Cash Flow 265 175 (82) 959 994


Cash & equivalents 2,685 2,375 1,881 2,203 2,331

Other current assets 1,516 1,287 1,247 1,446 1,400

PP&E & mining interests 7,425 8,227 8,928 9,259 9,731

Investments 195 216 216 216 216

Other non-current assets 569 711 711 711 644

Total Assets 12,390 12,815 12,982 13,835 14,321

Short-term debt 341 285 285 285 285

Other current liabilities 790 879 840 1,010 960

Long-term debt 1,033 2,092 2,092 1,692 1,292

Other non-current liabilities 1,904 1,810 1,810 1,810 1,810

Assumptions (Real) 2014 2015F 2016F 2017F LT Total Liabilities 3,726 4,780 4,742 4,511 4,061

Copper Price ($/lb) 3.11 2.71 2.89 2.92 2.50 Shareholder equity 6,725 6,174 6,287 6,882 7,397

Molybdenum Price ($/lb) 11.45 8.37 9.01 9.41 10.00 Minority interest 1,939 1,861 1,954 2,441 2,862

Gold Price ($/oz) 1,266 1,205 1,200 1,200 1,200 Total Liab. & Equity 12,390 12,815 12,982 13,835 14,321

Silver Price ($/oz) 19.08 16.69 17.59 18.60 18.46 Working Capital 605 386 385 414 418

Exchange rate (US$/£) 1.65 1.50 1.50 1.50 1.50 Net Debt (Cash) (1,311) 2 495 (227) (754)

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Los Pelambres Centinela Concs (Esperanza) Centinela Cathodes (El Tesoro)Michilla Antucoya Total goldC1 Cash Cost AISC

Copper (kt) / Gold (koz) C1 Cost / AISC ($/lb Cu)

Antofagasta 9 April 2015









9 April 2015

BUY

Current Share Price 24pTarget Price 40pMarket Capitalisation £88mShares In Issue 367mRIC/BLBG AUE.L/AUE LNAvg. Daily Volume (3M) 822,249Broker Yes



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Share Price

Aureus MiningRelat ive to UK Market


Absolute 7 24 -22

Relative 6 14 -26


Aureus MiningEstimate Changes

On the Cusp of Production

We maintain our BUY recommendation and 40p TP, despite our revised commodityprice forecasts and changes to our model.

● Company Snapshot. Aureus is an AIM and TSX-listed gold explorer and developerfocused in Liberia. Its main asset is the 120kozpa New Liberty project expected tostart production in May 2015, becoming Liberia's first commercial gold mine. Otheradvanced exploration prospects exist within the sizeable 1,470km² licence portfolio.

● Investment Thesis. Aureus is firmly on the way to becoming a African junior goldproducer with financing complete and development started. Robust project - NewLiberty has a 0.9Moz reserve with a high grade of 3.4g/t (1.7Moz resource). Standardopen pit and 1.1Mtpa gravity/CIL operation is envisaged. Following the new mine planin February 2015, LOM production is expected to be 107kozpa over 8 years (119kozpafirst 6 years), at a cash costs of $692/oz (AISC $789/oz). The new plan included anadditional starter pit so the project will have increased operational flexibility throughthe provision of a larger stockpile and more working faces, plus access to higher gradeore earlier. Fully financed - Project capex was estimated at $152m (inc. contingency).Fully funded following recent $18m equity raising. c$24m in potential "dead money"due to debt service requirements and contingencies. Exploration upside - Additionalproduction potential from Ndablama (plus possibly the 180koz Weaju prospect),30-40km away with resources of 0.9Moz, grading 1.7g/t. Initial testwork is encouragingand pit optimisation will be taken this year; with a shallow dip and decent thickness weshould see low strip ratios. Also further potential to increase mine life or go undergroundat New Liberty.

● Guidance. 2015: 60koz.

● Preview Q1. First gold pour now scheduled for the end May (full pelt July). We forecastcapex of c.$55m required to complete construction. We forecast cash of $40m anddebt of $90m at end Q1, following the recent $15m raising to cover the cost delaysfrom Ebola.

● Valuation. Blend of 1x NAV/5x P/CF (bottom of 1-2x NAV/5-15x P/CF range for golds).

● Risks. Low - Project delivery, Liberian politics.


1



Aureus Mining Ticker AUE.L Market Capitalisation £88m Financial Year End Dec

BUY Share Price £0.24 Enterprise Value (EV) £118m Reporting Currency US$

£0.40 Implied Return 67% Net Debt (Cash) $46m Shares in Issue 367m


Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) (0.03) (0.01) 0.03 0.01 (0.00)

New Liberty (90%) 12% 107% 204 0.56 0.37 EPS Growth 41% 58% 303% -61% -141%

Exploration Properties (inc. Ndablama/Weaju) 26% 50 0.14 0.09 P/E n.m n.m 13.7x 35.5x n.m

Sub-total 254 0.69 0.46 CFPS ($/sh) (0.02) (0.01) 0.08 0.08 0.06

Investments (Stellar Diamonds) 0% 1 0.00 0.00 P/CFPS n.m n.m 4.7x 4.4x 5.6x

Cash & Equivalents 21% 40 0.11 0.07 FCFPS ($/sh) (0.21) (0.34) (0.10) 0.04 0.03

Debt (45%) (86) (0.23) (0.16) P/FCFPS n.m n.m n.m 8.1x 12.7x

Corporate G&A / Other (10%) (18) (0.05) (0.03) FCF Yield -60% -95% -29% 12% 8%

Total 190 0.52 £0.35 EV/EBITDA n.m n.m 5.8x 5.0x 6.6x

Current NAV Multiple (Implied) 0.69x EBITDA Margin 0% 0% 42% 26% 19%

Cash Flow Value $/sh £/sh Dividend Per Share ($/sh) 0.00 0.00 0.00 0.00 0.00

CFPS (2 year forward) 0.08 0.06 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

Current P/CF multiple (implied) 4.4x Return on Assets (ROA) -4% -1% 3% 1% -1%

Blended Valuation Target Multiple Weight Return on Equity (ROE) -5% -2% 4% 1% -1%

NAV valuation 1.25x 50% £0.43 Return on Capital Employed (ROCE) -6% -2% 5% 3% 1%

Cash Flow valuation 7.5x 50% £0.41 Net Debt/EBITDA 4.3x -8.1x 2.4x 1.8x 2.4x

VALUATION £0.42 Gearing (Debt/Equity) 0% 42% 46% 39% 35%

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Interest Cover n.m n.m -0.3x -0.5x -1.4x

Base case gold price forecast 0.35 0.01 0.08 Shares Outstanding (m) 221 286 367 367 367

Base case +10% 0.47 0.04 0.10 Income Statement 2013 2014 2015F 2016F 2017F

Base case -10% 0.24 0.01 0.06 Revenue 0 0 73 140 139

Flat gold price (at spot $1,200/oz) 0.35 0.02 0.08 Cost of Sales 0 0 (39) (100) (108)

News Catalysts Q4 14 Q1 15 Q2 15 Q3 15 G&A (4) (4) (4) (4) (4)

New Liberty construction Exploration 0 0 0 0 0

New Liberty revised mine schedule Other (5) (1) (0) (0) (0)

Ndablama resource update EBITDA (9) (5) 30 36 27

Ndablama scoping study DD&A (0) (1) (15) (26) (25)

New Liberty production starts EBIT (9) (6) 16 9 2

Net Interest Expense 0 (0) (4) (4) (3)

Reserves & Resources (attributable) Tonnage Grade Gold EV/oz PBT (9) (6) 12 5 (1)

Reserves (P&P) Moz 8 3.4 0.8 214 Non-Recurring Items/Other 2 2 (2) (1) (1)

Resources (M&I) Moz 17 2.7 1.4 129 Taxes/Recovery 0 0 0 0 0

Resources (Total) Moz 35 2.5 2.5 70 Net Profit (Loss) - attributable (7) (4) 10 4 (2)

Production & Cost 2014 2015F 2016F 2017F Minority Interest 0 0 2 1 1

Gold Production (consolidated) 000oz 0 61 115 111 Cashflow 2013 2014 2015F 2016F 2017F

Gold Production (attributable) 000oz 0 55 103 100 Net Profit (Loss) (7) (4) 12 5 (1)

EV/oz Production (attributable) $/oz Au 0 3,250 1,721 1,775 DD&A 0 1 15 26 25

Cash Operating Cost $/oz 0 602 821 870 Non Recurring/Other 2 (1) 4 4 3

Total Cash Cost (net by-products) $/oz 0 638 858 907 Working Cap. Changes (0) 1 2 (1) (0)

All-in Sustaining Cost $/oz 0 689 922 978 Cash Flow From Operations (5) (4) 28 30 24

Capital Expenditure (42) (94) (66) (14) (13)

Acquis./Investments (8) (7) (8) (8) (8)



Net Borrowings 0 75 19 (11) (11)

Dividends Paid & Other 0 (1) 0 0 0

Cash Flow From Financing 15 99 33 (11) (11)

Net Change in Cash (40) (6) (12) (3) (8)

Free Cash Flow (47) (98) (38) 16 10




PP&E & Mining Interests 96 196 255 250 247


Other 25 34 34 34 34

Total Assets 166 267 315 307 295



Assumptions (Real) 2014 2015F 2016F 2017F LT Long Term Debt 0 75 95 83 73

Gold Price ($/oz) 1,412 1,266 1,200 1,200 1,200 Other Long Term Liabilities 0 0 0 0 0

Exchange Rate (US$:£) 1.56 1.65 1.50 1.50 1.50 Total Liabilities 7 87 109 95 84

Shareholder Equity 159 180 206 211 211

Total Liab. & S/Holder Equity 166 267 315 307 295


Net Debt (Cash) (39) 43 74 66 64

0

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175

2013 2014 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F

New Liberty Total Cash Cost AISC

Gold Production ('000oz, 100% basis) Total Cash Cost / AISC ($/oz Au)

Aureus Mining 9 April 2015



AnalystsPhil SwinfenTel: +44 (0)20 7260 [email protected]

Cailey BarkerTel: +44 (0)20 7260 [email protected]





9 April 2015

BUY

Current Share Price 12pTarget Price 40pMarket Capitalisation £22mShares In Issue 180mRIC/BLBG BKY.L/BKY LNAvg. Daily Volume (3M) 22,733



20

18

16

14

12

10

Share Price

Berkeley ResourcesRelat ive to UK Market


Absolute 7 -20 -23

Relative 6 -26 -27


Berkeley ResourcesEstimate Changes

Game Changer on the Horizon

We maintain our BUY recommendation but increase our TP to 40p, from 35p, dueto our updated commodity prices and changes to our model.

● Company Snapshot. Berkeley is an AIM/ASX listed uranium developer focused onSpain. The company’s flagship asset is the Salamanca Project in Western Spain wherea DFS is underway. Permitting is well advanced and we estimate first production in2018 depending on uranium prices.

● Investment Thesis. Low capex and opex, robust resource, simple open pitshallow mining, low-risk jurisdiction, uranium developer with regional hub model,first production should coincide with a higher price environment. Regional Hub -Salamanca is composed of three separate deposits: Retortillo, Alameda and recentlydefined Zona 7. Plans to build a centralised processing plant at Retortillo with heapleach at each site, for competitive opex and capex and growth flexibility. Resourcedoubled. New Zona 7 resource brings total resource to 88Mlbs at 469ppm, better thanmost African projects. Satellite Promoted. Zona 7 (10km away) is now the largestdeposit within Salamanca and higher grade (589ppm). Scoping study due Q2 2015 tointegrate into DFS with potential to defer Retortillo/Alameda capex as Zona 7 likely tojump queue being high-grade, shallow and low pre-strip. Timeline drag will be that Zona7 needs permitting. Existing PFS plan. 3.3Mlbs U3O8 p.a, cash costs $25/lb (AISC c.$29/lb), mid-low on cost curve. Initial capex for Retortillo is $95m. Growth Potential -Lots more satellite potential (eg. Gambuta) within trucking distance. Zona 7 resourceremains open. Balance sheet. A$16m cash and comfortable.

● News Catalysts: Zona 7 scoping study (Q2), Resource update (Q2).

● Uranium Market. Currently challenging but excellent long term fundamentals due aprojected doubling of electricity consumption by 2030 and increased contribution fromnuclear requiring a substantial world reactor build-out. New mine supply is constrainedby new project delays, cancelled expansions and mothballing of existing operations,whilst secondary supply is dwindling due to the end of the Russian HEU programme.Restart of Japanese reactors is now rolling out - four so far, twenty under review.Restarts drawn-out and onerous process but ultimately key market catalyst to promptunavoidable resumption of U3O8 contracting volumes, as despite inventory build up,utilities typically plan 3-5 years out to secure feed. 2014 contract volumes triple 2013'slow. Major reactor build-out in China (under pressure to cut pollution) also underpinsdemand story. Our LT price is $60/lb vs spot at $39/lb.

● Valuation. 0.5x NAV, middle of 0.25-1x P/NAV range for pre-producers.

● Risks. Low - Project delivery risk, environmental approval and permitting in Spain,project financing, uranium market.


1



Berkeley Resources Ticker BKY Market Capitalisation £22m Financial Year End June

BUY Share Price £0.12 Enterprise Value (EV) £13m Reporting Currency A$


Valuation Key Metrics 2014 2015F 2016F 2017F 2018F

Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS (A$/sh) (0.04) (0.04) (0.04) (0.03) 0.03

Salamanca 10% 104% 241 1.25 0.84 EPS Growth 33% 5% 1% 29% 195%

Sub-total 241 1.25 0.84 P/E n.m n.m n.m n.m 8.6x

Cash & Equivalents 4% 10 0.05 0.03 CFPS ($/sh) (0.04) (0.04) (0.04) (0.03) 0.05

Debt 0% 0 0.00 0.00 P/CFPS n.m n.m n.m n.m 4.4x

Corporate G&A / Other (8%) (19) (0.10) (0.06) FCFPS ($/sh) (0.04) (0.04) (0.04) (0.39) 0.04

Total 232 1.21 £0.81 P/FCFPS n.m n.m n.m n.m 5.1x

Current NAV Multiple (Implied) 0.15x FCF Yield -18% -18% -16% -172% 20%

EV/EBITDA n.m n.m n.m n.m 1.2x

Valuation EBITDA Margin 0% 0% 0% 0% 26%

NAV valuation NAV risk multiple 0.50x £0.39 Dividend Per Share ($/sh) 0.00 0.00 0.00 0.00 0.00

VALUATION £0.39 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

Return on Assets (ROA) -20% -25% -16% -6% 6%

Return on Equity (ROE) -21% -26% -16% -10% 9%

Sensitivity Analysis NAV (£/sh) Return on Capital Employed (ROCE) -21% -26% -17% -7% 8%

Base case U3O8 price forecast 0.81 Net Debt/EBITDA 0.0x 1.7x 4.4x -5.0x 1.7x

Base case +10% 0.47 Gearing (Debt/Equity) 0% 0% 0% 59% 49%

Base case -10% 0.27 Interest Cover n.m n.m n.m n.m -0.2x

LT U3O8 price ($60/lb) 0.36 Shares Outstanding (m) 180 180 264 347 347

Income Statement 2014 2015F 2016F 2017F 2018F

Revenue 0 0 0 0 80

Cost of Sales 0 0 0 0 (54)

News Catalyst (CY) 2014 2015 2016 2017 2018 G&A (2) (1) (2) (2) (4)

Permitting Exploration (7) (7) (8) (8) (3)

Zona 7 Scoping Study Other 1 0 0 0 (0)

Zona 7 in-fill drilling EBITDA (8) (7) (10) (10) 21

DFS DD&A 0 0 0 0 (9)

Construction & Engineering EBIT (8) (7) (10) (10) 12

Production Net Interest Expense 0 0 0 0 (3)

Reserves & Resources (attributable) Mt Grade ppm U3O8 EV/lb PBT (8) (7) (9) (10) 9

Reserves (P&P) Mlbs - - - - Non-Recurring Items/Other 0 0 0 0 0

Resources (M&I) Mlbs 34 423 32 0.42 Taxes/Recovery (0) 0 0 0 0

Resources (Total) Mlbs 85 469 88 0.15 Net Profit (Loss) - attributable (7) (7) (9) (10) 9

Production & Cost 2017F 2018F 2019F 2020F Minority Interest 0 0 0 0 0

U3O8 production Mlbs 0.00 1.15 1.47 3.25 Cashflow 2014 2015F 2016F 2017F 2018F

EV/lb Production (attributable) $/lb 0.0 11.6 9.1 4.1 Net Profit (Loss) (7) (7) (9) (10) 9

C1 Cash Cost $/lb 0 30 28 26 DD&A 0 0 0 0 9

All-in Sustaining Cost $/lb 0 36 37 27 Non Recurring/Other (1) (0) 0 0 0

Working Cap. Changes 0 0 0 0 0

Cash Flow From Operations (7) (7) (9) (10) 18

Capital Expenditure (0) (0) 0 (127) (3)


Cash Flow From Investing (0) (0) 0 (127) (3)


Net Borrowings 0 0 0 55 0

Dividends Paid & Other (0) 0 0 0 (5)

Cash Flow From Financing (0) 0 38 100 (5)

Net Change in Cash (7) (8) 29 (36) 11

Free Cash Flow (7) (8) (9) (136) 16

Balance Sheet 2014 2015F 2016F 2017F 2018F





Other 14 15 15 15 15

Total Assets 37 30 59 149 153




Uranium U3O8 price ($/lb) 34 39 41 48 60 Other Long Term Liabilities 0 0 0 0 0

Exchange Rate (A$:US$) 0.90 0.76 0.75 0.75 0.75 Total Liabilities 1 1 1 56 51

Exchange Rate (US$:£) 1.65 1.50 1.50 1.50 1.50 Shareholder Equity 36 29 57 93 102



Net Debt (Cash) (20) (13) (41) 50 34

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2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F

Retortillo Alameda C1 Cash Cost ASIC

U3O8 Production ('000 lb, 100% basis) C1 Cash Cost / AISC ($/lb)

Berkeley Resources 9 April 2015









9 April 2015

BUY

Current Share Price 39pTarget Price 75pMarket Capitalisation £20mShares In Issue 52mRIC/BLBG CALq.L/CMCL LNAvg. Daily Volume (3M) 11,298Broker Yes



6560555045403530

Share Price

Caledonia Mining CorpRelat ive to UK Market


Absolute 3 -1 -12

Relative 2 -9 -17


Caledonia Mining CorpEstimate Changes

Building a Golden Future

We maintain our BUY recommendation and 75p TP, despite our new commodityprice forecasts and changes to our model.

● Company Snapshot. Caledonia Mining is an AIM/TSX-listed junior gold producerfocused in Zimbabwe. Its flagship asset is the low cost, cash-generative Blanket mine,which is fully indigenised and potentially being expanded to 75-80kozpa by 2021, fromthe current 40kozpa.

● Investment Thesis. Low cost growth - Blanket is a historic mine with excellentinfrastructure, being expanded to 75-80kozpa by developing down-dip extensionsbelow 750m via a central shaft and the No.6 Winze, plus making minor modificationsto the under-utilised plant. Cash is king - Caledonia has c.$27m in cash and no debt.Growth comes at a very low $70m in capex, which will be funded internally. Blanket isan efficient, low-cost and cash generative mine with AISC of c.$900/oz, well below theindustry average (a function of low power and labour costs, plus natural ventilation in adry mine). Caledonia pays an 8% yield. Upside potential - We see potential to increaseproduction by 10-15kozpa from satellite properties, subject to more work. There is alsopotential for further operational efficiencies. M&A potential - Longer term, Caledoniawill have a decent cash pile and a hungry plant, putting it in a strong position to pickup distressed assets in Zimbabwe.

● Guidance. 2015: 42koz (NUMe 42koz).

● Preview Q1. Production of 10koz, slightly down q-o-q. 2015 guidance maintained. EPSof 3.5c, up q-o-q on WIP and higher gold price.


● Risks. High - Zimbabwe: Caledonia has navigated through Zimbabwean politicalchallenges and pioneered a successful indigenisation structure. Recent new marketinglaw for gold sales to state owned Fidelity is working out ok so far but there is alwaysa risk of political or legal change, in our view.


1



Caledonia Mining Ticker CMCL.L Market Capitalisation £20m Financial Year End Dec

BUY Share Price £0.39 Enterprise Value (EV) £9m Reporting Currency C$



Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS (Adjusted, $/sh) 0.28 0.12 0.11 0.20 0.35

Blanket (49%) 14% 108% 96 1.75 0.93 EPS Growth -43% -57% -6% 74% 77%

Exploration Properties 0% 0 0.00 0.00 P/E 2.6x 6.0x 6.4x 3.7x 2.1x

Sub-total 96 1.75 0.93 CFPS ($/sh) 0.28 0.26 0.21 0.31 0.46

Cash & Equivalents 24% 21 0.39 0.21 P/CFPS 2.6x 2.8x 3.5x 2.4x 1.6x

Debt 0% 0 0.00 0.00 FCFPS ($/sh) 0.06 0.13 (0.15) (0.12) 0.10

Corporate G&A / Other (31%) (28) (0.51) (0.27) P/FCFPS 12.9x 5.5x n.m n.m 7.6x

Total 89 1.63 £0.87 FCF Yield 8% 18% -20% -16% 13%

Current NAV Multiple (Implied) 0.45x EV/EBITDA 1.3x 1.0x 1.1x 0.7x 0.5x

Cash Flow Value $/sh £/sh EBITDA Margin 20% 28% 24% 31% 39%

CFPS (1 year forward) 0.23 0.12 Dividend Per Share ($/sh) 0.05 0.07 0.05 0.05 0.04

Current P/CF multiple (implied) 3.1x Dividend Yield 7.5% 10.2% 6.6% 6.6% 5.1%

Blended Valuation Target Multiple Weight Return on Assets (ROA) -4% 7% 7% 11% 16%

NAV valuation 1.00x 50% £0.87 Return on Equity (ROE) -11% 6% 7% 10% 15%

Cash Flow valuation 5.0x 50% £0.62 Return on Capital Employed (ROCE) 15% 18% 14% 22% 31%

VALUATION £0.75 Net Debt/EBITDA -1.8x -1.6x -1.1x -0.3x -0.3x

Gearing (Debt/Equity) 3% 0% 0% 0% 0%

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Interest Cover 0.0x 0.0x 0.0x 0.0x 0.0x

Base case gold price forecast 0.87 0.20 0.31 Shares Outstanding (m) 52 52 52 52 52

Base case +10% 1.06 0.28 0.40 Income Statement 2013 2014 2015F 2016F 2017F


Flat gold price (at spot $1,200/oz) 0.99 0.15 0.24 Cost of Sales (32) (36) (40) (45) (50)

H1 15 H2 15 2016 2017 G&A (8) (7) (7) (7) (7)

Tramming loop on 750m level Exploration 0 0 (0) (1) (1)

Start Sinking Central Shaft (800tpd) Other (13) 1 0 1 1

No. 6 Winze Project (500tpd) starts production EBITDA 13 16 15 23 36

Mining of AR Main/South below 750m starts DD&A (3) (4) (5) (4) (4)

Complete Central Shaft H2 EBIT 10 12 11 18 32

Net Interest Expense (0) (0) 0 0 0

Reserves & Resources (attributable) Tonnage Grade Gold EV/oz PBT 9 12 11 19 32

Reserves (P&P) Moz 3 3.7 0.3 39 Non-Recurring Items/Other (3) (3) (2) (3) (4)

Resources (M&I) Moz 4 3.8 0.5 27 Taxes/Recovery (10) (5) (3) (6) (10)

Resources (Total) Moz 10 4.2 1.4 10 Net Profit (Loss) - attributable (3) 5 6 10 18

Production & Cost 2014 2015F 2016F 2017F Minority Interest 3 2 2 3 4

Gold Production 000oz 42 42 49 60 Cashflow 2013 2014 2015F 2016F 2017F

Gold Production (attributable) 000oz 20 21 24 30 Net Profit (Loss) (0) 8 8 13 22

EV/oz Production (attributable) $/oz Au 660 654 561 457 DD&A 3 4 5 4 4

Cash Operating Cost $/oz 652 695 650 560 Non Recurring/Other 25 4 3 5 10

Total Cash Cost (net by-products) $/oz 743 760 717 627 Working Cap. Changes (5) 2 (1) (1) (2)

All-in Sustaining Cost $/oz 969 949 885 770 Cash Flow From Operations 15 14 11 16 24


Acquis./Investments 0 0 0 0 0



Net Borrowings 0 (1) 0 0 0


Cash Flow From Financing (7) (5) (3) (3) (2)

Net Change in Cash (5) 2 (10) (9) 3

Free Cash Flow 3 7 (8) (6) 5






Other 0 0 0 0 0

Total Assets 70 74 80 92 113





Exchange Rate (US$:£) 1.65 1.50 1.50 1.50 1.50 Total Liabilities 18 16 17 18 19

Exchange Rate (C$:US) 0.91 0.80 0.80 0.80 0.80 Shareholder Equity 52 58 63 74 94



Net Debt (Cash) (23) (27) (16) (8) (11)

0

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1,000

1,250

0

25

50

75

2009* 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F

Blanket Cash Costs AISC


Caledonia Mining Corp 9 April 2015









9 April 2015

HOLD

Current Share Price 60pTarget Price 60pMarket Capitalisation £691mShares In Issue 1,152mRIC/BLBG CEY.L/CEY LNAvg. Daily Volume (3M) 8,204,692Net Cash/(Debt) (m) (12/15F) $225.9m



807570656055504540

Share Price

Centamin EgyptRelat ive to UK Market


Absolute 1 -7 12

Relative 1 -14 6


Centamin EgyptEstimate Changes

Egyptian Yield

We maintain our HOLD recommendation and 60p TP, despite our revisedcommodity price forecasts and changes to our model.

● Company Snapshot. TSX/LSE-listed Mid-tier Egyptian gold producer. Main assetis the world class, 450-500kozpa Sukari gold mine. Also has some earlier stageexploration properties in Burkina Faso (Ampella) and Ethiopia.

● Investment Thesis. World class mine - Sukari has a 15Moz resource in a mine life of+20 years. It is the first and only commercial gold mine in the country, held in a 50%production sharing agreement with the government. Ramping up - Stage 4 10Mtpaplant expansion is complete ($330m). The original 5Mtpa plant had been runningat +15-20% of nameplate capacity so there is potential for 11-12Mtpa in our view.Underground is key - Productivity is up to 1Mtpa although there is potential to push this.Grade is key, originally expected to average 8-10g/t, but closer to 6.5-7g/t in the shortterm. Geology is tricky but potential is evident, with real upside from a second Ptahdecline (not in LOM plan). We expect to see the operation surprise to the upside withpotential to beat on plant throughput or underground grade. Cash & divi - Reducingcapex and no debt leaves plenty cash available. Dividend policy of 15-30% of FCF(2-4% yield). Profit sharing payments expected to start H2 2016. Legal cases - 2 casesregarding legitimacy of its exploitation licence by a private individual and fuel subsidy.Likely to take some time to resolve although a recent new law to restrict third partychallenges may quicken the process.

● Guidance. 2015: 420koz at cash operating cost of $700/oz (exc. royalties and fuelsubsidy), AISC $950/oz. From H2 hits the longer term rate of 450-500kozpa at $700/oz (AISC $850-900/oz).

● Preview Q1 (13 May). Q1 produced 108koz, 16% down q-o-q but better than guided,with open pit grades moving down temporarily in line with the mine plan. FY guidanceis maintained but looks well on track to beat it as expected (NUMe 445koz). Financials- EPS of 1.4c, down q-o-q on lower production and y-o-y on lower gold prices (NPAT$17m, 2014 Q1 1.9c), EBITDA of $45m, up y-o-y but down q-o-q. Balance sheetremaining strong, up at $181m has capex falls away and FCF is generated. Cashoperating costs $733/oz, up q-o-q on lower grades and ounces. No material updatesexpected on legal cases with a hopeful change around on the new law to restrict thirdparty challenges.


● Risks. Moderate-High: Legal cases, Egyptian politics.




Centamin Egypt Ticker CEY.L Market Capitalisation £685m Financial Year End Dec

HOLD Share Price £0.60 Enterprise Value (EV) £577m Reporting Currency US$

£0.60 Implied Return 0% Net Debt (Cash) -$163m Shares in Issue 1,142m



Sukari (100%) 12% 92% 974 0.84 0.56 EPS Growth (57%) 14% 26% (48%) (6%)

Sub-total 974 0.84 0.56 P/E 12.5x 11.0x 8.7x 16.9x 18.0x

Corporate G&A / Other 12% (7%) (76) (0.07) (0.04) CFPS ($/sh) 0.10 0.18 0.19 0.13 0.13


Debt 0% 0 0.00 0.00 FCFPS ($/sh) 0.04 0.10 0.11 0.06 0.06

Total 1,061 0.92 £0.61 P/FCFPS 21.8x 8.6x 8.4x 14.3x 14.4x

Current NAV multiple (Implied) 0.98x FCF Yield 5% 12% 12% 7% 7%

Cash Flow Value $/sh £/sh EV/EBITDA 5.2x 4.1x 3.6x 3.4x 2.9x

CFPS - 12 month forward 0.18 0.12 EBITDA margin 35% 37% 37% 36% 36%

Current P/CF multiple (implied) 5.1x Dividend Per Share ($/sh) 0.02 0.03 0.03 0.02 0.02

Blended Valuation Target Multiple Weight Dividend Yield 2.2% 3.5% 3.6% 2.1% 2.1%

NAV valuation 1.00x 50% £0.61 Return on Assets (ROA) 6% 6% 8% 4% 4%

Cash Flow valuation 5.0x 50% £0.58 Return on Equity (ROE) 6% 7% 8% 4% 4%

VALUATION £0.60 Return on Capital Employed (ROCE) 6% 7% 8% 8% 9%

Net Debt/EBITDA -1.0x -1.2x -1.1x -1.2x -1.3x

Sensitivity Analysis Valuation NAV/sh 15F EPS 15F CFPS Gearing (Debt/Equity) 0% 0 0 0 0

Base case gold price forecast £0.60 £0.61 $0.10 $0.19 Interest Cover n.m n.m n.m n.m n.m

Base case +10% £0.65 £0.77 $0.14 $0.22 Shares Outstanding (m) 1,132 1,142 1,142 1,142 1,142

Base case -10% £0.51 £0.47 $0.06 $0.14 Income Statement 2014 2015F 2016F 2017F 2018F

Flat gold price (at spot $1200/oz) £0.56 £0.60 $0.11 $0.19 Revenue 473 536 597 632 665

News catalysts H2 14 H1 15 H2 15 2016 Cost of sales (358) (411) (445) (470) (488)

Court cases G&A (16) (16) (16) (17) (17)

Stage 4 (plant expansion: 10Mt p.a.) Other (14) (16) (18) (19) (20)

Sukari resource update EBITDA 165 196 218 227 240

Sukari full run rate (450-500kozpa @ $700/oz) DD&A 84 103 100 101 100

EBIT 84 93 118 126 140

Reserves & Resources (attributable) Tonnes Grade Gold EV/oz Net finance income (expense) (2) 1 2 5 10

Reserves (P&P) 217 Mt 1.10 g/t 7.7 Moz 112 PBT 82 94 121 132 150

Resources (M&I) - inc. Ampella 411 Mt 1.13 g/t 14.9 Moz 58 Non-Recurring Items/Other 0 0 0 0 0

Resources (M, I&I) - inc. Ampella 502 Mt 1.15 g/t 18.5 Moz 47 Tax / Payment to EMRA (0) 0 (3) (71) (93)

Production & cost 2014 2015F 2016F 2017F 2018F Net Profit (Loss) - attributable 82 94 118 61 57

Gold production (koz) 377 445 493 507 521 Minority Interest (0) 0 (0) 0 (0)

EV/oz production ($/oz AuEq) 2,293 1,943 1,755 1,706 1,659 Cashflow 2014 2015F 2016F 2017F 2018F

Cash Operating Cost ($/oz) 729 692 694 699 698 Net Profit (Loss) 82 94 118 61 57

Total Cash Cost ($/oz) 766 728 730 734 734 Working Cap. change (59) 4 (3) (3) (3)

All-in Sustaining Cost ($/oz) 1,006 947 908 877 858 DD&A 84 103 100 101 100

Non Recurring/Other 5 (1) (3) (6) (10)

Cash Flow From Operations 112 200 211 152 144


Acquis./investments/adjustments (14) (30) (30) (10) (5)


Borrowings 0 (0) 0 0 0

Capital stock 50 0 0 0 0

Dividends paid & other (61) (31) (49) (31) (12)


Net Change in Cash 21 58 43 31 54

Free Cash Flow 47 119 122 72 71






Other 148 178 209 220 225

Total Assets 1371 1440 1508 1535 1573


Assumptions (Real) 2014 2015F 2016F 2017F LT Current Liabilities 34 41 43 45 48

Gold Price (US$/oz) 1,266 1,205 1,200 1,200 1,200 Long Term Debt 0 0 0 0 0

GBPUSD exchange rate 1.65 1.50 1.50 1.50 1.50 Other Long Term Liabilities 3 3 3 3 3

Total Liabilities 37 44 46 49 51


Minority interest (0) (0) (0) (0) (0)

Total Liab. & Equity 1371 1440 1508 1535 1573


Net Debt (Cash) (163) (231) (235) (265) (320)

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Sukari (100% basis) Total cash costs AISC

Attrib. Gold Eq Production ('000oz) Total Cash Cost ($/oz AuEq)

Centamin Egypt 9 April 2015









9 April 2015

BUY

Current Share Price 8pTarget Price 24pMarket Capitalisation £22mShares In Issue 273mRIC/BLBG CGH.L/CGH LNAvg. Daily Volume (3M) 174,102Net Cash/(Debt) (m) (12/13F) $11.2mBroker Yes



20181614121086

Share Price

Chaarat GoldRelat ive to UK Market


Absolute -8 -34 -29

Relative -8 -39 -32


Chaarat GoldEstimate Changes

DFS Abound

We maintain our BUY recommendation but increase our TP to 24p, from 23p, dueto our new commodity price forecasts and changes to our model.

● Company Snapshot. Chaarat is an AIM-quoted junior gold developer focused inKyrgyzstan. Its flagship asset is the 6.1Moz Chaarat gold project, with the resourcecontained within the Tulkubash (oxide) and Kiziltash (sulphide & refractory) deposits.DFS is expected mid 2015.

● Investment Thesis. Potential outweighs challenges - World Class potential +10Mozdeposit (current resource 6km of total 40km strike) with decent grades of +3g/t (1.7g/t Tulkubash), healthy mineable widths up to 20m, and relatively simple and consistentgeology. Topographically challenging location with a seasonally harsh climate, limitedinfrastructure and steeply dipping, predominantly refractory ore. Strategic partnerlikely - Given scale and financing requirements, plus close proximity to China, astrategic partner seems the likely solution to develop the project. The DFS shouldmake the project more robust and put Chaarat in a stronger bargaining position withShandong and other potential strategic investors. DFS Making progress - Beingundertaken by China Nonferrous (NFC), Chaarat's 9% shareholder - expected tocomplete mid 2015, which will keep costs down and align the company with a potentialdevelopment partner. DFS will define operating parameters; Initial assumptions are fora 250kozpa, with the option to develop in 2 stages. Initial stage will be a 120kozpa heapleach - a sizeable 5Mtpa operation with low grade (0.9g/t), low strip (2:1) and cashcosts of $550-600/oz; Second stage will be open pit/underground to process refractoryore by POX/Biox. Phase 1 will have ore transported through a 10km long tunnel to theplant, so will take c.3 years to complete. We conservatively estimate start-up in 2019,with capex of $200-250m for stage 1 and $150m for stage 2. A resource update forTulkubash is expected over the coming months. Funded to complete - recent raised$5m to Fasanara Capital (26%), which is sufficient to last until Q1 2016.

● Valuation. 0.75x NAV (middle of 0.5-1x NAV range for gold pre-producers).

● Risks. High: Kyrgyzstan politics, metallurgy & mining, limited infrastructure &topographically challenging, project delivery.


1



Chaarat Ticker CGH.L Market Capitalisation £22m Financial Year End Dec

BUY Share Price 8p Enterprise Value (EV) £17m Reporting Currency US$

24p Implied Return 193% Net Debt (Cash) -$8m Shares in Issue 273m


Net Asset Value Disc Rate NAV (%) $m £m p/sh EPS ($/sh) (0.06) (0.02) (0.03) (0.03) (0.03)

Chaarat (100%) 14% 109% 151 101 34 EPS Growth -25% 57% -10% -23% 15%

Exploration properties 0% 0 0 0 P/E n.m n.m n.m n.m n.m

Sub-total 151 101 34 CFPS ($/sh) (0.02) (0.02) (0.03) (0.03) (0.03)

Cash & Equivalents 6% 8 5 2 P/CFPS n.m n.m n.m n.m n.m

Debt 0% 0 0 0 FCFPS ($/sh) (0.10) (0.03) (0.04) (0.20) (0.36)

Corporate G&A / Other (14%) (20) (13) (4) P/FCFPS n.m n.m n.m n.m n.m

Total 140 93 31 FCF Yield -1% 0% 0% -2% -3%

Current NAV Multiple (Implied) 0.26x EV/EBITDA n.m n.m n.m n.m n.m

VALUATION Target Multiple 0.75x 24p EBITDA Margin 0% 0% 0% 0% 0%

Dividend Per Share ($/sh) 0.00 0.00 0.00 0.00 0.00

Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

Return on Assets (ROA) -22% -11% -14% -6% -4%

Return on Equity (ROE) -23% -11% -15% -6% -6%

Return on Capital Employed (ROCE) -23% -11% -15% -7% -7%

Net Debt/EBITDA 0.8x 1.2x 0.3x 5.9x -4.2x


Interest Cover n.m n.m n.m n.m n.m

Shares Outstanding (m) 250 262 273 300 300

Sensitivity Analysis NAV (p/sh) 15F EPS 15F CFPS Income Statement 2013 2014F 2015F 2016F 2017F

Base case gold price forecast 31 (0.03) (0.03) Revenue 0 0 0 0 0

Base case +10% 46 (0.03) (0.03) Cost of Sales 0 0 0 0 0

Base case -10% 16 (0.03) (0.03) G&A (6) (4) (4) (4) (4)

Flat gold price (at spot $1,200/oz) 30 (0.03) (0.03) Exploration (9) (3) (4) (7) (7)

News Catalysts H1 15 H2 15 2016 2019 EBITDA (15) (7) (8) (11) (11)

Tulkubash resource update DD&A 0 0 0 0 0

DFS completes EBIT (15) (7) (8) (11) (11)

Financing Net Interest Expense 0 0 0 1 1

Construction/Development PBT (14) (7) (8) (10) (10)

Production starts Non-Recurring Items/Other 0 0 0 0 0

Taxes/Recovery 0 0 0 0 2

Reserves & Resources (attributable) Gold Silver Gold Eq EV/oz Net Profit (Loss) - attributable (14) (7) (8) (10) (9)

Reserves (P&P) Moz 2.6 0 2.6 10 Minority Interest 0 0 0 0 0

Resources (M&I) Moz 5.2 0 5.2 5 Cashflow 2013 2014F 2015F 2016F 2017F

Resources (M, I&I) Moz 6.1 0 6.1 4 Net Profit (Loss) (14) (7) (8) (10) (9)

Production & Cost (attributable) 2016F 2017F 2018F 2019F DD&A 0 0 0 0 0

Gold Eq. Production 000oz 0 0 0 120 Non Recurring/Other 5 0 0 0 0

EV/oz Production $/oz AuEq 0 0 0 215 Working Cap. Changes 3 2 0 0 0

Total Cash Cost (net by-products) $/oz 0 0 0 585 Cash Flow From Operations (6) (5) (8) (10) (9)

All-in Sustaining Cost $/oz 0 0 0 720 Capital Expenditure (19) (4) (3) (50) (100)


Cash Flow From Investing (19) (4) 2 (49) (100)



Dividends Paid & Other 0 0 0 0 0

Cash Flow From Financing 0 5 0 120 75

Net Change in Cash (25) (3) (5) 60 (34)

Free Cash Flow (25) (9) (11) (60) (109)






Other 0 0 0 0 0

Total Assets 65 60 53 163 229



Long Term Debt 0 0 0 0 0

Assumptions (Real) 2014F 2015F 2016F 2017F LT Other Long Term Liabilities 0 1 1 1 1


Silver Price ($/oz) 19.08 16.69 17.59 18.60 18.46 Shareholder Equity 63 59 51 161 153

Exchange Rate (US$/£) 1.65 1.50 1.50 1.50 1.50 Total Liab. & S/Holder Equity 65 60 53 163 229

Working Capital 12 7 2 62 (47)

Net Debt (Cash) (11) (8) (2) (63) 46

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Heap Leach Open Pit (POX) Kiziltash (U/G) Total Cash Cost AISC

Attrib. Gold Eq Production ('000oz) Total Cash Cost / AISC ($/oz AuEq)

Chaarat Gold 9 April 2015









9 April 2015

BUY

Current Share Price 64pTarget Price 90pMarket Capitalisation £29mShares In Issue 46mRIC/BLBG CNR.L/CNR LNAvg. Daily Volume (3M) 101,561Broker Yes



140

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60

40

Share Price

Condor GoldRelat ive to UK Market


Absolute 10 3 -9

Relative 9 -5 -14


Condor GoldEstimate Changes

Dotting the i's and crossing the t's

We maintain our BUY recommendation and 90p TP despite our revised commodityprice forecasts and changes to our model.

● Company Snapshot. AIM-listed gold developer focused on Nicaragua. PFScompleted Nov 2014 on its flagship 2.3Moz La India gold project. Focus of the PFSon the Indicated 830koz resource but Condor's all about options including mining ofsatellite pits, underground mining and a district scale exploration play. A clear take-outtarget for a larger player.

● Investment Thesis. High Grade Simplicity. Robust resource of 2.3Moz Au ofwhich 900koz is open-pittable at a high grade of 3.1g/t, well above peers (1.7g/t).Reserve 675koz at 3g/t Au. Simple mining, low capex, lower quartile AISC, excellentinfrastructure with roads and power, lower risk jurisdiction. Takeover Target. Given theproject's high-grade and advance stage, we believe Condor could be a take-over targetfor a larger player. PFS options. Base case - 0.8Mpta mill, 79kozpa, 9 year LOM,AISC of $690/oz and capex $110m. PFS included two PEA scenarios - A: includingsatellite pits and B: satellites + underground. Scenario "A" is based on a larger plantand increases production by 25% (1.2Mtpa plant, 97kozpa, 8 year LOM, capex $127m,AISC $685/oz). Scenario B boosts gold production to 137koz pa but comes with acapex of $169m. Our View. We base our valuation on Scenario A as we believe it doesnot make sense to exclude satellite pits - 100kozpa, 9 year LOM, $130m capex, AISCof $740/oz, start up 2018, 30% IRR. We see Condor defining a modest, high-gradeopen pit as a foundation and expanded from there. District play. Real upside is thescalability of a new district play - numerous untested targets within trucking distance- 75% of the district is unexplored. Cash to keep busy. £6.4m placing in Q3 2014,£3.5m from the IFC, a strong endorsement of the project. Current Activity- focusedon the de-risking the project through permitting and land acquisition and working on allthe soft issues before moving into the BFS and significant expenditure.

● Valuation. 0.75x NAV (middle of 0.5-1x NAV range for gold pre-producers).

● News Catalysts. On-going exploration - Drilling at La India for depth and strikeextensions and exploration drilling at Real de la Cruz.

● Risks. Moderate. Project delivery, financing, opex and capex changes, NGO activity.


1



Condor Ticker CNR.L Market Capitalisation £26m Financial Year End Dec

BUY Share Price 64p Enterprise Value (EV) £23m Reporting Currency £

90p Implied Return 41% Net Debt (Cash) -£4m Shares in Issue 41m


Net Asset Value Disc Rate NAV (%) $m £m p/sh EPS (£/sh) (0.11) (0.08) (0.09) (0.06) (0.04)

La India 12% 78% 76 51 97 EPS Growth -54% 25% -2% 24% 33%

Resources not in mine plan 29% 28 19 36 P/E n.m n.m n.m n.m n.m

Exploration properties 10% 10 7 13 CFPS (£/sh) (0.06) (0.07) (0.07) (0.06) (0.04)

El Salvador projects 0% 0 0 0 P/CFPS n.m n.m n.m n.m n.m

Sub-total 114 76 146 FCFPS (£/sh) (0.19) (0.21) (0.08) (0.06) (0.34)

Cash & Equivalents 4% 4 2 5 P/FCFPS n.m n.m n.m n.m n.m

Debt 0% 0 0 0 FCF Yield -29% -34% -13% -10% -53%

Corporate G&A / Other (22%) (21) (14) (27) EV/EBITDA n.m n.m n.m n.m n.m

Total 97 64 124 EBITDA Margin 0% 0% 0% 0% 0%

Current NAV Multiple (Implied) 0.52x Dividend Per Share (£/sh) 0.00 0.00 0.00 0.00 0.00

VALUATION Target Multiple 0.75x 93p Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

Return on Assets (ROA) n.m n.m n.m n.m n.m

Return on Equity (ROE) n.m n.m n.m n.m n.m

Sensitivity Analysis NAV (p/sh) Return on Capital Employed (ROCE) n.m n.m n.m n.m n.m

Base case gold price forecast 124 Net Debt/EBITDA 0.8x 0.8x 1.7x 2.3x 7.6x

Base case +10% 170 Gearing (Debt/Equity) 0% 0% 0% 0% 97%

Base case -10% 63 Interest Cover n.m n.m n.m n.m n.m

Flat gold price (at spot $1,200/oz) 121 Shares Outstanding (m) 31 37 41 48 75

News Catalysts 2014 2015 2016 2017 2018 Income Statement 2012 2013 2014F 2015F 2016F

PFS Completed Revenue 0 0 0 0 0

Exploration results Cost of Sales 0 0 0 0 0

BFS G&A (3) (3) (3) (3) (3)

Funding Exploration 0 0 0 0 0

Construction EBITDA (3) (3) (3) (3) (3)

Production DD&A 0 0 0 0 0

Reserves & Resources (La India attributable) Gold EV/oz EBIT (3) (3) (3) (3) (3)

Reserves (P&P) Moz 0.7 51 Net Interest Expense 0 0 0 0 0

Resources (M&I) Moz 1.1 31 PBT (3) (3) (3) (3) (3)

Resources (M, I&I) Moz 2.3 15 Non-Recurring Items/Other 0 0 0 0 0

Production & Cost (attributable) 2016F 2017F 2018F 2019F Taxes/Recovery 0 0 0 0 0

Gold Production 000oz 0 0 82 88 Net Profit (Loss) - attributable (3) (3) (4) (3) (3)

EV/oz Production $/oz Au - - 414 384 Minority Interest (0) (0) (0) 0 0

Operating Cash cost (C1) $/oz 0 0 608 778 Cashflow 2012 2013 2014F 2015F 2016F

Total Cash Cost (C2) $/oz 0 0 648 815 Net Profit (Loss) (3) (3) (4) (3) (3)

All-in Sustaining Cost $/oz 0 0 742 917 DD&A 0 0 0 0 0

Non Recurring/Other 1 1 0 0 0

Working Cap. Changes 0 (1) 0 0 0

Cash Flow From Operations (2) (3) (3) (3) (3)

Capital Expenditure (4) (5) (1) 0 (22)


Cash Flow From Investing (4) (5) (1) 0 (22)





Net Change in Cash 1 (1) 3 2 78

Free Cash Flow (6) (8) (3) (3) (25)






Other 10 15 14 14 14

Total Assets 13 18 21 23 122




Gold Price ($/oz) 1,412 1,266 1,205 1,200 1,200 Other Long Term Liabilities 0 0 0 0 (0)

Silver Price ($/oz) 23.9 19.1 16.7 17.6 18.5 Total Liabilities 1 1 1 1 61

Exchange Rate (US$/£) 1.56 1.65 1.50 1.50 1.50 Shareholder Equity 13 18 20 22 62



Net Debt (Cash) (2) (2) (5) (7) (25)

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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

La India (open pit) Feeders La India (underground)

Artisanal Total Cash Cost AISC

Attrib. Gold Production ('000oz) Total Cash Cost / AISC ($/oz )

Condor Gold 9 April 2015









9 April 2015

BUY

Current Share Price 49pTarget Price 90pMarket Capitalisation £80mShares In Issue 162mRIC/BLBG DALR.L/DALR LNAvg. Daily Volume (3M) 24,693


Dec- 14 Jan- 15 Feb- 15 Mar- 15 Apr- 15

6560555045403530

Share Price

Dalradian ResourcesRelat ive to UK Market


Absolute -11 28 n/a

Relative -11 18 n/a


Dalradian ResourcesEstimate Changes

The Golden Shamrock


● Company Snapshot. Dalradian is an AIM/TSX-listed gold developer based inNorthern Ireland. Its flagship asset is the high grade 3.5Moz Curraghinalt project, whichis undergoing a PFS, expected to produce 162kozpa at an AISC of <$700/oz from2019.

● Investment Thesis. We view Dalradian as a rare investment opportunity for low-risk,high-grade exposure in the junior gold space. After successfully defining an attractiveand sizeable project in under 4 years, it is now de-risking it through permitting andfeasibility. The project is one of the few high grade gold projects in the world, locatedin a developed jurisdiction with low costs/capex and excellent infrastructure. We seeplenty of upside potential in what could well become a new gold belt. Grade is king -Curraghinalt has a decent 3.5Moz resource at a high grade of 9.3g/t (diluted). The 2014revised PEA envisaged a conventional 620ktpa shallow underground/CIL operation.Cash costs and capital intensity are bottom quartile at $485/oz and $86/oz (capex$250m). A PFS is expected to be completed by the year end, which is investigating anumber of potential options which should enhance the project. Location, Location -Strong government and local community support. Like its neighbour, Northern Irelandis pro-investment and mining friendly. It has already approved use of explosives forDALR's underground program and we expect to see a similar success story as WolfMinerals has enjoyed. With strong support and first world infrastructure we think that itwould be when, rather than if, the project gets developed. Plenty of upside - We seeplenty of upside, including a reduction in NI tax to 12% (TBA soon), increased mine life,plus exploration upside - open in all directions on a largely unexplored 12km gold trend,which we ascribe no value to. We believe the region has potential to become a major+10Moz gold district. Value to be had - The shares are trading behind its high gradepeers and we would expect a re-rating as it moves through the stages of feasibility andde-risks towards production. We see plenty of newsflow this year to drive the shareswith exploration results, permitting, underground development, resource update andPFS results.

● Valuation. 0.5x P/NAV (bottom of 0.5-1x P/NAV range for gold pre-producers).

● Risks. Low: Project development, financing, permitting.




Dalradian Resources Ticker DALR.L Market Capitalisation £80m Financial Year End Dec

BUY Share Price £0.49 Enterprise Value (EV) £58m Reporting Currency C$



Net Asset Value Disc Rate NAV (%) $m C$/sh £/sh EPS (C$/sh) (0.06) (0.04) (0.06) (0.04) (0.05)

Curraghinalt (100%) 10% 111% 530 3.70 1.97 EPS Growth 77% 36% -67% 42% -44%

Exploration Properties 0% 0 0.00 0.00 P/E n.m n.m n.m n.m n.m

Sub-total 530 3.70 1.97 CFPS (C$/sh) (0.04) (0.03) (0.03) (0.02) (0.05)

Cash & Equivalents 7% 33 0.23 0.12 P/CFPS n.m n.m n.m n.m n.m

Debt 0% 0 0.00 0.00 FCFPS (C$/sh) (0.12) (0.21) (0.15) (0.44) (0.68)

Corporate G&A / Other (18%) (87) (0.61) (0.32) P/FCFPS n.m n.m n.m n.m n.m

Total 476 C$3.32 £1.76 FCF Yield -13% -23% -16% -48% -74%

Current NAV Multiple (Implied) 0.28x EV/EBITDA n.m n.m n.m n.m n.m

VALUATION Target Multiple 0.50x C$1.66 £0.88 EBITDA Margin 0% 0% 0% 0% 0%

Dividend Per Share (C$/sh) 0.00 0.00 0.00 0.00 0.00

Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

Return on Assets (ROA) -8% -6% -10% -5% -4%


Return on Capital Employed (ROCE) -9% -7% -10% -5% -5%

Net Debt/EBITDA 4.2x 2.3x 0.3x 0.7x -9.8x


Sensitivity Analysis NAV (£/sh) 18F EPS 18F CFPS Interest Cover n.m n.m n.m n.m n.m

Base case gold price forecast 1.76 (0.05) (0.05) Shares Outstanding (m) 120 163 174 326 326

Base case +10% 2.28 (0.05) (0.05) Income Statement 2014 2015F 2016F 2017F 2018F

Base case -10% 1.37 (0.05) (0.05) Revenue 0 0 0 0 0

Flat gold price (at spot $1,200/oz) 1.70 (0.05) (0.05) Cost of Sales 0 0 0 0 0

News Catalysts H1 15 H2 15 2016 2017 G&A (7) (6) (11) (11) (12)

EIA preparation & submission Exploration 0 0 0 0 (10)

UG development Other 0 0 0 0 0

Resource update EBITDA (7) (6) (11) (11) (22)

Pre-Feasibility Study Q4 DD&A 0 0 0 0 0

Definitive Feasibility Study & Permitting EBIT (7) (6) (11) (11) (22)

Financing & Construction Net Interest Expense 0 0 0 0 0

Reserves & Resources (attributable) Tonnage Grade Gold EV/oz PBT (7) (6) (11) (11) (22)

Reserves (P&P) Moz 0 0.0 0.0 0 Non-Recurring Items/Other 0 0 0 0 0

Resources (M&I) Moz 3 10.4 1.0 88 Taxes/Recovery 0 0 0 0 6

Resources (Total) Moz 11 9.9 3.5 25 Net Profit (Loss) - attributable (7) (6) (11) (11) (17)

Production & Cost 2017F 2018F 2019F 2020F Minority Interest 0 0 0 0 0

Gold Production (consolidated) 000oz 0 0 221 171 Cashflow 2014 2015F 2016F 2017F 2018F

Gold Production (attributable) 000oz 0 0 221 171 Net Profit (Loss) (7) (6) (11) (11) (17)

EV/oz Production (attributable) $/oz Au 0 0 401 517 DD&A 0 0 0 0 0

Cash Operating Cost $/oz 0 0 323 345 Non Recurring/Other 1 1 5 5 (0)

Total Cash Cost (net by-products) $/oz 0 0 402 426 Working Cap. Changes 1 0 0 0 0

All-in Sustaining Cost $/oz 0 0 479 519 Cash Flow From Operations (5) (5) (6) (6) (17)


Acquis./Investments (1) 0 0 0 0






Net Change in Cash 23 (15) (11) 4 (1)

Free Cash Flow (14) (35) (26) (144) (223)






Other 2 2 2 2 2

Total Assets 84 98 107 249 454



Assumptions (Real) 2017F 2018F 2019F 2020F LT Long Term Debt 0 0 0 0 222


Silver Price ($/oz) 18.6 18.5 18.5 18.5 18.5 Total Liabilities 3 3 3 3 225

Exchange Rate (US$:£) 1.50 1.50 1.50 1.50 1.50 Shareholder Equity 80 95 104 245 229

Exchange Rate (C$:US$) 1.25 1.25 1.25 1.25 1.25 Total Liab. & S/Holder Equity 84 98 107 249 454


Net Debt (Cash) (30) (14) (4) (8) 216

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Curraghinalt Total Cash Cost AISC


Dalradian Resources 9 April 2015









9 April 2015

HOLD

Current Share Price 65pTarget Price 60pMarket Capitalisation £383mShares In Issue 589mRIC/BLBG FXPO.L/FXPO LNAvg. Daily Volume (3M) 1,110,586Net Cash/(Debt) (m) (12/15F) $(506.4)m



180160140120100806040

Share Price

FerrexpoRelat ive to UK Market


Absolute 18 18 -58

Relative 17 9 -60


FerrexpoEstimate Changes

Pellet Protection

We maintain our HOLD recommendation and 60p TP, despite our revisedcommodity price forecasts and changes to our model.

● Company Snapshot. FTSE250 iron ore producer in Ukraine. 6th largest pelletproducer in the world with integrated logistics capability and 20Bnt in resources.Steadily increasing production from its 12Mtpa Poltava (FPM) and Yeristovo (FYM)mines; with blue sky from Belanovskoye (FBM). Also owns 14% of Ferrous Resources.

● Investment Thesis. Pellet premium - Production gently ticking up as plant upgradeshave been made, increasing to 12Mtpa. C1 costs are down below $40/t, helped bymore efficient FYM ore, cost savings and fx devaluation ($4/t per 10% UAH), althoughexpected to see inflationary increases (>10%) into 2016. Produces a premium qualitypellet and remains competitive on the global pellet cost curve (c.$20/t premium toChina 62% CFR price, comprising $29/t pellet premium, $7.5/t for 65%, less $13/t freight). No impact from Ukraine issues at present. We estimate AISC of c.$60/t(C1 $40/t, plus $4/t G&A, $6/t sustaining capex, $9/t freight to border), plus $7/t fordebt interest and tax, leaving a small margin at current iron ore prices. Businessimprovement - All now complete - Quality upgrade programme (100% 65% pelletsby end 2015), 12Mtpa capacity upgrade, Mine Life Extension (2038), plus marketing,cost and logistics improvements. 10Mtpa concentrator at FYM has been postponeduntil market improves, with modest capex expenditure to continue (NUMe 2019/20,$850m capex, phased development likely). Balance sheet holding - Well managedand conservative keeping net debt to EBITDA within its financial parameters; furtherrefinancing expected ($576m to repay by April 2016 from bank amortisation and re-financed Eurobond). Consistent dividend payer (5% yield).

● Guidance. 2015: 11.5-12Mt (12Mtpa run rate by year end).

● Preview Q1 IMS (16 Apr). Production up 2.5% y-o-y at 2.8Mt, a quarterly record. Highgrade 65% Fe pellets are now at 85%, up 48% y-o-y. We forecast a small premium tobenchmark prices; pellet premiums being maintained. C1 costs continuing to fall at $36/t, down y-o-y; continuing to benefit from higher production volumes and fx devaluation.Net debt up down slightly at $650m.

● Valuation. Blend of 1x NAV/7x P/E (bottom of 7-12x P/E range for bulk miners).

● Risks. High: Ukraine politics - access & supply lines, VAT receivables, legal case.


1



Ferrexpo Ticker FXPO.L Market Capitalisation £381m Financial Year End Dec




Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) 0.45 0.30 0.11 0.18 0.15

Poltava (FPM) & Yeristovo (FYM) 12% 355% 1,686 2.88 1.92 EPS Growth 22% -33% -63% 64% -19%

Sub-total 1,686 2.88 1.92 P/E 2.2x 3.2x 8.8x 5.4x 6.7x

Investments (Ferrous - 14.4%) 0 0.00 0.00 CFPS ($/sh) 0.86 0.73 0.40 0.48 0.40


Debt (275%) (1,305) (2.23) (1.49) FCFPS (£/sh) (0.06) 0.09 0.31 0.23 0.21

Corporate G&A (112%) (533) (0.91) (0.61) P/FCFPS n.m 10.6x 3.2x 4.2x 4.7x

Total 475 0.81 £0.54 FCF Yield -7% 9% 32% 24% 21%

Current NAV Multiple (Implied) 1.20x EV/EBITDA 2.5x 2.5x 5.5x 4.7x 5.6x

Earnings Value $/sh £/sh EBITDA Margin 32% 36% 23% 24% 20%

EPS (1 year forward) 0.13 0.09 Dividend Per Share ($/sh) 0.13 0.13 0.05 0.06 0.04

Current P/E multiple (implied) 7.6x Dividend Yield 13.6% 13.5% 5.0% 5.7% 4.6%

Blended Valuation Target Multiple Weight Return on Assets (ROA) 9% 8% 3% 7% 6%

NAV valuation 1.0x 50% £0.54 Return on Equity (ROE) 15% 24% 8% 12% 9%

Earnings valuation 7.0x 50% £0.60 Return on Capital Employed (ROCE) 19% 27% 13% 18% 15%

VALUATION £0.57 Net Debt/EBITDA 1.3x 1.4x 2.3x 1.6x 1.5x

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Gearing (Debt/Equity) 59% 182% 122% 63% 49%

Base case iron ore price forecast 0.54 0.18 0.48 Interest Cover -0.1x -0.1x -0.3x -0.2x -0.1x

Base case +10% 1.55 0.28 0.60 Shares Outstanding (m) 585 585 585 585 585

Base case -10% (0.47) 0.08 0.35 Income Statement 2013 2014 2015F 2016F 2017F

Flat iron ore price (at spot $50/t) (1.06) 0.02 0.28 Revenue 1,581 1,388 998 1,107 1,119

News Catalysts 2014 2015 2016 2017 Cost of Sales (773) (648) (529) (588) (670)

Yeristovo concentrator decision Selling and distribution expenses (336) (312) (290) (300) (270)

Poltava Quality upgrade project G&A and Other operating expenses (71) (20) (40) (40) (48)

Poltava mine life extension project EBITDA 506 496 225 268 222

Yeristovo concentrator production (stage 2) 2020 DD&A 100 82 81 85 87

Reserves & Resources Tonnage Grade Iron EV/t EBIT 401 409 140 179 131

Reserves (P&P) Mt 1,491 32% 477 2.62 Net Interest Expense (64) (49) (63) (51) (28)

Resources (M&I) Mt 4,721 32% 1,511 0.83 Exceptionals and Other (32) (107) 3 3 3

Resources (Inferred) Mt 2,088 31% 647 1.93 PBT 305 252 80 132 106

Production & Cost (attributable) 2014 2015F 2016F 2017F Taxes/Recovery (42) (70) (14) (24) (19)

Poltava (FPM) Mt pellets 7.6 7.8 8.2 8.2 Net Profit (Loss) 262 176 65 106 86

Yerostovo (FYM) Mt pellets 3.4 3.8 3.8 3.8 Minority Interest 2 6 1 2 1

Belanovskoye Mt conc 0.0 0.0 0.0 0.0 Cashflow 2013 2014 2015F 2016F 2017F

Total Mt Fe 11.0 11.6 12.0 12.0 Net Profit (Loss) 262 176 65 106 86

C1 Cost $/t Fe 46 37 43 48 DD&A 100 82 81 85 87

All-in Sustaining Cost $/t Fe 71 56 62 65 Non Recurring/Other (26) 43 35 24 2

Working Cap. Changes (103) (15) 69 (5) 0



Investments/Sale of Assets (87) 9 2 1 (0)



Net Borrowings 7 274 (354) (400) (100)


Cash Flow From Financing (82) 193 (383) (433) (126)

Net Change in Cash (206) 234 (200) (297) (5)

Free Cash Flow (38) 54 181 135 122




PP&E 1,534 926 915 906 872

Other 483 277 203 203 204

Total Assets 2,932 2,135 1,856 1,556 1,517



Long Term Debt 928 1,056 951 551 451

Other Long Term Liabilities 58 32 43 54 65

Total Liabilities 1,197 1,417 1,075 687 598

Assumptions (Real) 2014 2015F 2016F 2017F LT Shareholder Equity 1,735 718 781 868 919

Iron Ore Price ($/t 62% Fe) 97 55 59 60 60 Total Liab. & S/Holder Equity 2,932 2,135 1,856 1,556 1,517

Iron Ore Price Received ($/t) 116 77 82 82 82 Working Capital 704 602 656 364 359

Exchange Rate (US$/£) 1.65 1.50 1.50 1.50 1.50 Net Debt (Cash) 639 678 524 421 326

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Ferrexpo 9 April 2015









9 April 2015

ADDFrom Buy

Current Share Price 880pTarget Price 1,000pMarket Capitalisation £5.3bnShares In Issue 601mRIC/BLBG FQM.L/FQM LNAvg. Daily Volume (3M) 29,915Net Cash/(Debt) (m) (12/15F) $(4,846.2)mBroker Yes



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First Quantum MineralsRelat ive to UK Market


Absolute 12 -3 -19

Relative 11 -11 -23


First Quantum MineralsEstimate Changes

Building Through the Cycle

We downgrade to an ADD recommendation and decrease our TP to £10.00, from£10.50, due to our revised commodity price forecasts and changes to our model.

● Company Snapshot. TSX/LSE-listed major +400ktpa global copper producer with 7operating mines and 5 development projects across 8 countries. It's flagship assetsare the Kansanshi & Sentinel mines in Zambia and the Cobre Panama project.

● Investment Thesis. Superior growth - Plans to grow to 1.1Mtpa by 2018, from thecurrent +400ktpa; 2015: ramp-up of 300ktpa Sentinel project and Zambia smelter,Enterprise nickel in H2 2015, Kansanshi 60-70kpta sulphide expansion 2017, 320ktpaCobre Panama project Q4 2017 ($6.4bn). Longer term: Haquira & Taca Taca. Bestin Class - FQM is a leader in the copper space, having developed 5 mines in last10 years, on time and budget, and at costs well below industry norms. It has a trackrecord of adding value at its projects and has been able to exceed expectations andre-invent itself from the DRC/Zambia into a global player. Challenging year - Withdevelopment project build out, smelter constraints and power issues in Zambia, plusbuild up of activities at Cobre Panama, we see 2015 as a big and challenging year forFQM, operationally and financially. Debt has been restructured and covenants relaxed;should be ample headroom ($2bn) but we are in a period of peak capex, so will needto be well managed, in our view (gearing 60%, Net Debt/EBITDA 3.5x).

● Guidance. 2015: 410-440kt copper (560-640kt inc. Sentinel), 32-40kt nickel,218-247koz gold; C1 cost $1.30-1.55/lb Cu and $4.80-5.30/lb Ni. Capex $1.2-1.4bn.

● Preview Q1. Better quarter at 118kt copper, up 12% q-o-q, gold flat at 56koz and nickeldown at 4.8kt (Q4 2014 105kt Cu, 56koz Au, 10kt Ni). C1 costs slightly 8% y-o-y at$1.44/lb Cu and $6.74/lb Ni (Q4 2014 $1.33/lb). Kansanshi flat but should see orecoming though from Sentinel. Ravensthorpe down following leach tank failure. Othersrelatively flat with grades and tonnage holding up ok. Financials - EPS $0.16 (NPAT$94m), up q-o-q (Q4 2014 $0.13) and EBITDA of $315m. Restructured balance sheetto remain debt heavy: net debt of $5.7bn ($0.6bn cash). We look to see the progresson ramp up of Sentinel and the smelter.

● Valuation. Blend of 1X NAV/12x P/E (upper end 7-15x P/E range for coppers).

● Risks. High: Zambian tax, politics & outstanding VAT, power supply & prices, Zambiansmelter constraints, capex overruns & balance sheet, project delivery.


1



First Quantum Minerals Ticker FQM.L Market Capitalisation £5,199m Financial Year End December

ADD Share Price £8.80 Enterprise Value (EV) £1,502m Reporting Currency US$

£10.00 Implied Return 14% Net Debt (Cash) $5,546m Shares in Issue 591m


Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS - underlying ($/sh) 0.96 0.80 0.67 1.39 2.06

Kansanshi (80%) 10% 29% 3,099 6.45 4.30 EPS Growth (18%) (17%) (16%) 276% 48%

Guelb Moghrein (100%) 10% 3% 288 0.60 0.40 P/E 13.8x 16.5x 19.6x 9.5x 6.4x

Kevitsa (100%) 8% 13% 1,391 2.89 1.93 CFPS ($/sh) 1.55 1.26 3.09 4.63 4.24

Ravensthorpe (100%) 8% 14% 1,437 2.99 1.99 P/CFPS 8.5x 10.5x 4.3x 2.9x 3.1x

Sentinel (95%) 10% 17% 1,807 3.76 2.51 FCFPS ($/sh) (2.96) (1.47) (0.35) 1.12 0.39

Enterprise (100%) 12% 15% 1,608 3.35 2.23 P/FCFPS (4.5)x (9.0)x (37.7)x 11.8x 34.2x

Haquira (100%) 10% 9% 961 2.00 1.33 FCF Yield -22% -11% -3% 8% 3%

Las Cruces (100%) 8% 12% 1,244 2.59 1.73 EV/EBITDA 8.8x 10.3x 10.1x 6.5x 4.8x

Cayeli (100%) 10% 2% 242 0.50 0.34 EBITDA margin 38% 40% 33% 36% 41%

Pyhasalmi (100%) 8% 4% 446 0.93 0.62 Dividend Per Share ($/sh) 0.28 0.04 0.13 0.28 0.41

Cobre Panama (100%) 12% 32% 3,371 7.01 4.67 Dividend Yield 2.1% 0.3% 1.0% 2.1% 3.1%

Taca Taca Project (100%) 437 0.91 0.61 Return on Assets (ROA) 3% 6% 2% 4% 6%

Sub-total 16,331 33.97 22.65 Return on Equity (ROE) 6% 10% 4% 8% 10%

Corporate G&A / Other 11% (2%) (254) (0.53) (0.35) Return on Capital Employed (ROCE) 7% 5% 4% 7% 10%

Cash & Equivalents 4% 436 0.91 0.60 Net Debt/EBITDA 2.5x 3.9x 3.5x 2.1x 1.5x

Debt (57%) (5,982) (12.44) (8.30) Gearing (Debt/Equity) 44.8% 59.3% 59.4% 47.2% 41.8%

Total Net Asset Value 10,531 21.91 £14.60 Interest Cover 18.8x 12.9x 6.4x 13.3x 17.8x

Current NAV multiple (Implied) 0.60x Shares Outstanding (m) 560 590 596 596 596

Earnings Value $/sh £/sh Income Statement 2013 2014 2015F 2016F 2017F

EPS - 1 year forward 0.67 0.45 Revenue 3,553 3,542 4,203 5,911 7,084

Current P/E multiple (implied) 19.6x Cost of sales (2,419) (2,544) (3,354) (4,454) (4,927)

Blended Valuation Target Multiple Weight G&A (123) (116) (107) (28) (28)

NAV valuation 1.00x 50% £14.60 Other (116) (41) (82) (21) (22)

Earnings valuation 12.0x 50% £5.38 EBITDA 1,352 1,413 1,379 2,104 2,924

VALUATION £9.99 DD&A 477 594 720 697 818

Sensitivity Analysis Valuation NAV/sh 15 EPS 15 CFPS EBIT 895 841 659 1,407 2,106

Base case metal price forecast £9.99 £14.60 $0.67 $3.09 Non-Recurring Items/Other - - - - -

Base case +10% £14.03 £22.02 $0.75 $3.21 Net finance income (expense) 5 11 10 (53) (116)

Base case -10% £7.30 £8.55 $0.75 $3.21 PBT 899 852 669 1,354 1,990

Using flat $2.50/lb Cu; $6.50/lb Ni £7.54 £12.00 $0.40 $2.71 Tax (370) 141 (201) (406) (597)

News catalysts 2014 2015 2016 2017 Net Profit (Loss) - attributable 459 835 401 829 1,225

Sentinel starts production Q3 Minority Interest 71 159 68 118 168

Smelter starts up (Zambia) Q4 Cashflow 2013 2014 2015F 2016F 2017F

Enterprise starts production H2 Net profit (loss) 530 993 468 948 1,393

Kansanshi sulphide expansion (60-70ktpa) Working capital change (65) 15 118 1,100 298

Cobre Panama starts production Q4 DD&A 477 594 720 697 818

Reserves (attributable) Tonnes Grade Metal EV / lb Non-recurring/other (72) (859) 532 14 19

Copper reserves (P&P): Cu-equiv 1,389 Mt 0.64% 8,875kt Cash Flow From Operations 869 744 1,839 2,759 2,528

Nickel reserves (P&P): Ni-equiv 358 Mt 0.64% 2,282kt Capital expenditure (2,802) (2,647) (1,545) (2,035) (2,363)

Combined reserves: Cu-equivalent 1,747 Mt 0.93% 16,177kt $0.06 /lb Acquis./investments/adjustments 4,069 (111) 776 - (190)

Production & cost 2014 2015F 2016F 2017F 2018F Cash Flow From Investing 1,267 (2,758) (769) (2,035) (2,553)

Copper production (kt) - cons'd 428 576 731 838 1,122 Borrowings 3,677 1,909 281 (260) (167)

Copper production (kt) - equity 331 485 633 653 689 Capital stock 2,274 188 - - -

Nickel production (kt) 46 42 87 85 81 Other (7,701) (437) - - -

Gold production (koz) 227 239 254 329 481 Cash Flow From Financing (1,750) 1,659 281 (260) (167)

EV per lb Cu-equiv prodn ($/lb Cu) 3.08 2.11 1.61 1.56 1.48 Net Change in Cash 386 (356) 1,351 464 (191)

C1 Cost ($/lb Cu) 1.35 1.42 1.47 1.27 1.17 Free Cash Flow (1,933) (1,903) 294 724 165

C1 Cost ($/lb Ni) 4.37 5.10 3.94 3.84 3.65 Balance Sheet 2013 2014 2015F 2016F 2017F

All-in Sustaining Cost ($/lb Cu) 1.69 1.72 1.62 1.42 1.33 Cash & equivalents 695 436 1,417 1,325 1,134

All-in Sustaining Cost ($/lb Ni) 6.34 7.40 4.37 4.29 4.11 Other current assets 1,933 1,678 1,883 3,813 4,305

PP&E & mining interests 11,986 14,719 15,544 18,109 19,654

Investments 58 33 33 33 33

Other non-current assets 800 957 (0) - -

Total Assets 15,471 17,824 18,878 23,281 25,126

Short-term debt 1,046 23 23 23 23

Other current liabilities 759 674 967 4,069 4,859

Long-term debt 3,027 5,929 6,240 5,774 5,608

Other non-current liabilities 2,597 1,134 1,134 1,161 1,179

Total Liabilities 6,383 7,736 8,341 11,003 11,645

Shareholder equity 7,968 8,913 9,305 10,840 11,899

Minority interest 1,120 1,175 1,232 1,438 1,582

Total Liab. & Equity 15,471 17,824 18,878 23,281 25,126

Working Capital 1,004 989 870 (300) (598)

Net Debt (Cash) 3,379 5,546 4,846 4,472 4,497

Assumptions (Real) 2014 2015F 2016F 2017F LT

Copper Price ($/lb) 3.11 2.71 2.89 2.92 2.50

Gold Price ($/oz) 1,266 1,205 1,200 1,200 1,200

Nickel Price ($/lb) 7.66 5.97 6.41 6.98 8.00

Exchange rate (US$/£) 1.65 1.50 1.50 1.50 1.50

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First Quantum Minerals 9 April 2015









9 April 2015

BUY

Current Share Price 710pTarget Price 1,000pMarket Capitalisation £5.2bnShares In Issue 737mRIC/BLBG FRES.L/FRES LNAvg. Daily Volume (3M) 1,676,016Net Cash/(Debt) (m) (12/14F) $(738.5)m



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FresnilloRelat ive to UK Market


Absolute 1 -12 -21

Relative 0 -19 -25


FresnilloEstimate Changes

Investing in a Downturn

We maintain our BUY recommendation and increase our TP to £10, from £9, due toour new commodity price forecasts and changes to our model.

● Company Snapshot. FTSE 100 company and world’s largest primary silver producerwith 5 operating mines and 3 development projects in Mexico. Flagship assets are theFresnillo/Saucito mines and the Herradura district gold mines. 75% owned by Peñoles.

● Investment Thesis. Preferred silver play - A conservative, well run company with asuperior growth profile and premium quality assets that sit on the bottom of the costcurve. Gold revenue now switched to 55% following $450m acquisition of Newmont's44% in Herradura district mines. Superior growth - LT target of 65Mozpa Ag and+750kozpa Au by 2018 (more likely 80Mozpa, 1.3Mozpa or 2-2.5Mozpa AuEq).Saucito II started H2 2014 (10Mozpa Ag, 35kozpa Au, $235m capex), San Julian H22015 (10Mozpa Ag, 45kozpa Au, $515m capex), Fresnillo & Cienega optimisationprojects (2017, 10Mozpa at $170m and 20kozpa at $55m), Pyrites plant (4MozpaAg, 18kozpa Au, $105m), Mega Centauro pit and Centauro Deep at Herradura(2019/20, 280/225kozpa, $155/365m), Juanicipio (2018, 10Mozpa Ag, 30kozpa Au,$300m), Orisvyo (2018, 136kozpa, $350m). More projects likely with sizeable $225mexploration budget. Balance sheet tight - Net debt of $350m as YE, post Newmontacquisition and $800m in senior notes. Hedge on 44% on Herradura projects. Peakcapex in 2015/6, we estimate an additional $300m in debt will be needed. High marginbusiness with low cost operations (Fresnillo AISC $9/oz, Saucito $7/oz, EBITDA margin45%). Little risk and divi with 4-4.5% (inc. special). Chinks in armour - 2013/14 weredifficult years, with land issues, tax changes, plus labour and cost pressures againstfalling grades and rising capex. Conducting a group wide review of its land rights andcommunity relations but outside of this we now see limited risks.

● Guidance. 2015: 45-47Moz silver (inc. Silverstream) and 670-685koz gold. Capex$700m.

● Preview Q1 (15 Apr). Production down q-o-q at 11.3Moz silver (inc. Silverstream) and326koz gold (Q4 2014 12.2Moz Ag, 360koz Au). Production from Saucito slightly loweras the expansion ramps up, Fresnillo still struggling with tonnage and lower grades.Herradura and Cienega flat.

● Valuation. Blend of 2x NAV/15x P/CF (top of 1-2x NAV/5-15x P/CF range for silvers).

● Risks. Low: Land issues, Mexican tax.




Fresnillo Ticker FRES.L Market Capitalisation £5,232m Financial Year End Dec

BUY Share Price £7.10 Enterprise Value (EV) £5,463m Reporting Currency US$




Fresnillo (100%) 8% 33% 2,370 3.22 2.14 EPS Growth -68% -55% -37% 94% 48%

Saucito (100%) 8% 32% 2,239 3.04 2.03 P/E 32.3x 72.4x 115.5x 59.6x 40.2x

Cienega (100%) 8% 4% 269 0.37 0.24 CFPS ($/sh) 1.03 0.77 0.68 0.97 1.29

Herradura (100%) 8% 23% 1,613 2.19 1.46 P/CFPS 10.4x 13.8x 15.7x 11.0x 8.3x

Soledad & Dipolos (100%) 8% 0% 0 0.00 0.00 FCFPS ($/sh) (0.17) (0.41) (0.54) (0.61) (0.21)

Noche Buena (100%) 8% 2% 149 0.20 0.13 P/FCFPS n.m n.m n.m n.m n.m

Juanicipio (56%) 10% 4% 312 0.42 0.28 FCF Yield -2% -4% -5% -6% -2%

San Julian (100%) 10% 9% 611 0.83 0.55 EV/EBITDA 7.5x 9.6x 10.7x 7.4x 5.7x

Orisyvo (100%) 10% 4% 308 0.42 0.28 EBITDA Margin 45% 40% 35% 41% 41%

Sub-total 7,871 10.68 7.12 Dividend Per Share ($/sh) 0.69 0.12 0.05 0.07 0.13

Silverstream Contract 3% 198 0.27 0.18 Dividend Yield 6.5% 1.1% 0.5% 0.7% 1.2%

Cash & Equivalents 6% 449 0.61 0.41 Return on Assets (ROA) 6% 3% 2% 3% 4%

Debt (11%) (796) (1.08) (0.72) Return on Equity (ROE) 8% 4% 3% 5% 8%

Corporate G&A / Other (9%) (637) (0.86) (0.58) Return on Capital Employed (ROCE) 12% 7% 5% 9% 12%

Total 7,086 9.62 £6.41 Net Debt/EBITDA -0.6x 1.1x 1.4x 1.6x 1.5x

Current NAV Multiple (Implied) 1.11x Gearing (Debt/Equity) 31% 35% 46% 60% 56%

Cash Flow Value $/sh £/sh Interest Cover 0.0x -0.3x -0.2x -0.1x -0.1x

CFPS (1 year forward) 0.75 0.50 Shares Outstanding (m) 730 737 737 737 737

Current P/CF multiple (implied) 14.2x Income Statement 2013 2014 2015F 2016F 2017F

Blended Valuation Target Multiple Weight Revenue 1,615 1,414 1,481 1,789 2,333

NAV valuation 2.0x 50% £12.82 Cost of Sales (608) (597) (771) (893) (1,223)

Cash Flow valuation 15.0x 50% £7.50 G&A (62) (68) (70) (71) (73)

VALUATION £10.16 Exploration (208) (169) (170) (172) (176)

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Other (7) (13) 42 81 101

Base case silver price forecast 6.41 0.09 0.68 EBITDA 730 567 511 734 963

Base case +10% 8.09 0.20 0.86 DD&A (239) (295) (313) (353) (450)

Base case -10% 4.70 (0.02) 0.50 EBIT 488 246 198 381 512

Flat silver price (at spot $17/oz) 5.86 0.13 0.73 Net Interest Expense (15) (72) (41) (54) (57)

News Catalysts 2015 2016 2017 2018 PBT 473 174 157 327 456

San Julian starts production H2 Non-Recurring Items/Other (90) 77 0 0 0

Cienega optimisation project (5ktpd) Taxes/Recovery (122) (134) (89) (195) (260)

Fresnillo optimisation (10ktd) / pyrites plant projects Net Profit (Loss) - attributable 240 108 68 132 195

Herradura Mega Centauro / Centauro Deep projects 2019/20 Minority Interest 21 9 0 0 0

Juanicipio / Orisivyo projects Cashflow 2013 2014 2015F 2016F 2017F

Reserves & Resources (attributable) Silver Gold Gold Eq EV/oz Ag Net Profit (Loss) 261 117 68 132 195

Reserves (P&P) Moz 475 19.5 26.8 306 DD&A 239 295 313 353 450

Resources (M&I) Moz 1,287 23.5 43.3 189 Employee Profit Sharing (55) (20) (29) (36) (44)

Production & Cost (attributable) 2014 2015F 2016F 2017F Non Recurring/Other (33) (87) 29 36 44

Silver Production (inc Silverstream) 000oz 44,802 45,972 58,037 74,716 Working Cap. Changes 34 (183) (79) (116) (136)

Gold Production 000oz 596 674 747 795 Cash Flow From Operations 446 122 302 369 510

Gold Eq. Production 000oz 1,179 1,344 1,635 2,003 Capital Expenditure (572) (426) (701) (817) (664)

EV/oz Production $/oz AuEq 6,948 6,095 5,011 4,091 Acquisitions & Exploration 87 (213) 341 47 49

Total Cash Cost (silver, by-product) $/oz Ag 4.9 6.3 6.7 7.4 Cash Flow From Investing (485) (638) (360) (771) (615)

Total Cash Cost (gold, by-product) $/oz Au 552 698 674 690 Equity Issues (Net of Costs) 346 (44) 0 0 0

All-in Sustaining Cost (silver) $/oz Ag 7.9 8.4 8.0 8.4 Net Borrowings 794 0 270 370 (30)

All-in Sustaining Cost (gold) $/oz Au 894 1,005 998 985 Dividends Paid & Other (465) (533) (39) (54) (98)

Cash Flow From Financing 676 (577) 231 316 (128)

Net Change in Cash 638 (1,097) 173 (86) (233)

Free Cash Flow (126) (304) (399) (448) (154)


Cash & Equivalents 1,252 449 328 242 9

Total Current Assets 1,773 1,178 1,142 1,198 1,131

PP&E & Mining Interests 1,838 1,969 2,358 2,822 3,035

Silverstream Contract 373 392 348 305 258


Other 416 537 493 450 402

Total Assets 4,084 3,742 4,049 4,522 4,620



Long Term Debt 795 796 1,066 1,436 1,406


Total Liabilities 1,412 1,440 1,718 2,114 2,114

Shareholder Equity 2,672 2,302 2,331 2,409 2,507

Total Liab. & S/Holder Equity 4,084 3,742 4,049 4,522 4,620

Assumptions (Real) 2014 2015F 2016F 2017F LT Working Capital 1,629 1,038 995 1,025 928

Gold Price ($/oz) 1,266 1,205 1,200 1,200 1,200 Net Debt (Cash) (415) 347 738 1,194 1,397

Silver Price ($/oz) 19.1 16.7 17.6 18.6 18.5

Exchange Rate (US$/£) 1.65 1.50 1.50 1.50 1.50

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Fresnillo 9 April 2015









9 April 2015

BUY

Current Share Price 53pTarget Price 75pMarket Capitalisation £287mShares In Issue 541mRIC/BLBG GEM.L/GEM LNAvg. Daily Volume (3M) 173,356



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GemfieldsRelat ive to UK Market


Absolute 5 15 42

Relative 5 5 35


GemfieldsEstimate Changes

A Uniquely Colourful Story

We maintain our BUY recommendation but increase our TP to 75p, from 70p, dueto our new commodity price forecasts and changes to our model.

● Company Snapshot. AIM-listed Gemfields is the world's largest producer of colouredgemstones. Main assets: the producing Kagem emerald mine in Zambia, Montepuezruby mine in Mozambique, early stage sapphires in Sri Lanka and the Fabergé luxuryjewellery brand. A mining stock with unique luxury retail exposure.

● Investment Thesis. First Mover Advantage. A fast growing business leveringexperience to consolidate the highly fragmented coloured gemstone industry.Gemfields has introduced mechanised mining, security of supply, a consistentmarketing message and a proprietary grading system to take control of the industryand stimulate demand. World-class Mines - Kagem produces 20% of the world'semeralds and Montepuez has the potential to match this with rubies. Kagem hasreached a steady production plateau, Montepuez has recently started ramp up fromtrial to full-scale mining. Coloured Gems - Produces a mix of stones which are sold atseparate lower and higher quality auctions. Higher quality emeralds and rubies 10% ofproduction but 80% of revenues. Emeralds well established, but only two ruby auctionsso far. Potential for rubies to become flagship asset. Prices Up - Gemfields has seena 12-fold increase in received emerald prices since 2009 and demand continues toimprove. Luxury Exposure - Owns 100% of luxury brand, Fabergé, which providesdirect access to market coloured stones and has historically provided some protectionfrom broader commodity weakness. Hollywood Actress, Mila Kunis is Gemfields brandambassador. Solid Footing - Decent balance sheet, cash $50m, $86m inventory and$30m debt. Scope for further acquisitions.

● Guidance. FY15 Kagem 25-30Mcts emeralds, Montepuez 8Mcts rubies.

● Preview - Q1 Production. Production 5.6Mcts emeralds broadly in-line with previousquarter. Grade 200cpt and likely to be below 300cpt average run-rate. Unit operatingcosts $2.20/ct, up 10% from previous quarter. Production 2.3Mcts rubies, down 30%as mining focuses on lower volume, higher quality areas. Unit costs $1.8/ct in line withprevious quarter. Looking for more guidance on auction plan (and content) and newson the ramp up at Montepuez as the operation transitions to full scale mining.

● Valuation. TP blend 1x NAV/7.5x CF. (middle of 5-15x CF range for gem producers).

● Risks. Moderate. Gemstone mining highly variable, grade volatility, limited freefloat (Pallinghurst 74%), technical challenges for UG mining at Kagem. ZambianGovernment ban on emerald auctions outside Zambia. Mooted Zambian tax changes.


1



Gemfields Ticker GEM.L Market Capitalisation £287m Financial Year End June




Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) (0.05) 0.02 0.04 0.04 0.04

Kagem Emeralds (75%) 12% 55% 350 0.65 0.43 EPS Growth -115% 130% 139% 3% 1%

Montepuez Rubies (75%) 14% 37% 233 0.43 0.29 P/E n.m 49.0x 20.5x 19.8x 19.7x

Sub-total 583 1.08 0.71 CFPS ($/sh) (0.04) 0.10 0.15 0.15 0.16

Gemstone Inventories 10% 62 0.11 0.08 P/CFPS n.m 8.0x 5.4x 5.4x 5.0x

Faberge inventory & brand 16% 100 0.18 0.12 FCFPS (£/sh) (0.10) 0.05 0.02 0.02 0.03

Exploration & other licences 1% 5 0.01 0.01 P/FCFPS n.m 14.7x 41.4x 37.0x 31.3x

Cash & Equivalents 8% 50 0.09 0.06 FCF Yield -13% 7% 2% 3% 3%

Debt (5%) (30) (0.06) (0.04) EV/EBITDA n.m 2.7x 4.6x 4.4x 4.2x

Corporate G&A (22%) (139) (0.26) (0.17) EV/SALES 8.8x 2.6x 2.2x 2.0x 1.8x

Total 631 1.16 £0.77 EBITDA Margin 1% 37% 48% 46% 44%


Earnings Value $/sh £/sh Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

CPS (1 year forward) 0.15 0.10 Return on Assets (ROA) -6% 2% 4% 4% 4%

Current P/CF multiple (implied) 5.4x Return on Equity (ROE) -8% 0% 4% 3% 2%

Blended Valuation Target Multiple Weight Return on Capital Employed (ROCE) 0% 16% 22% 22% 22%

NAV valuation 1.00x 50% £0.77 Net Debt/EBITDA 0.8x -0.3x -0.2x -0.2x -0.3x

Cash flow valuation 7.5x 50% £0.73 Gearing (Debt/Equity) 4% 6% 9% 9% 5%

VALUATION £0.75 Interest Cover -0.6x 0.0x 0.0x 0.0x 0.0x

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Shares Outstanding (m) 417 541 541 541 541

Base case gemstone price forecast 0.77 0.04 0.15 Income Statement 2013 2014 2015F 2016F 2017F

Base case +10% 0.78 0.04 0.15 Revenue 48 160 184 202 224

Base case -10% 0.61 0.04 0.15 Cost of Sales (35) (75) (77) (90) (107)

Flat gemstone price 0.70 0.04 0.15 Gross Profit 14 85 106 112 117

News Catalysts 2014 2015 2016 2017 (33) (48) (49) (50) (50)

Kagem - Fibolele & Libwente bulk sampling EBITDA 0 59 89 93 99

Sri Lanka Sapphire business DD&A 20 22 31 31 32

Acquisitions EBIT (20) 37 58 62 67

MRM- plant upgrade Net Interest Expense (0) (1) (2) (1) (1)

Expand auction platform Exceptionals and Other 0 (0) (0) 0 0

MRM ramp up PBT (20) 36 56 61 66

Resource (Kagem) Tonnage Grade E+B (Mcts) Taxes/Recovery (3) (20) (26) (26) (29)

Reserves (P&P) Mt - - - Net Profit (Loss) (23) 9 21 22 22

Resources (M&I) Mt 2.7 365 1,003 Minority Interest (0) 7 10 13 16

Resources (Inferred) Mt 0.01 24.5 0.22 Cashflow 2013 2014 2015F 2016F 2017F

Production & Cost (attributable) 2013 2014 2015F 2016F PAT (23) 16 31 35 38

Gemstone Production (E+B) Mcts 29.9 20.3 23.5 25.0 DD&A 20 22 31 31 32

Gemstone Production (Rubies) Mcts 1.9 6.5 10.8 16.1 Non Recurring/Other 5 23 28 27 29

Gemstone TCC (ROM Em+Ruby) $/ct 1.2 1.8 1.9 1.5 Working Cap. Changes (17) (7) (10) (13) (12)

Gemstone AISC (ROM Em+Ruby) $/ct 2.3 3.7 4.1 3.3 Cash Flow From Operations (15) 54 79 80 87


Stripping costs / Other (7) (11) (28) (5) (9)



Net Borrowings 9 5 14 0 (10)

Dividends 0 0 0 0 0

Other (1) (5) (4) (10) (10)


Net Change in Cash (26) 26 12 2 (6)

Free Cash Flow (43) 29 10 12 14



Inventory 78 89 93 91 98


PP&E 229 229 253 264 276

Other 52 51 59 63 66

Total Assets 379 427 472 493 513





Assumptions (Real) 2013 2014F 2015F 2016F 2017F Total Liabilities 103 138 154 149 140

High Quality Emeralds ($/ct) 41.9 58.3 51.5 55.1 59.0 Shareholder Equity 275 289 319 345 373

Lower Quality Emeralds ($/ct) 2.87 3.24 3.12 3.38 3.70 Total Liab. & S/Holder Equity 379 427 472 493 513

Rubies ($/ct) 0.0 18.5 18.9 19.7 20.8 Working Capital 70 85 92 104 114

Wt. avg - all gemstones ($/ct) 7.7 15.0 7.6 12.3 12.9 Net Debt (Cash) 0 (20) (20) (21) (25)

Exchange Rate (US$/£) 1.56 1.65 1.50 1.50 1.50

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Gemfields 9 April 2015









9 April 2015

BUY

Current Share Price AUD2Target Price AUc300Market Capitalisation AUD428,400,000Shares In Issue 252mRIC/BLBG HFR.AX/HFR AUAvg. Daily Volume (3M) 433,697Net Cash/(Debt) (m) (06/15F) AUc107.9mBroker Yes


Apr- 14 May- 14 Jul- 14 Sep- 14 Oct- 14

0.9

0.8

0.7

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0.3

Share Price

Highfield ResourcesRelat ive to ASX200I


Absolute 68 143 347

Relative 67 124 325


Highfield ResourcesEstimate Changes

Potash in Pamplona

We maintain our BUY recommendation and A$3.00 TP, despite our revisedcommodity price forecasts and changes to our model.

● Company Snapshot. ASX-listed potash junior focused in Spain. Its assets comprisethe Muga, Sierra del Perdón and Pintano projects, which are undergoing resourcedefinition and feasibility work. Javier is expected to commence production Q2 2017,producing 1.1Mtpa KCl at $135/t, with one of the lowest capital intensities in the world.

● Investment Thesis. Attractive - Three low-risk, shallow potash projects that can utiliselow-capital entry, conventional extraction plus strong local infrastructure and in-countryexpertise to fast track development in close proximity to end markets. Muga robust- DFS showed an NPV (10%) of $1.42bn and IRR of 52%. Production of 1.12Mtpaover 24 years at an AISC of $135/t, in the middle of the cost curve. Shallow (<300m),meaning accessible by twin decline for conventional underground mining and flotationprocessing. Capex of $354m (pre-production $254m), with bottom quartile capitalintensity of $315/tpa vs. global average of c.$930/tpa. Plenty of upside: increased sizeand grade of resource, higher extraction rates, higher plant recovery and utilisation,lower capex/opex, plus salt by-products. Mining concession application was lodged inQ4 2014 and MOU signed with two ports and for power. Other projects - We forecastthe 82Mt Sierra del Perdón project starting in 2017/18 and Pintano in 2018/19, withpeak group production at 2.2Mtpa in 2024 at a cash costs of $140/t, in line with globalaverages. While of modest grade, the projects are within the same region, all benefitingfrom competitive advantages with low capital intensity and high IRR's of +40%.

● Potash market. The potash market appears to have bottomed at c.$305/t KCl. Pricesare thought to remain subdued in the short-term but rebound in the long-term, asprice momentum and demand pick up and inventory levels decline. We remain neutral,forecasting c.$300/t KCl.

● News Catalysts. Q2 - Sierra Del Perdon scoping study (NUMe 400-500ktpa KCl,capex $250m, NPV 10% $440m, IRR 31%), Pintano drilling results.

● Valuation. 1x NAV; projects risk-weighted up to 75%.

● Risks. Moderate: Permitting, keeping on time and budget, financing, project delivery.


1



Highfield Resources Ticker HFR.AX Market Capitalisation A$428 Financial Year End June

BUY Share Price A$1.70 Enterprise Value (EV) A$395 Reporting Currency A$

A$3.00 Implied Return 76% Net Debt (Cash) -A$25 Shares in Issue 252m


Net Asset Value Disc Rate NAV (%) $m *$/sh *A$/sh EPS ($/sh) (0.04) (0.07) (0.15) (0.13) 0.09

Muga-Vipasca (25% risk-weighted) 10% 83% 1,185 1.98 2.64 EPS Growth -29% -93% -107% 12% 168%

Pintano (75% risk weighted) 10% 14% 206 0.34 0.46 P/E n.m n.m n.m n.m 18.6x

Sierra del Perdon (75% risk weighted) 10% 8% 108 0.18 0.24 CFPS ($/sh) (0.03) (0.04) (0.15) (0.13) 0.11

Sub-total 1,500 2.51 3.34 P/CFPS n.m n.m n.m n.m 15.6x

Cash & Equivalents 2% 25 0.04 0.06 FCFPS ($/sh) (0.03) (0.18) (0.76) (0.28) (0.02)

Debt 0% 0 0.00 0.00 P/FCFPS n.m n.m n.m n.m n.m

Corporate G&A / Other (6%) (93) (0.16) (0.21) FCF Yield -2% -11% -45% -16% -1%

Total 1,432 2.39 A$3.19 EV/EBITDA n.m n.m n.m n.m 4.0x

Current NAV Multiple (Implied) 0.53x EBITDA Margin 0% 0% 0% -305% 38%

Earnings Value $/sh A$/sh Dividend Per Share ($/sh) 0.00 0.00 0.00 0.00 0.03

EPS (1 year forward) 0.00 0.00 Dividend Yield 0.0% 0.0% 0.0% 0.0% 1.6%

Current P/E multiple (implied) 0.0x Return on Assets (ROA) -10% -9% -18% -16% 10%

Blended Valuation Target Multiple Weight Return on Equity (ROE) -11% -9% -49% -45% 25%

NAV valuation 1.00x 100% A$3.19 Return on Capital Employed (ROCE) -11% -9% -17% -13% 18%

Earnings valuation 0.0x 0% A$0.00 Net Debt/EBITDA 2.1x 5.7x -3.7x -4.8x 3.3x

VALUATION A$3.19 Gearing (Debt/Equity) 0% 0% 174% 184% 142%

Sensitivity Analysis NAV (A$/sh) 18F EPS 18F CFPS Interest Cover n.m n.m n.m n.m -0.2x

Base case potash price forecast 3.19 0.09 0.11 Shares Outstanding (m) 156 462 462 562 562

Base case +10% 3.63 0.12 0.14 Income Statement 2014 2015F 2016F 2017F 2018F


Flat potash price (at spot $305/t) 2.67 0.06 0.08 Cost of Sales 0 0 0 (7) (81)

News Catalysts (CY) H2 14 H1 15 H2 15 2017 G&A (5) (6) (6) (15) (15)

Muga resource update (M&I) Exploration (1) (13) (60) (61) (61)

Muga DFS Other 0 0 0 (0)

Sierra del Perdon resource EBITDA (6) (19) (66) (62) 99

Sierra del Perdon Scoping Study DD&A 0 0 0 (1) (10)

Muga permits received & financing Q4 EBIT (6) (19) (66) (63) 89

Muga starts construction Q4 Net Interest Expense 0 0 (4) (12) (15)

Muga begins production Q2 PBT (6) (19) (70) (75) 73

Reserves & Resources (attributable) Tonnage Grade % Potash EV/t Non-Recurring Items/Other 0 0 0 0 0

Reserves (P&P) Mt KCl 146 21.2 31.0 9.56 Taxes/Recovery 0 0 0 0 (22)

Resources (M&I) Mt KCl 281 18.0 50.5 5.87 Net Profit (Loss) - attributable (6) (19) (70) (75) 51

Resources (Total) Mt KCl 572 17.8 101.7 2.91 Minority Interest 0 0 0 0 0

Production & Cost 2016F 2017F 2018F 2019F Cashflow 2014 2015F 2016F 2017F 2018F

Potash Production (KCl, MOP) 000t 0 45 535 802 Net Profit (Loss) (6) (19) (70) (75) 51

Salt Production (NaCl) - excluded 000t 0 27 321 524 DD&A 0 0 0 1 10

Potash Eq. Production 000t 0 49 588 975 Non Recurring/Other 1 0 (0) (0) (0)

EV/oz Production (attributable) $/t 0 6,648 554 369 Working Cap. Changes 0 1 0 0 0

Total Cash Cost (co-product basis) $/t 0 111 111 112 Cash Flow From Operations (4) (17) (70) (74) 61

All-in Sustaining Cost $/t 0 146 146 137 Capital Expenditure (0) (67) (280) (80) (72)





Dividends Paid & Other 0 0 0 0 (15)

Cash Flow From Financing 14 182 250 160 (35)

Net Change in Cash 5 96 (100) 5 (46)

Free Cash Flow (4) (84) (350) (155) (10)


Cash & Equivalents 12 108 8 13 (33)

Total Current Assets 13 108 8 13 (33)



Other 40 40 40 40 40

Total Assets 53 216 396 480 496




Assumptions (Real) 2014 2015F 2016F 2017F LT Other Long Term Liabilities 0 0 (0) (0) (0)

Potash Price (KCl, MOP - $/t) 379 297 303 300 300 Total Liabilities 2 2 252 312 292

Salt Price (NaCl, $/t) - excluded 50 50 50 50 50 Shareholder Equity 51 214 144 168 204

Exchange Rate (A$:US$) 0.97 0.90 0.76 0.75 0.75 Total Liab. & S/Holder Equity 53 216 396 480 496

Working Capital 11 106 6 11 (35)

* post-financing basis Net Debt (Cash) (12) (108) 242 297 323

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Potash Production (kt KCl, 100% basis) Total Cash Cost / AISC ($/t KCl)

Highfield Resources 9 April 2015









9 April 2015

BUY

Current Share Price 41pTarget Price 80pMarket Capitalisation £133mShares In Issue 325mRIC/BLBG HGM.L/HGM LNAvg. Daily Volume (3M) 536,592Net Cash/(Debt) (m) (12/14F) $(239.7)mBroker Yes



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Share Price

Highland GoldRelat ive to UK Market


Absolute 5 10 -43

Relative 5 1 -46


Highland GoldEstimate Changes

Slow and Steady

We maintain our BUY recommendation and 80p, despite our new commodity priceforecasts and changes to our model.

● Company Snapshot. AIM-quoted c.250kozpa junior gold producer focused in Russiawith three operating mines (MNV, Novo & Belaya Gora), two development projects(Klen & Kekura) and some advanced stage exploration properties. 32% owned byRoman Abramovich's Millhouse LLC.

● Investment Thesis. Solid, defensive junior with growth, but perceived Russian riskand project delivery risks may continue to cap substantial stock gains. Solid base withgrowth - Production to stay 250-300koz from average sized, low cost mines: MNV -flagship mature open pit/underground mine (150kozpa) falling on lower grades, offsetby higher tonnage and increase open pit mine life. Novo polymetallic undergroundmine increasing plant throughput (90kozpa AuEq) and Belaya Gora, now a stand-alone operation that is ramping to full capacity (80-100kozpa). Cash costs are low at$650-700/oz; AISC bottom quartile at $850-900/oz, well below the industry average.Chukotka focus - Growth is focussed on Klen and Kekura in Chukotka, Far EastRussia. Klen project design is under state review (start 2017 at 50koz pa) andKekura is undergoing met testwork, resource extension and upgrade (start 2018 at180-220koz pa). Other projects Taseevskoye, Unkurtash and Lyubov to remain lowerpriority. Balance sheet prudence - Well managed, prudent company keeping net debt/EBITDA within limits. Net debt $240m, with $100m undrawn debt facility available.Capex to tick up over next few years as projects build out. Divi payer with 7% yield.

● Guidance. 2015: 270-285koz.

● Preview FY (27 Apr). Production up 11% y-o-y at 259koz, as reported previously. TCC$690/oz, AISC $899/oz. Financials - EPS down y-o-y at $0.12, EBITDA $111m. Netdebt down at $240m. We look for more colour on Kekura, with the scoping study nowbeing finalised; expected to have been submitted for state approval of reserves.

● Valuation. Blend of 1.25x NAV/5x P/CF (low end of 1-2x NAV/5-15x P/CF range forgolds).

● Risks. Moderate: Perceived Russian risk, project delivery, financing.




Highland Gold Ticker HGM.L Market Capitalisation £134m Financial Year End Dec





Mnogovershinoye (MNV - 100%) 12% 27% 85 0.26 0.17 EPS Growth -57% -28% -36% -9% 111%

Novoshirokinskoye (Novo - 100%) 12% 39% 126 0.38 0.26 P/E 3.7x 5.1x 8.0x 8.8x 4.2x

Belaya Gora (100%) 12% 48% 152 0.47 0.31 CFPS ($/sh) 0.29 0.35 0.23 0.23 0.21

Kekura (100%) 14% 53% 170 0.52 0.35 P/CFPS 2.1x 1.8x 2.7x 2.7x 3.0x

Klen (100%) 14% 16% 50 0.15 0.10 FCFPS ($/sh) (0.19) 0.13 0.03 (0.29) (0.35)

Unkurtash (100%) 14% 11% 36 0.11 0.07 P/FCFPS n.m 4.9x 18.7x n.m n.m

Taseevskoye (100%) 14% 6% 20 0.06 0.04 FCF Yield -30% 21% 5% -48% -56%

Lyubov (100%) 14% 6% 18 0.06 0.04 EV/EBITDA 2.2x 2.6x 3.0x 3.0x 2.9x

Sub-total 656 2.01 1.34 EBITDA Margin 44% 36% 32% 30% 30%

Cash & Equivalents 22% 70 0.21 0.14 Dividend Per Share ($/sh) 0.09 0.08 0.04 0.02 0.02

Debt (97%) (309) (0.95) (0.63) Dividend Yield 14.0% 13.4% 6.0% 3.9% 3.5%

Corporate G&A / Other (31%) (98) (0.30) (0.20) Return on Assets (ROA) 4% 3% 2% 2% 3%

Total 319 0.98 £0.65 Return on Equity (ROE) 7% 5% 3% 3% 5%

Current NAV Multiple (Implied) 0.63x Return on Capital Employed (ROCE) 7% 5% 4% 4% 7%

Cash Flow Value $/sh £/sh Net Debt/EBITDA 1.9x 2.2x 2.5x 3.6x 4.4x

CFPS (1 year forward) 0.23 0.15 Gearing (Debt/Equity) 38% 37% 36% 50% 49%

Current P/CF multiple (implied) 2.7x Interest Cover 0.1x -0.1x -0.3x -0.3x -0.2x

Blended Valuation Target Multiple Weight Shares Outstanding (m) 325 325 325 325 325

NAV valuation 1.25x 50% £0.81 Income Statement 2013 2014F 2015F 2016F 2017F

Cash Flow valuation 5.0x 50% £0.77 Revenue 304 311 307 322 335

VALUATION £0.79 Cost of Sales (150) (182) (191) (207) (215)

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS G&A (19) (17) (18) (19) (19)

Base case gold price forecast 0.65 0.08 0.23 Other (3) (1) (0) 0 0

Base case +10% 1.32 0.14 0.30 EBITDA 133 111 97 97 101

Base case -10% (0.04) (0.00) 0.15 DD&A (54) (52) (50) (52) (20)

Flat gold price (at spot $1,200/oz) 0.63 0.07 0.23 EBIT 77 59 47 45 81

News Catalysts 2014 2015 2016 2017 Net Interest Expense 5 (4) (15) (16) (20)

Belaya Gora starts production (stand-alone) PBT 82 55 32 29 61

Kekura PFS H2 Non-Recurring Items/Other 0 0 0 0 0

Kekura pilot plant starts Taxes/Recovery (27) (15) (7) (6) (13)

Klen starts production Net Profit (Loss) - attributable 55 39 25 23 48

Kekura starts production (2017/2018) Minority Interest 0 1 1 1 1

Reserves & Resources (attributable) Gold Silver Gold Eq EV/oz Cashflow 2013 2014F 2015F 2016F 2017F

Reserves (P&P) Moz 2.6 0 2.6 169 Net Profit (Loss) 55 40 26 23 49

Resources (M&I) Moz 11.5 0 11.5 38 DD&A 54 52 50 52 20

Production & Cost (attributable) 2014F 2015F 2016F 2017F Non Recurring/Other 1 (3) (1) (1) (1)

Gold Eq. Production 000oz 259 275 285 288 Working Cap. Changes (15) 23 (0) (1) (1)

EV/oz Production $/oz AuEq 1,700 1,598 1,546 1,529 Cash Flow From Operations 95 113 75 73 67

Total Cash Cost (net by-products) $/oz 690 687 704 704 Capital Expenditure (156) (72) (65) (169) (180)

All-in Sustaining Cost $/oz 899 898 903 903 Acquis./Investments (191) (0) 0 0 21





Cash Flow From Financing 255 (33) (2) 137 23

Net Change in Cash 4 7 9 41 (68)

Free Cash Flow (61) 41 11 (96) (113)


Cash & Equivalents 58 70 68 85 (4)


PP&E & Mining Interests 976 997 1,011 1,128 1,288


Other 126 121 121 121 121

Total Assets 1,293 1,307 1,320 1,456 1,529

Short Term Debt 124 175 175 295 305


Long Term Debt 185 134 134 134 134

Assumptions (Real) 2014F 2015F 2016F 2017F LT Other Long Term Liabilities 115 115 115 115 136



Lead Price ($/lb) 0.95 0.83 0.89 0.90 0.90 Total Liab. & S/Holder Equity 1,293 1,307 1,320 1,456 1,529

Zinc Price ($/lb) 0.98 0.95 0.95 0.95 0.95 Working Capital 20 (37) (38) (140) (238)


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Highland Gold 9 April 2015









9 April 2015

HOLD

Current Share Price 88pTarget Price 85pMarket Capitalisation £324mShares In Issue 368mRIC/BLBG HOCM.L/HOC LNAvg. Daily Volume (3M) 772,958



200180160140120100806040

Share Price

Hochschild MiningRelat ive to UK Market


Absolute 10 -5 -51

Relative 10 -12 -53


Hochschild MiningEstimate Changes

Here Comes Inmaculada

We maintain our HOLD recommendation and increase our TP to 85p, from 75p, dueto our revised commodity prices forecasts and changes to our model.

● Company Snapshot. FTSE 250, fifth largest primary silver producer with four coreunderground mines in Peru and Argentina, plus some exploration projects. 54% ownedby Chairman Eduardo Hochschild.

● Investment Thesis. Limited margin - 3 core assets include Pallancata, Arcata andInmaculada in Peru (9 & 6Mozpa AgEq), plus 51% owned San Jose in Argentina(12Mozpa AgEq). These are all underground, high-grade narrow vein mines whichare highly capital intensive. Despite cost savings, group AISC is still high at c.$17/oz(plus c.$1/oz for debt interest), leaving little FCF margin. HOC expects further savings,AISC expected to fall to $15-16/oz with Inmaculada, although it clearly struggles todeliver margin. Growth to come. Following Inmaculada starting up in Q2, productiongrowth from 22Moz to 29Moz AqEq in 2016. Inmaculada 194kozpa Au at $527/oz,AISC $11-12/oz AgEq, capex $373m). Crespo has been postponed from its 2017 start-up (2.7Mozpa, $80m capex left), and we view the project as marginal. Also earlierstage 9.6Moz Volcan project in Chile (Andina) and Azuca. Exploration is to focus onbrownfield and resource drilling to improve LOM quality; value accretion likely a wayoff. Balance sheet struggle - Following re-financing, HOC has net debt of c.$350m.Hedge of 6Moz Ag at $17.75/oz and 38koz Au at $1,300/oz. Divi is suspended andwe don't see a re-start until Inmaculada is up and running and the balance sheet isrestored. We see decent FCF yields of +5% but still a long haul to pay back all the debt.

● Guidance. 2015: 24Moz silver equivalent (Inmaculada 6-7Moz); AISC $15-16/oz.

● Preview Q1 (22 Apr). Production down y-o-y and q-o-q at 4.5Moz AgEq, comprising3.3Moz silver and 20koz gold. A seasonally weaker quarter. Arcata and Pallancatalower as higher grade/lower tonnage is mined through 2015 to preserve cash. SanJose slightly down and Ares closed. Inmaculada starting up in Q2. Net debt up at c.$400m, depending on new facility drawdown.

● Valuation. Blend of 1.5x NAV/5x P/CF (mid/low end of 1-2x NAV/5-15x P/CF for silver).

● Risks. Moderate: Tax & labour issues, project delivery, maintaining costs and balancesheet.




Hochschild Ticker £7.00 Market Capitalisation £323m Financial Year End Dec




Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) - Underlying (0.15) (0.15) 0.00 0.04 0.04

Arcata (Peru - 100%) 10% 44% 79 0.21 0.14 EPS Growth -180% 0% 101% 3008% 7%

Pallancata (Peru - 100%) 10% 58% 103 0.27 0.18 P/E n.m n.m 1,141.3x 36.7x 34.3x

San José (Argentina - 51%) 10% 33% 59 0.15 0.10 CFPS ($/sh) 0.15 0.25 0.49 0.53 0.53

Inmaculada (Peru - 100%) 12% 236% 421 1.09 0.73 P/CFPS 8.5x 5.2x 2.7x 2.5x 2.5x

Crespo (Peru - 100%) 12% 5% 10 0.03 0.02 FCFPS ($/sh) (0.52) (0.61) (0.15) 0.09 0.07

Azuca (Peru - 100%) 12% 0% 0 0.00 0.00 P/FCFPS n.m n.m n.m 14.9x 19.8x

Dorado (Chile - 100%) 12% 19% 34 0.09 0.06 FCF Yield -39% -46% -11% 7% 5%

Sub-total 707 1.83 1.22 EV/EBITDA 4.3x 6.2x 5.2x 4.6x 4.9x

Cash & Equivalents 65% 116 0.30 0.20 EBITDA Margin 31% 28% 31% 29% 26%

Debt (263%) (469) (1.22) (0.81) Dividend Per Share ($/sh) 0.05 0.01 0.00 0.00 0.00

Corporate G&A / Other (98%) (176) (0.46) (0.30) Dividend Yield 4.0% 0.5% 0.0% 0.0% 0.0%

Total 178 0.46 £0.31 Return on Assets (ROA) -8% -4% 0% 1% 1%

Current NAV Multiple (Implied) 2.85x Return on Equity (ROE) -14% -7% -1% 1% 1%

Cash Flow Value $/sh £/sh Return on Capital Employed (ROCE) -7% -2% 3% 4% 5%

CFPS (1 year forward) 0.37 0.25 Net Debt/EBITDA 0.8x 2.6x 2.6x 2.2x 2.2x

Current P/CF multiple (implied) 3.5x Gearing (Debt/Equity) 45% 52% 52% 45% 41%

Blended Valuation Target Multiple Weight Interest Cover n.m n.m -0.7x -0.5x -0.4x

NAV valuation 1.50x 50% £0.46 Shares Outstanding (m) 367 367 385 385 385

Cash Flow valuation 5.0x 50% £1.24 Income Statement 2013 2014 2015F 2016F 2017F

VALUATION £0.85 Revenue 622 493 528 626 665

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Cost of Sales (322) (282) (259) (339) (367)

Base case silver price forecast 0.31 0.00 0.49 G&A (57) (46) (40) (40) (50)

Base case +10% 0.87 0.06 0.61 Exploration (46) (18) (15) (15) (16)

Base case -10% (0.24) (0.06) 0.36 Other (1) (11) (52) (52) (62)

Flat silver price (at spot $17/oz) (0.04) (0.00) 0.47 EBITDA 195 136 162 180 170

News Catalysts H1 15 H2 15 2016 2017 DD&A (147) (129) (131) (136) (132)

Inmaculada starts production EBIT (79) (27) 56 70 72

Net Interest Expense (41) (41) (37) (35) (32)

PBT (120) (68) 19 35 40

Reserves & Resources (attributable) Silver Gold Silver Eq EV/oz Ag Non-Recurring Items/Other 0 0 0 0 0

Reserves (P&P) Moz 81 1.2 152 5.5 Taxes/Recovery (9) (3) (8) (15) (17)

Resources (M&I) Moz 241 11.2 910 0.9 Net Profit (Loss) - attributable (134) (69) 0 14 15

Production & Cost (attributable) 2014 2015F 2016F 2017F Minority Interest 6 (2) 10 6 8

Silver Production 000oz 16,166 15,671 17,136 17,143 Cashflow 2013 2014 2015F 2016F 2017F

Gold Production 000oz 101 145 203 203 Net Profit (Loss) (129) (71) 11 20 23

Silver Eq. Production (reported) 000oz 22,202 24,371 29,300 29,345 DD&A 147 129 131 136 132

EV/oz Production $/oz AgEq 38 34 29 29 Non Recurring/Other (13) (2) (6) (6) (6)

Total Cash Cost (co-product) $/oz Ag 12.1 9.1 10.1 10.9 Working Cap. Changes 59 29 (16) 4 (0)

AISC (co-product) $/oz Ag 17.8 15.3 15.0 16.5 Cash Flow From Operations 65 85 121 155 150


Acquisitions & Exploration 41 52 0 0 0



Net Borrowings 314 15 0 (50) (25)

Dividends Paid & Other (286) (1) 0 0 0


Net Change in Cash (54) (164) (66) (26) (10)

Free Cash Flow (184) (224) (56) 34 26




PP&E & Mining Interests 873 1,076 1,138 1,138 1,146

Investments 0 0 0 0 0


Other 312 257 257 257 257

Total Assets 1,734 1,706 1,769 1,734 1,732



Long Term Debt 0 441 469 419 394



Assumptions (Real) 2014 2015F 2016F 2017F LT Shareholder Equity 970 894 905 926 949

Gold Price ($/oz) 1,266 1,205 1,200 1,200 1,200 Total Liab. & S/Holder Equity 1,734 1,706 1,769 1,734 1,732

Silver Price ($/oz) 19.1 16.7 17.6 18.6 18.5 Working Capital (22) 222 199 169 160


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Arcata Pallancata San José Ares Selene

Inmaculada Azuca Crespo Cash Cost AISC

Attrib. Silver Production (Moz) Total Cash Cost ($/oz AgEq)

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Attrib. Gold Production ('000oz) Total Cash Cost ($/t AuEq)

Hochschild Mining 9 April 2015









9 April 2015

BUY

Current Share Price 4pTarget Price 25pMarket Capitalisation £22mShares In Issue 554mRIC/BLBG IFL.L/IFL LNAvg. Daily Volume (3M) 687,718Net Cash/(Debt) (m) (06/14F) ZAR(344.2)mBroker Yes



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Share Price

Internat ional Ferro MetalsRelat ive to UK Market


Absolute -7 -10 -67

Relative -7 -17 -69


International Ferro MetalsEstimate Changes

Chrome Headwinds

We maintain our BUY recommendation and 25p TP, despite our revised commodityprice forecast and changes to our model.

● Company Snapshot. LSE-listed, South African integrated ferrochrome producer.Produces 265ktpa from its two mines, Letsedi and Sky Chrome, plus third party ores.Chinese steelmaker JISCO holds 29%, as a strategic shareholder and offtake partner.

● Investment Thesis. Leverage - Pure, highly leveraged play on South AfricanFerrochrome. Our NAV increases by 40% for a 10% increase in FeCr price. Aturnaround story with furnaces now operating at full load and profits have restartedafter a 5 year gap but margins remain relatively tight, like many SA producers.Realised prices receive discounts of c.25-30% (c.80c/lb) and cash costs are c.65-75c/lb (R6.50-7.50/lb). Costs key - reduction initiatives have been successfully achievedbut likely to have to continue to work hard to keep costs down given rising powerprices (12% pa) and labour pressures, even with helpful Rand weakness. However,IFL plans to move to owner-operated and has new cost reduction initiatives; plansto improve efficiencies in reductants and power consumption; co-gen plant is yet todeliver its full potential. Also, Letsedi underground mine has restarted and increasedproduction will help reduce reliance on more costly third party ores. Debt reducing- Net borrowings expected to reduce (c.R450-490m) as cash generation increases,helped by cumulative tax losses and reduced capex. Has a one year loan from Bank ofChina, rolled over for another year. Upside - Potential to move to a 60MW DC furnaceand a phase II expansion to 100ktpa at a cost of c.R1bn, reducing costs by 12%. BFSQ1 2015, commissioning H1 2017; non-equity financing (partner etc.). Not in our model.

● Guidance. FY15 200-205kt (downgraded from 215-222kt).

● Preview Q3. Production 51kt, up q-o-q following the DMR stoppages, but down y-o-y (Q2 49.8kt). Production costs down q-o-q at R7.47/lb (Q2 R7.82/lb), as betterore supply is utilised, offset by increased power costs. Letsedi underground now onaccelerated schedule and cogen plant to restart shortly. Net borrowings up slightly atR465m, before coming down after June. Market remaining subdued with recent rolloverof benchmark prices at $1.08/lb.

● Valuation. TP blend of 1x NAV/7.5x P/E (bottom of 7-12x P/E range for industrials).

● Risks. Moderate: South African labour, power supply & prices, ferrochrome market,cash generation and balance sheet.




International Ferro Metals Ticker IFL.L Market Capitalisation £20m Financial Year End June

BUY Share Price 3.6p Enterprise Value (EV) £52m Reporting Currency ZAR

25p Implied Return 590% Net Debt (Cash) $48m Shares in Issue 554m


Net Asset Value Disc Rate Rm $m $/sh £/sh EPS (R/sh) 0.08 (0.37) 0.22 0.34 0.35

Buffelsfontein (100%) 10% 3,895 410 0.74 0.49 EPS Growth 134% (564%) 160% 56% 112%

Sub-total 3,895 410 0.74 0.49 P/E 6.5x n.m 2.4x 1.5x 1.5x

Corporate G&A / Other 10% (704) (74) (0.13) (0.09) CFPS (R/sh) 0.23 0.09 0.46 0.65 1.16

Cash & Equivalents 49 5 0.01 0.01 P/CFPS 2.2x 5.8x 1.1x 0.8x 0.4x

Debt (509) (54) (0.10) (0.06) FCFPS (R/sh) 0.04 (0.34) 0.24 0.45 0.98

Total 2,731 287 0.52 £0.35 P/FCFPS 11.8x n.m 2.2x 1.2x 0.5x

Current NAV multiple (Implied) 0.10x FCF Yield 8% -66% 46% 86% 189%

Earnings Value R/sh $/sh £/sh EV/EBITDA 3.7x -38.4x 2.2x 1.8x 1.8x

EPS - 1 year forward 0.22 0.02 0.02 EBITDA margin 10% -1% 14% 15% 15%

Current P/E multiple (implied) 2.4x Dividend Per Share (R/sh) 0.00 0.00 0.00 0.00 0.00


NAV valuation 1.00x 50% £0.35 Return on Assets (ROA) 1% (7%) 4% 6% 6%

Earnings valuation 7.50x 50% £0.12 Return on Equity (ROE) 2% (10%) 6% 8% 8%

VALUATION £0.23 Return on Capital Employed (ROCE) 4% (6%) 8% 10% 8%

Net Debt/EBITDA 1.7x -27.1x 1.1x 0.3x -1.1x

Gearing (Debt/Equity) 25.1% 30.9% 25.7% 16.4% 8.7%

Sensitivity Analysis Valuation NAV/sh 16F EPS 16F CFPS Interest Cover 1.9x -2.3x 3.4x 4.8x 6.9x

Base case ferrochrome forecast £0.23 £0.35 R0.22 R0.46 Shares Outstanding (m) 554 554 554 554 554

Base case +10% £0.36 £0.55 R0.34 R0.58 Income Statement (Rm) 2014 2015F 2016F 2017F 2018F

Base case -10% £0.08 £0.10 R0.10 R0.34 Revenue 2,101 2,022 2,491 2,690 2,813

Flat long-term prices (at $1.08/lb & R9.50) £0.23 £0.35 R0.22 R0.46 Cost of sales (1,870) (2,007) (2,214) (2,352) (2,482)

G&A (100) (148) (100) (103) (105)

News catalysts (CY) H1 14 H2 14 H1 15 H2 15 Other (25) 2 (0) (0) 0

Letsedi underground restarts EBITDA 202 (19) 337 410 409

Phase II Expansion (DC Furnace, 100ktpa) feasibility study DD&A 107 112 161 174 184

Non-Recurring Items/Other (5) 0 0 0 0

EBIT 105 (132) 176 236 225

Production & cost (equity) 2014 2015F 2016F 2017F 2018F Net finance income (expense) (65) (72) (55) (47) (31)

FeCr production (kt) 228 203 242 252 252 PBT 40 (204) 121 189 195

EV/lb production ($/lb Cr) 0.31 0.34 0.29 0.28 0.28 Tax 2 0 0 0 0

C1 Production Cost (R/lb) 6.87 7.75 7.67 7.77 7.77 Net Profit (Loss) - attributable 43 (203) 121 189 195

C1 Production Cost ($/lb Cr) 0.66 0.68 0.66 0.73 0.81 Minority Interest (1) (1) 0 0 0

All-in Sustaining Cost ($/lb Cr) 0.73 0.77 0.71 0.78 0.86 Cashflow 2014 2015F 2016F 2017F 2018F

Net Profit (Loss) 42 (204) 121 189 195

Working Cap. change 53 (15) 100 66 (214)

DD&A 129 130 179 192 201

Non Recurring/Other (94) 138 (145) (85) 459



Acquis./investments/adjustments 14 (11) (2) (4) (3)


Borrowings (4) 9 (75) (172) (164)

Capital stock 0 0 0 0 0

Dividends paid & other (58) (65) (55) (47) (31)



Free Cash Flow 24 (188) 132 247 542



Total Current Assets 731 551 664 801 1,204

Assumptions (Real) 2014 2015F 2016F 2017F LT PP&E & Mining Interests 2,045 2,049 1,938 1,814 1,680

FeCr benchmark ($/lb Cr) 1.16 1.13 1.11 1.21 1.20 Deferred taxation 235 235 235 235 235

Payable discount to benchmark (%) -30% -33% -30% -30% -25% Other 248 242 228 217 204

FeCr realised price ($/lb Cr) 0.81 0.75 0.77 0.84 0.93 Total Assets 3,259 3,077 3,065 3,067 3,324

Exchange rate (US$/ZAR) 10.39 11.43 11.63 10.69 9.50 Short Term Debt 506 509 509 386 222

Exchange rate (US$/£) 1.63 1.57 1.50 1.50 1.50 Current Liabilities 838 872 737 595 654

South Africa inflation (%) 0% 0% 2% 4% 4% Long Term Debt 61 49 49 0 0


Total Liabilities 1,002 1,028 895 707 769

Shareholder Equity 2,261 2,052 2,174 2,363 2,558

Total Liab. & Equity 3,259 3,077 3,065 3,067 3,324


Net Debt (Cash) exc fin lease 344 527 378 116 (442)

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2013 2014 2015F 2016F 2017F 2018F 2019F 2020F

Buffelsfontein C1 Production Cost AISC

Attrib. FeCr Production (kt) Total Unit Operating Cost ($/lb Cr)C1 Production Cost / AISC ($/lb Cr)

International Ferro Metals 9 April 2015









9 April 2015

REDUCEFrom Sell

Current Share Price 216pTarget Price 190pMarket Capitalisation £965mShares In Issue 447mRIC/BLBG KAZ.L/KAZ LNAvg. Daily Volume (3M) 2,303,740Net Cash/(Debt) (m) (12/15F) $(2,929.5)m



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Share Price

Kaz MineralsRelat ive to UK Market


Absolute -3 -12 -17

Relative -4 -19 -21


Kaz MineralsEstimate Changes

Red on the Horizon

We upgrade to a REDUCE recommendation and increase our TP to 190p, from 180p,due to our revised commodity price forecasts and changes to our model.

● Company Snapshot. FTSE 250, major copper producer in Kazakhstan. It isrestructuring as KAZ Minerals to produce 80ktpa from its fully integrated business,comprising 5 mines (including Bozymchak mine in Kyrgyzstan). It has three c.100ktpagrowth projects: Boschekul and Aktogay, which are scheduled to start in 2015, plusthe earlier stage Koksay.

● Investment Thesis. Growth to start - Flat to declining production of 80-85ktpa fromexisting mature mines. Steady growth to 300ktpa in 2018 as Boschekul and Aktogay(Oxide) begin production in Q4 2015 and Aktogay Sulphide in 2017 (we exclude Koksay- 80ktpa Cu, 60kozpa Au). Leverage - Leveraged copper play due to narrow margin.Gross cash costs high at +$3.00/lb due to mature mines, but closer to $1.20-1.40/lbnet due to significant by-product credits (4Moz Ag, 40koz Au and 120kt Zn). Costs areexpected to decline with fx devaluation, plus addition of Boschekul ($0.80-1.00/lb net)and Aktogay ($1.20-1.40/lb). Balance sheet - Net debt $1bn with peak capex of $1.6bnin 2015 due to high capital intensity growth projects ($2.3bn each) doesn't leave anyFCF. Gearing +250% and 7x net debt/EBITDA (2016) looks ugly; no covenants testeduntil 2016; we expect further refinancing required. Divi suspended.

● Guidance. 2015: 80-85kt copper, 90-95kt zinc, 2.25-2.5Moz silver and 42.47koz gold.Gross C1 costs $2.80-3.00/lb; project capex of $1.4-1.6bn, sustaining capex $110m.

● Preview FY (30 Apr). Production of 21kt, with lower grades filtering through anda seasonally weaker quarter. Silver and zinc by-products down on lower grades at700koz and 25kt; gold flat at 11koz. Projects on track for Q4 start-up.

● Valuation. Blend of 1x NAV/10x P/E (middle of 7-12x range for copper miners).

● Risks. Moderate: Political risk, project delivery, balance sheet, restructuring plan,costs.




KAZ Minerals Ticker KAZ.L Market Capitalisation £965m Financial Year End Dec

REDUCE Share Price £2.16 Enterprise Value (EV) £1,873m Reporting Currency US$



Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) - Underlying 1.78 0.19 (0.06) 0.17 0.69

Mining Assets (inc. Projects) 12% 196% 4,670 10.45 6.97 EPS Growth 89% -89% -133% 360% 311%

Sub-total 4,670 10.45 6.97 P/E 1.8x 16.8x n.m 19.4x 4.7x

Cash & Equivalents 40% 965 2.16 1.44 CFPS ($/sh) 0.35 (0.13) 0.23 0.88 1.66

Debt (130%) (3,092) (6.92) (4.61) P/CFPS 9.3x n.m 14.0x 3.7x 1.9x

Corporate G&A (7%) (160) (0.36) (0.24) FCFPS ($/sh) (2.04) (2.24) (3.78) (0.99) (0.17)

Total 2,383 5.33 £3.55 P/FCFPS n.m n.m n.m n.m n.m

Current NAV Multiple (Implied) 0.61x FCF Yield -63% -69% -117% -31% -5%

Earnings Value $/sh £/sh EV/EBITDA 4.8x 5.3x n.m 3.7x 2.1x

EPS (1 year forward) 0.03 0.02 EBITDA Margin 42% 42% 21% 34% 44%

Current P/E multiple (implied) 114.5x Dividend Per Share ($/sh) 0.08 0.00 (0.01) 0.02 0.07

Blended Valuation Target Multiple Weight Dividend Yield 2.5% 0.0% -0.2% 0.5% 2.1%

NAV valuation 1.0x 50% £3.55 Return on Assets (ROA) -51% -41% 0% 1% 4%

Earnings valuation 10.0x 50% £0.19 Return on Equity (ROE) -123% -112% -1% 3% 13%

VALUATION £1.87 Return on Capital Employed (ROCE) 4% 2% 1% 6% 11%

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Net Debt/EBITDA 3.9x 3.8x 15.9x 7.0x 4.0x

Base case copper price forecast 3.55 (0.06) 0.23 Gearing (Debt/Equity) 129% 147% 172% 185% 174%

Base case +10% 5.52 0.03 0.41 Interest Cover -0.2x -2.8x -1.9x -0.6x -0.1x

Base case -10% 1.60 (0.15) 0.05 Shares Outstanding (m) 513 447 447 447 447

Flat copper price (at spot $2.75/lb) 4.46 (0.05) 0.25 Income Statement 2013 2014 2015F 2016F 2017F

News Catalysts H1 14 H2 14 2015 2017 Revenue 933 846 829 1,486 2,016

Kazakhmys NewCo restructuring Cost of Sales (577) (456) (588) (902) (1,130)

Bozymchak starts production Admin & Selling Expenses (177) (164) (180) (232) (181)

Bozshakol commences production H2 Other 14 (132) 0 0 0

Aktogay commences production (oxide) Q4 EBITDA (exc. MET) 389 355 176 503 887

Aktogay commences production (sulphide) DD&A (50) (42) (42) (43) (39)

Reserves & Resources (attributable) Copper Gold Cu Eq EV/lb Cu MET (86) (86) (73) (108) (143)

Reserves (P&P) Mt / Moz 15.9 9.4 20.6 0.06 EBIT 193 94 62 352 704

Resources (M&I) Mt / Moz 23.4 11.6 29.0 0.04 Net Interest Expense (47) (263) (119) (203) (92)

Sales 2014 2015F 2016F 2017F PBT 146 (169) (57) 149 613

Copper kt 84 94 178 239 Taxes/Recovery (56) (65) 29 (75) (306)

Silver Moz 3.4 2.5 2.8 3.0 Profit (Loss) from disc'd operations (3,053) (2,128) 0 0 0

Gold koz 35 45 64 80 Net Profit (Loss) - attributable (2,963) (2,362) (29) 75 306

Costs 2014 2015F 2016F 2017F Underlying Profit 911 86 (29) 75 306

C1 cost (gross by-products) $/lb 2.57 2.84 2.27 2.06 Minority Interest 0 0 0 0 0

C1 Cost (net by-products) $/lb 0.85 1.55 1.42 1.29 Cashflow 2013 2014 2015F 2016F 2017F

All-in Sustaining Cost $/lb 2.03 2.88 2.35 1.90 Net Profit (Loss) (2,963) (2,362) (29) 75 306

DD&A 50 42 42 43 39

Non Recurring/Other 3,091 2,262 90 278 398

Working Cap. Changes 118 21 13 98 83

Cash Flow From Operations 73 202 (41) 192 416

Capital Expenditure (1,120) (1,203) (1,646) (635) (491)

Investments/Sale of Assets 668 1,068 32 23 12

Cash Flow From Investing (452) (135) (1,614) (612) (479)


Net Borrowings 683 (26) 487 391 237

Dividends Paid & Other (42) 0 3 (7) (31)

Cash Flow From Financing 641 (26) 490 383 206

Net Change in Cash 257 15 (1,165) (37) 143

Free Cash Flow (1,047) (1,001) (1,687) (443) (75)


Cash & Equivalents 1,582 1,730 565 528 671

Total Current Assets 3,545 2,496 1,366 1,586 1,946

PP&E & Mining Assets 1,693 2,740 4,380 4,972 5,424

Investments in associate 0 0 0 0 0

Assets held for sale 1,018 0 0 0 0

Other (431) 482 482 482 482

Total Assets 5,825 5,718 6,227 7,040 7,852

Short Term Debt 503 181 181 181 181

Current Liabilities 746 638 686 1,041 1,340

Long Term Debt 2,608 2,911 3,398 3,788 4,025


Copper Price ($/lb) 3.11 2.71 2.89 2.92 2.50 Total Liabilities 3,410 3,614 4,149 4,895 5,431

Silver Price ($/oz) 19.1 16.7 17.6 18.6 18.5 Shareholder Equity 2,416 2,104 2,078 2,145 2,421


Zinc Price ($/lb) 0.98 0.95 0.95 0.95 0.95 Working Capital 2,799 1,858 679 545 605

Exchange Rate (US$/£) 1.65 1.50 1.50 1.50 1.50 Net Debt (Cash) 954 962 2,614 3,041 3,135

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Core Assets Boschekul Aktogay Cash Cost AISC

Copper Production (kt) Net Cash Cost / AISC ($/lb Cu)

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KAZ Minerals Kazakhmys Copper EBITDA Margin

Group EBITDA ($m) EBITDA Margin

Kaz Minerals 9 April 2015









9 April 2015

BUY

Current Share Price 3pTarget Price 10pMarket Capitalisation £7mShares In Issue 231mRIC/BLBG MIRL.L/MIRL LNAvg. Daily Volume (3M) 355,111



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Share Price

Minera IRLRelat ive to UK Market


Absolute -3 22 -58

Relative -4 12 -60


Minera IRLEstimate Changes

All Rests on Ollachea


● Company Snapshot. AIM/TSX-listed junior gold producer focused in Latin America.It’s assets comprise the 20kozpa Corihuarmi mine in Peru and the 100kozpa Ollacheaproject in Peru.

● Investment Thesis. Growth & upside - Growth to +100kozpa in 2017 at cash costsof <$600/oz. Production at Corihuarmi is reducing due to lower grades, offset by highertonnage and recovery through the pads. Exploration at satellite deposits has extendedLOM to H1 2017. Don Nicolas sold for $10m. Ollachea expected to start Q4 2016 (likelylater), subject to financing of $165m capex, with construction permit now received.Upside from the 0.9Moz Concurayoc Zone, plus potential to extend at depth and alongstrike; could increase LOM and/or increase production by 20-30kozpa. Financingremains key - Cash of $1m at end Q1, plus a $2m working cap facility. A $100m loanfacility has been offered by Macquarie but not taken up (inc. consolidating existing$30m debt facility), leaving potentially $110m to finance Ollachea. Minera is pursuinga range of avenues - royalty streams, JV partners, offtake and equity. Expected tocomplete in Q2.

● Guidance. 2015: 22koz (prev. 20koz).

● Preview FY. Production at Corihuarmi 23.3koz as announced previously. Cash costsof $874/oz. EPS -18c, down y-o-y (NPAT -$40m). EBITDA $3m. Cash down at $2.5m;$30m in debt. We look for progress on financing for Ollachea. Q1 production downslightly at 5.7koz.

● Valuation. 1x P/NAV (bottom end of 1-2x NAV gold producers).

● Risks. High: Financing and balance sheet, development risk, Argentina & Peru politics.




Minera IRL Ticker MIRL.L Market Capitalisation £7m Financial Year End Dec




Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS ($/sh) (0.19) (0.18) (0.02) (0.06) 0.01

Corihuarmi (Peru) 10% 15% 6 0.02 0.02 EPS Growth -969% 7% 88% -214% 119%

Ollachea (Peru) 12% 202% 83 0.31 0.21 P/E n.m n.m n.m n.m 3.8x

Exploration Properties 0% 0 0.00 0.00 CFPS ($/sh) 0.00 (0.02) (0.01) (0.04) 0.23

Sub-total 90 0.33 0.22 P/CFPS 67.8x n.m n.m n.m 0.2x

Cash & Equivalents 8% 3 0.01 0.01 FCFPS ($/sh) (0.02) (0.07) (0.29) (0.51) 0.21

Debt (67%) (28) (0.10) (0.07) P/FCFPS n.m n.m n.m n.m 0.2x

Corporate G&A / Other (58%) (24) (0.09) (0.06) FCF Yield -46% -142% -612% -1096% 449%

Total 41 0.15 £0.10 EV/EBITDA n.m n.m n.m n.m 0.3x

Current NAV Multiple (Implied) 0.30x EBITDA Margin -1% 3% -2% -28% 20%

VALUATION Target Multiple 1.0x £0.10 Dividend Per Share ($/sh) 0.00 0.00 0.00 0.00 0.02

Dividend Yield 0.0% 0.0% 0.0% 0.0% 35.4%

Return on Assets (ROA) -18% -25% -2% -5% 1%


Return on Capital Employed (ROCE) 0% 1% 0% -2% 10%

Net Debt/EBITDA 4.2x 7.0x 1.5x -28.4x 1.3x


Interest Cover n.m -6.7x n.m n.m -0.4x

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Shares Outstanding (m) 174 225 226 236 236

Base case gold price forecast 0.10 (0.02) (0.01) Income Statement 2013 2014 2015F 2016F 2017F

Base case +10% 0.22 (0.02) 0.00 Revenue 36 30 26 24 155

Base case -10% (0.02) (0.02) (0.01) Cost of Sales (23) (21) (20) (20) (75)

Flat gold price (at spot $1,200/oz) 0.10 (0.02) (0.01) G&A (8) (7) (5) (5) (5)

News Catalysts H1 2014 H2 2014 2015 2016 Exploration (0) (0) (0) (0) (0)

Ollachea financing Other 1 1 (0) (3) 0

Ollachea construction permit EBITDA 5 3 2 (5) 74

Cayhua feasibiilty results (Corihuarmi) DD&A (5) (2) (2) (2) (43)

Ollachea development EBIT (1) 1 (1) (7) 31

Ollachea production starts H2 Net Interest Expense (31) (7) (4) (9) (12)

PBT (32) (6) (4) (16) 19

Reserves & Resources (attributable) Tonnage Grade Gold EV/oz Non-Recurring Items/Other (0) (32) 0 0 0

Reserves (P&P) Moz 10 3.6 1.2 20 Taxes/Recovery (2) (2) 1 5 (6)

Resources (M&I) Moz 23 2.4 1.8 13 Net Profit (Loss) - attributable (34) (40) (5) (16) 3

Resources (Total) Moz 44 2.3 3.4 7 Minority Interest 0 0 2 5 10

Production & Cost 2014 2015F 2016F 2017F Cashflow 2013 2014 2015F 2016F 2017F

Gold Production (consolidated) 000oz 23 22 19 126 Net Profit (Loss) (34) (40) (3) (11) 13

Gold Production (attributable) 000oz 23 22 19 120 DD&A 5 2 2 2 43

EV/oz Production (attributable) $/oz Au 1,487 1,572 1,798 290 Non Recurring/Other 34 40 2 5 18

Cash Operating Costs $/oz Au 705 806 893 495 Working Cap. Changes (1) (3) (1) 0 (1)

Total Cash Cost (net by-products) $/oz 874 903 1,047 561 Cash Flow From Operations 0 (5) (1) (9) 55

All-in Sustaining Cost $/oz 1,172 1,141 1,322 642 Capital Expenditure (4) (10) (63) (112) (5)

Exploration & Other (18) 12 (4) (10) (10)

Cash Flow From Investing (22) 2 (67) (122) (15)

Equity Issues (Net of Costs) 14 (0) 90 0 0


Dividends Paid & Other 0 (2) 0 0 (4)

Cash Flow From Financing 19 3 140 70 (34)

Net Change in Cash (3) 0 71 (61) 6

Free Cash Flow (4) (15) (65) (121) 50




PP&E & Intangibles 174 136 201 322 294


Other 7 8 8 8 8

Total Assets 190 156 291 349 352







Exchange Rate (US$:£) 1.65 1.50 1.50 1.50 1.50 Total Liab. & S/Holder Equity 190 156 291 349 352

Working Capital (30) (22) 78 16 23

Net Debt (Cash) 22 24 3 134 99

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Minera IRL 9 April 2015









9 April 2015

BUY

Current Share Price 183pTarget Price 250pMarket Capitalisation £943mShares In Issue 515mRIC/BLBG PDL.L/PDL LNAvg. Daily Volume (3M) 1,074,673Net Cash/(Debt) (m) (06/14F) $(125.6)m



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Petra DiamondsRelat ive to UK Market


Absolute -2 -5 23

Relative -3 -12 17


Petra DiamondsEstimate Changes

Sparkling Resilience

We maintain our BUY recommendation and 250p TP despite our revised commodityprice forecasts and changes to our model.

● Company Snapshot. FTSE 250 mid-tier diamond producer with 6 operations in SouthAfrica and Tanzania. Large 300Mct resource base and it's two main mines, Cullinanand Finsch, make up 75% of revenues. Also some early stage exploration in Botswana.

● Investment Thesis. Preferred diamond play - Long term investment with premiumquality management and assets, plus growth into a firm diamond market. GradeBoost Coming - Gradual production increase to 5Mcts by 2019 and increasing gradeas Cullinan and Finsch move into undiluted kimberlite ore (Cullinan grade going to50cpht from 31cpht; 2.2Mcts pa, Finsch 60cpht, from 37cpht; 2Mcts pa) which shouldincrease margins. Production to increase by 2019 at Kimberley underground (100kcts),Koffiefontein (105kcts) and Williamson (300kcts). Upside beyond FY19 with excessore handing capacity at Cullinan and Finsch. Fancy upside - Revenues H2 weighteddue to seasonality, with more tenders. Upside for specials from Cullinan (average 1-2pa at c.$15-25m), which go straight to the bottom line. Balance sheet steady - Costswell controlled despite inflation, labour and power issues. Margins to increase to 50%,from 40%. Funds continue to be well managed and we see limited pressure to executegrowth plans which are fully funded; peak capex this year. First Divi- 2p for FY15,starter yield of only 1% but progressive policy in place.

● Guidance. FY15: Production 3.3Mcts (June YE). Cullinan - price $130/ct, Finsch -price $90/ct.

● Preview - Interims (Late Feb). Production 835kcts, a return to a similar level as Q1 andon track for FY15 guidance of 3.3Mcts and target of 5Mcts by FY19. Sales 1,053kcts,up y-o-y (Q3 2014 905kcts). Sales revenue $137m. Results will be H2 weighted due tothe usual seasonal timing of tenders, which should see a solid finish to FY15. Continuedramp up at Finsch and Cullinan. Further potential grade volatility at Cullinan. We expectthe diamond market to have firmed from the dip in Q1 but with overall growth remainingmuted. Short-term issues with mid-stream manufacturers and cutters being squeezedto persist, but long term underpinned by US market and continued growth from China.

● Valuation. Blend of 1x NAV/5x P/CF (bottom of 5-15x P/CF range for diamond miners).

● Risks. Low: South Africa labour & power. Delivery on growth programme.




Petra Diamonds Ticker PDL.L Market Capitalisation £943m Financial Year End June





Cullinan (74%) 10% 47% 1,383 2.56 1.58 EPS Growth 54% 29% 105% 43% 24%

Finsch (74%) 10% 44% 1,289 2.39 1.47 P/E 30.6x 23.7x 11.6x 8.1x 6.5x

Williamson (75%) 10% 6% 171 0.32 0.20 CFPS ($/sh) 0.38 0.35 0.56 0.78 0.70

Koffiefontein (74%) 10% 5% 155 0.29 0.18 P/CFPS 7.7x 8.4x 5.3x 3.8x 4.2x

Kimberley U/G (74%) 10% 1% 37 0.07 0.04 FCFPS ($/sh) (0.10) (0.07) 0.04 0.26 0.40

Fissures (74%) 10% (0%) (2) (0.00) (0.00) P/FCFPS (30.9)x (45.4)x 76.9x 11.2x 7.4x

Sub-total 3,033 5.61 3.46 FCF Yield -3% -2% 1% 9% 14%

Corporate G&A / Other 10% (3%) (83) (0.15) (0.10) EV/EBITDA 9.9x 8.9x 5.8x 4.0x 3.0x

Cash & equiv (est) 5% 153 0.28 0.17 EBITDA margin 36% 36% 49% 55% 56%

Debt (est) (6%) (172) (0.32) (0.20) Dividend Per Share ($/sh) 0.00 0.03 0.04 0.04 0.09

Total 2,931 5.42 £3.35 Dividend Yield 0.0% 1.0% 1.2% 1.5% 3.1%

Current NAV multiple (Implied) 0.55x Return on Assets (ROA) 6% 7% 12% 16% 18%

Earnings value $/sh £/sh Return on Equity (ROE) 11% 12% 21% 24% 23%

Cash flow per share (12 months forward) 0.36 0.22 Return on Capital Employed (ROCE) 13% 13% 19% 25% 26%

Current P/CF multiple (implied) 8.2x Net Debt/EBITDA 0.7x 0.2x 0.2x -0.2x -0.7x

Blended valuation Target Multiple Weight £/sh Gearing (Debt/Equity) 25% 27% 26% 15% 4%

NAV valuation 1.00x 50% £3.35 Interest Cover 21.9x 18.3x 25.5x 38.5x 117.5x

Cash flow valuation 7.5x 50% £1.66 Shares Outstanding (m) 511 515 515 515 515

VALUATION £2.51 Income Statement (US$m) 2014 2015F 2016F 2017F 2018F

Sensitivity Analysis Valuation NAV/sh 16F EPS 16F CFPS Revenue 472 500 586 722 843

Base case diamond price forecast £2.51 £3.35 $0.26 $0.56 Cost of sales (320) (343) (321) (350) (404)

Base case +10% £2.51 £3.36 $0.26 $0.56 G&A (14) (15) (14) (14) (15)

Base case -10% £2.50 £3.33 $0.25 $0.55 Other (10) (1) 1 1 1

Flat diamond prices (Rough Index @ 180) £1.92 £2.87 $0.14 $0.34 EBITDA 170 181 288 399 470

News catalysts FY 14 FY 15 FY 16 DD&A 42 39 37 42 45

Potential value-add from 'specials' EBIT 128 142 251 358 425

Cullinan - C-Cut production starts Net finance income (expense) (4) (14) (4) (4) (0)

Finsch - development of Block 5 SLC PBT 124 129 247 354 424

Finsch - development of SWC Non-Recurring Items/Other (16) 0 0 0 0

Koffiefontein - Production from Ebenhaezer pit Tax (41) (44) (69) (99) (109)

Reserves & Resources (attributable) Tonnes Grade Carats EV$/ct Net Profit (Loss) - attributable 50 64 132 189 234

Reserves (P&P) 94 Mt 42 Mt 40 Mt 39 Minority Interest 18 20 46 66 82

Resources (M&I) 352 Mt 47 Mt 165 Mt 9 Cashflow (US$m) 2014 2015F 2016F 2017F 2018F

Production & cost (cons) 2014 2015F 2016F 2017F 2018F Net Profit (Loss) 68 85 178 255 316

Diamonds produced (kct) 3,110 3,306 3,301 3,870 3,918 Working Cap. change 20 46 3 3 0

EV$/ct production 497 468 468 400 395 DD&A 42 43 37 42 45

Total Cash Cost ($/ct) 79 78 70 73 78 Non Recurring/Other 67 9 70 100 1

All-in Sustaining Cost ($/ct) 84 84 76 78 82 Cash Flow From Operations 196 182 287 400 362


Acquis./investments/adjustments (2) 92 0 0 0


Borrowings 12 38 27 (60) (116)

Capital stock 3 (4) (1) (1) 0

Dividends paid & other 7 0 (37) (47) (31)

Cash Flow From Financing 22 34 (11) (107) (146)

Net Change in Cash 7 79 80 172 131

Free Cash Flow (13) (47) 91 280 277

Balance Sheet (US$m) 2014 2015F 2016F 2017F 2018F



PP&E & Mining Interests 839 959 1,118 1,196 1,236


Other 62 2 3 3 4

Total Assets 1,099 1,270 1,452 1,617 1,790



Assumptions 2014 2015F 2016F 2017F 2018F Long Term Debt 159 197 224 164 49

Diamond Price (weighted avg, $/ct) 138 130 167 188 213 Other Long Term Liabilities 202 216 217 218 220

Cullinan - average $/ct (real) 185 169 155 167 178 Total Liabilities 467 543 585 542 430

Finsch - average $/ct (real) 99 88 124 144 170 Shareholder Equity 596 676 780 934 1,146

Polished Price Index 144 138 135 138 141 Minority interest 36 50 87 141 214

Rough Price Index 238 234 236 249 245 Total Liab. & Equity 1,099 1,270 1,452 1,617 1,790

South Africa & Tanzania inflation 0.0% 0.0% 1.9% 4.0% 4.0% Working Capital (2) (48) (51) (54) (54)

Exchange rate (US$/ZAR) 10.39 11.43 11.63 10.69 9.63 Net Debt (Cash) 125 37 53 (81) (327)

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Petra Diamonds 9 April 2015









9 April 2015

HOLD

Current Share Price 4,852pTarget Price 5,100pMarket Capitalisation £4.5bnShares In Issue 93mRIC/BLBG RRS.L/RRS LNAvg. Daily Volume (3M) 613,991Net Cash/(Debt) (m) (12/15F) $168.6m



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Share Price

Randgold ResourcesRelat ive to UK Market


Absolute 5 0 3

Relative 5 -8 -2


Randgold ResourcesEstimate Changes

Reaching a Peak

We maintain our HOLD recommendation and increase our TP to £51, from £49, dueto our new commodity price forecasts and changes to our model.

● Company Snapshot. FTSE 100 mid-tier African gold producer. Produces 1.2Mozpafrom 5 mines in Mali (Loulo-Gounkoto, Morila), Cote d'Ivoire (Tongon) and DRC (Kibali).Also has the Massawa project in Senegal, plus a large exploration portfolio and anumber of JVs with juniors.

● Investment Thesis. Industry leader - Peer-leading management and assets, with solidorganic growth and upside, while not without its political and technical challenges.Well-deserved premium rating for an impressive track record in creating shareholdervalue. Growth peaking - Loulo-Gounkoto growing to 650-700kozpa moving into highergrade areas; Kibali is firing on all cylinders with production moving to full 600kozpa(RRS 45%). Tongon appears the ongoing bug-bear with recovery and power issues(260-300kozpa). We see upside to 1.3Mozpa at $600/oz (AISC $750-800/oz) on grade,optimisation and minor expansions. Cash to come: M&A or divi? - Capex has peakedso will come down sharply. RRS want to build the coffers up to $500m to cover the nextmine build. It recently increased its debt facility to $400m, which appears to be a moveto capitalise on a faltering industry; despite its strict filters, M&A could be a real prospectthis year. We see substantive cash generation and chance of dividend upgrades in2015. Organic trail - Exploration is now focusing on discovery of elephants andbrownfield targets to improve mine plans. We see lots of prospectivity, particularly inMali and DRC. Political challenges - African political issues are ongoing, particularlyin Cote d'Ivoire and the DRC and we could see further wobbles. However, a peer-leading approach to African politics should navigate through the crossfire.

● Guidance. 2015: 1.2-1.26Moz at TCC of $650-700/oz. Capex $330m.

● Preview Q1 (7 May). Production flat q-o-q at 289koz at a cash cost of $693/oz (Q4 2014287koz at $712/oz). Loulo-Gounkoto slightly up on grade and ratio switches to morefrom Loulo; Tongon stays with elevated tonnage and grade with recoveries continuingto improve with the new crusher and expanded flotation circuit; Morila down slightlyfrom a strong Q4 when the pushback started. Kibali down at 166koz as grade comesdown. EPS flat q-o-q at $0.48 with a slightly higher gold price (NPAT $45m, Q4 2014$0.49). Balance sheet up at $114m cash and no debt as Kibali capex comes off butVAT receivables remain outstanding.

● Valuation. Blend of 2x NAV/15x P/CF (top of 1-2x NAV/5-15x P/CF for golds).

● Risks. Mali, Cote d'Ivoire & DRC politics, mining code & tax.




Randgold Resources Ticker RRS.L Market Capitalisation £4,493m Financial Year End Dec

HOLD Share Price £48.52 Enterprise Value (EV) £4,432m Reporting Currency US$




Loulo - Mali (80%) 10% 30% 1,129 12.19 8.13 EPS Growth -35% -16% -25% 11% 24%

Gounkoto - Mali (80%) 10% 20% 755 8.15 5.43 P/E 24.1x 28.7x 38.4x 34.4x 27.8x

Tongon - Cote D'Ivoire (89%) 10% 20% 768 8.29 5.53 CFPS ($/sh) 5.04 3.43 4.62 5.08 5.65

Morila - Mali (40%) 10% 0% 18 0.20 0.13 P/CFPS 14.4x 21.2x 15.8x 14.3x 12.9x

Kibali - DRC (45%) 12% 28% 1,044 11.28 7.52 FCFPS ($/sh) (2.86) 0.94 2.44 3.76 4.59

Massawa - Senegal (83%) 12% 3% 109 1.18 0.78 P/FCFPS n.m 77.6x 29.9x 19.4x 15.8x

Sub-total 3,823 41.29 27.52 FCF Yield -4% 1% 3% 5% 6%

Cash & Equivalents 2% 91 0.98 0.66 EV/EBITDA 9.1x 8.8x 10.0x 8.8x 7.8x

Debt 0% 0 0.00 0.00 EBITDA Margin 31% 33% 27% 28% 32%

Corporate G&A / Other (4%) (149) (1.61) (1.07) Dividend Per Share ($/sh) 0.50 0.47 0.60 0.63 0.83

Total 3,765 40.66 £27.10 Dividend Yield 0.7% 0.6% 0.8% 0.9% 1.1%

Current NAV Multiple (Implied) 1.79x Return on Assets (ROA) 8% 7% 5% 5% 6%

Cash Flow Value $/sh £/sh Return on Equity (ROE) 8% 6% 3% 4% 4%

CFPS (1 year forward) 4.73 3.16 Return on Capital Employed (ROCE) 11% 11% 8% 9% 10%

Current P/CF multiple (implied) 15.4x Net Debt/EBITDA -0.1x -0.2x -0.4x -0.8x -1.2x

Blended Valuation Target Multiple Weight Gearing (Debt/Equity) 0% 0% 0% 0% 0%

NAV valuation 2.0x 50% £54.21 Interest Cover 0.1x 0.0x 0.0x 0.0x 0.0x

Cash Flow valuation 15.0x 50% £47.34 Shares Outstanding (m) 92 93 93 93 93

VALUATION £50.77 Income Statement 2013 2014 2015F 2016F 2017F

Revenue 1,138 1,087 1,074 1,220 1,271

Sensitivity Analysis NAV (£/sh) 15F EPS 15F CFPS Cost of Sales (609) (627) (712) (759) (739)

Base case gold price forecast 27.10 1.90 4.62 G&A & Exploration (49) (37) (60) (50) (52)

Base case +10% 34.09 2.92 5.78 Share of JV Profits, Other 6 81 140 91 89

Base case -10% 20.13 0.87 3.45 EBITDA 485 504 442 503 569

Flat gold price (at spot $1,200/oz) 26.23 1.90 4.62 DD&A (131) (147) (152) (165) (160)

News Catalysts Q1 14 Q2 14 Q3 14 Q4 14 EBIT 355 357 290 337 409

Kibali sulphide production starts Share of JV profits, Net Interest 48 (4) 0 2 1

Cote d'Ivore New Mining Code PBT 402 353 290 339 410

Kibali underground stoping begins Non-Recurring Items/Other (49) (36) (56) (59) (65)

Gounkoto u/g trade-off study Taxes/Recovery (77) (82) (58) (85) (102)

Tongon float circuit installed Net Profit (Loss) - attributable 277 235 176 196 242

Reserves & Resources (attributable) Gold Silver Gold Eq EV/oz Minority Interest 47 36 56 59 65

Reserves (P&P) Moz 15.0 0 15.0 443 Cashflow 2013 2014 2015F 2016F 2017F

Resources (M&I) Moz 22.0 0 22.0 302 Net Profit (Loss) 324 271 232 254 307

Production & Cost 2014 2015F 2016F 2017F DD&A 131 147 152 165 160

Gold Production (consolidated) 000oz 1,147 1,211 1,301 1,307 Non-Cash Items/JV Dividends 79 60 112 141 159

Gold Production (attributable) 000oz 995 1,055 1,126 1,130 Working Cap. Changes (47) (67) (11) (6) (1)

EV/oz Production $/oz Au 6,685 6,299 5,905 5,885 Cash Flow From Operations 464 318 428 470 523

Total Cash Cost (net by-products) $/oz 698 684 686 647 Capital Expenditure (exc. JVs) (728) (231) (202) (122) (98)

All-in Sustaining Cost $/oz 805 756 757 776 Acquis./Investments 0 9 0 0 0






Net Change in Cash (336) 45 89 238 298

Free Cash Flow (264) 87 226 348 425



Total Current Assets 406 396 507 754 1,054

PP&E (inc. JVs) 2,778 2,932 3,050 3,028 2,985


Other 191 205 205 205 205

Total Assets 3,377 3,533 3,761 3,987 4,243






Assumptions (Real) 2014 2015F 2016F 2017F LT Shareholder Equity 3,058 3,303 3,520 3,742 3,998


Silver Price ($/oz) 19.08 16.7 17.6 18.6 18.5 Working Capital 168 254 354 598 897

Exchange Rate (US$:£) 1.65 1.50 1.50 1.50 1.50 Net Debt (Cash) (44) (91) (172) (410) (708)

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Randgold Resources 9 April 2015









9 April 2015

BUY

Current Share Price C$0.90Target Price C$1.75Market Capitalisation C$161,889,480Shares In Issue 180mRIC/BLBG TMM.TO/TMM CNAvg. Daily Volume (3M) 642,035



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Timmins Gold


Absolute -15 -32 -43

Relative -16 -36 -46


Timmins GoldEstimate Changes

Platform for Growth

We maintain our BUY recommendation and increase our TP to C$1.75 from C$1.60,due to our revised commodity price forecasts and changes to our model.

● Company Snapshot. TSX/NYSE-listed junior gold producer operating in Mexico. It’smain asset is the San Francisco gold mine in Sonoro State which produces 120kozpa. It recently acquired two development projects, Caballo Blanco and Ana Paula, alsoin Mexico.

● Investment Thesis. Robust producer - San Francisco has a solid production trackrecord producing c.120koz pa at an operating cost of below $800/oz. The mine is asimple heap leach operation with very few moving parts. Free Cash Flow to Return.Once growth capex on Caballo Blanco and Ana Paula is spent, Timmins shouldreturn to generating significant free cash flow, even at current gold prices. CoiledSpring. Timmins is highly leveraged to the gold price. The combination of an unhedgedproducer with strong cash flow and a moderate but stable opex base, provides acompelling call on gold price recovery. A modest move to $1,300 gold (vs NUMe$1,200) would increase our FY15 EPS forecast by 125%. Growth Story - TMM is acheap way to buy into a future mid-tier producer. Timmins could potentially doubleproduction within the next two years to 325koz pa. Caballo Blanco and Ana Paula willbe developed to Timmins' own time-line to manage the capital spend. Organic Growth.Timmins is planning to capitalise on drilling success late last year which identified high-grade feeders in the San Francisco pit, along strike and down dip. Exploration Play.Timmins has a Mexican focused 200,000ha under-explored land package.

● Guidance. FY guidance remains 115-125koz at $800-850/oz at a stable 25ktpdcrushing rate and 0.59g/t head-grade.Preview Q1. Production 29koz gold at $876/ozcash operating cost (after by-product credits). 2,250t processed at 0.59g/t Au headgrade.

● Valuation. 1.25x NAV and 7.5x CF (middle of 1-2x NAV and 5-15x CF range for goldproducers).

● Risks. Moderate-high. Mexican tax changes, project delivery, financing, securityissues in Guerrero State.




Timmins Gold Ticker TMM.TO Market Capitalisation C$162m Financial Year End Dec

BUY Share Price C$0.90 Enterprise Value (EV) $116m Reporting Currency $

C$1.75 Implied Return 94% Net Debt (Cash) -£17m Shares in Issue 180m


Net Asset Value Disc Rate NAV (%) $m C$m C$/sh EPS ($/sh) 0.11 0.06 0.03 0.02 0.04

San Francisco (100%) 8% 54% 282 353 1.23 EPS Growth n.m -46% -49% -29% 83%

Ana Paula (100%) 10% 24% 127 159 0.56 P/E 6.8x 12.6x 25.0x 35.0x 19.2x

Caballo Blanco (100%) 10% 10% 50 62 0.22 CFPS ($/sh) 0.36 0.20 0.08 0.07 0.11

Resources off-plan, Exploration 18% 95 118 0.41 P/CFPS 2.0x 3.5x 9.0x 10.4x 6.6x

Sub-total 554 692 2.42 FCFPS ($/sh) (0.00) (0.02) 0.01 (0.20) (0.35)

Cash & Equivalents 5% 28 35 0.12 P/FCFPS n.m n.m 124.4x n.m n.m

Debt (2%) (11) (14) (0.05) FCF Yield 0% -2% 1% -23% -39%

Corporate G&A / Other (9%) (48) (60) (0.21) EV/EBITDA 2.1x 2.9x 3.9x 3.9x 1.9x

Total 522 653 2.28 EBITDA Margin 35% 26% 21% 20% 28%


Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0%

Cash Flow Value $/sh C$/sh Return on Assets (ROA) 6% 3% 2% 2% 2%

CPS (1 year forward) 0.07 0.09 Return on Equity (ROE) 9% 4% 3% 3% 4%

Current P/CF multiple (implied) 10.4x Return on Capital Employed (ROCE) 19% 8% 4% 4% 6%

Blended Valuation Target Multiple Weight Net Debt/EBITDA -0.1x -0.4x -0.5x 0.3x 2.0x

NAV valuation 1.25x 50% $2.85 Gearing (Debt/Equity) 10% 5% 5% 4% 41%

Cash flow valuation 7.5x 50% $0.65 Interest Cover 0.0x -0.1x -0.1x -0.2x -0.3x

VALUATION $1.75 Shares Outstanding (m) 144 180 283 340 374

Sensitivity Analysis NAV (p/sh) 15F EPS 15F CFPS Income Statement 2013 2014 2015F 2016F 2017F

Base case gold price forecast 2.28 0.02 0.07 Revenue 161 154 143 152 216

Base case +10% 2.81 0.06 0.11 Cost of Sales (88) (98) (105) (112) (143)

Base case -10% 1.28 (0.01) 0.03 G&A (11) (14) (10) (10) (12)

Flat Gold Price (at spot $1,200/oz) 2.05 0.03 0.07 Other (5) (2) 2 0 0

News Catalysts 2014 2015 2016 2017 2018 EBITDA 57 41 30 30 61

San Francisco mine plan update DD&A (15) (19) (17) (18) (31)

San Francisco regional drilling EBIT 41 22 12 12 31

Caballo Blanco - infill, Met testing Net Interest Expense (1) (2) (2) (2) (10)

CB & AP - PEA Optimisation, Permitting PBT 40 20 11 10 20

Caballo Blanco - Production (H2) Non-Recurring Items/Other 0 0 0 0 0

Ana Paula - Production Taxes/Recovery (3) (10) (3) (3) (6)

Reserves & Resources (La India attributable) Gold EV/oz Net Profit (Loss) - attributable 15 9 7 7 14

Reserves (P&P) Moz 1.6 73 Minority Interest 0 0 0 0 0

Resources (M&I) Moz 4.3 27 Cashflow 2013 2014 2015F 2016F 2017F

Resources (M, I&I) Moz 6.6 18 PBT 40 20 11 10 20

Production & Cost (attributable) 2013 2014F 2015F 2016F DD&A 15 19 17 18 31

Gold Production 000oz 120 120 118 125 Non Recurring/Other 8 3 2 2 10

Gold Eq Production 000oz 121 121 119 126 Working Cap. Changes (11) (9) (9) (6) (21)

EV/oz Production $/oz Au 962 958 978 925 Cash Flow From Operations 52 33 21 24 41

Operating Cash cost $/oz 717 790 876 861 Capital Expenditure (53) (36) (19) (92) (172)

Total Cash Cost $/oz 727 799 885 870 Acquis./Investments 0 (11) 0 0 0

All-in Sustaining Cost $/oz 872 925 999 919 Cash Flow From Investing (53) (47) (19) (92) (172)



Other (1) (1) (2) (2) 110

Cash Flow From Financing (1) 19 (2) 45 138

Net Change in Cash (1) 4 (0) (24) 7

Free Cash Flow (0) (3) 1 (69) (131)






Other 0 0 0 0 (0)

Total Assets 269 312 324 380 569







Assumptions (Real) 2014 2015F 2016F 2017F LT Total Liab. & S/Holder Equity 269 312 324 380 569

Gold Price ($/oz) 1,266 1,205 1,200 1,200 1,200 Working Capital 35 52 58 37 58

Silver Price ($/oz) 19.1 16.7 17.6 17.6 18.5 Net Debt (Cash) (6) (16) (16) 8 121

Exchange Rate (US$/£) 1.65 1.50 1.50 1.50 1.50

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Attrib. Gold Production ('000oz) Total Cash Cost / AISC ($/oz )

Timmins Gold 9 April 2015









9 April 2015

ADD

Current Share Price 20pTarget Price 23pMarket Capitalisation £162mShares In Issue 808mRIC/BLBG WLFE.L/WLFE LNAvg. Daily Volume (3M) 360,759Net Cash/(Debt) (m) (06/15F) £(49.9)mBroker Yes



2422201816141210

Share Price

Wolf MineralsRelat ive to UK Market


Absolute 6 42 -6

Relative 6 31 -10


Wolf MineralsEstimate Changes

Tantalizing Tungsten

We maintain our ADD recommendation and 23p TP, despite our new commodityprice forecasts and changes to our model.

● Company Snapshot. AIM/ASX-listed emerging UK tungsten producer. It owns theHemerdon mine in Devon, the third largest tungsten project in the world, which is fullypermitted and financed, starting production in Q3 2015.

● Investment Thesis. Ready to roll - Wolf successfully completed its A$183m (£99m)equity fundraising which, along with permitting already complete, removes the lastsignificant key risk. Construction commenced in February, marking Hemerdon’strajectory to be the first new metal mine in the UK for 45 years. Production is expected tostart in Q3 2015. Robust, simple project - Hemerdon has a substantial resource baseof 145Mt at a moderate grade of 0.19% WO3. A simple 3Mtpa open pit/gravity operationis envisaged to produce 345,000 mtu pa at a C1 cost of $109/mtu (net tin credits),at the bottom of the cost curve (AISC c.$180/mtu). Capex is expected to be £123m,giving a low capital intensity of $66/tpa. The project is located in a mining town withexcellent infrastructure, being fully permitted with no environmental concerns. Offtakeand marketing are secured. Plenty of upside - As we roll forward into production, wesee a 36% upside to our TP over the next 3 years. Mine life has been extended by3 years, beyond the current 9 years by expanding the pit and steepening the walls.Wolf has also been given the temporary go-ahead for 24/7 operation for 6 months.If it can operate within permitted noise levels, it will apply for a permanent change,growing production by 27% to 440,000mtu pa, increasing our TP by 5p. We also seepotential for an underground operation, opportunities to optimise the plant and upsidefrom country rock processing and aggregate sales. Assuming this upside, our bestcase TP increases by 34%. Profit potential - From FY16 onwards, we forecast Wolfhas the potential to generate A$60-80m in profits (3-4x P/E), EBITDA of A$100-110m(c.2x EV/EBITDA), FCF of $70-90m (3-4x P/CF) and dividends with a yield of +7%.

● Attractive LT market. Tungsten is classed as a strategic metal due to its uniqueproperties (used in drill bits etc). The market is forecast to move into deficit with supplyunable to keep up with rising demand and limited projects on the horizon. We are yet tosee a price response as prices have drifted lower to $255/mtu, on a lack of consistentbuying, but experts forecast a pick up in H2 (NUMe LT price is $450/mtu).

● Preview FY15. Financials academic. We forecast capex spend of A$144m. We expectsome fx benefit, with the balance sheet having net debt of A$51m, depending on timingof debt drawdown and payment of key capital items.

● Valuation. Blend of 1x NAV/7x 2016 P/E (bottom of 7-12x P/E range for industrials).

● Risks. Low: Project delivery, tungsten market.




Wolf Minerals Ticker WLFE Market Capitalisation £160m Financial Year End June

ADD Share Price £0.20 Enterprise Value (EV) £158m Reporting Currency A$



Net Asset Value Disc Rate NAV (%) $m $/sh £/sh EPS (A$/sh) (0.04) (0.01) (0.01) 0.04 0.07

Hemerdon 10% 112% 343 0.42 0.28 EPS Growth -22% 73% 51% 839% 86%

Sub-total 343 0.42 0.28 P/E n.m n.m n.m 9.4x 5.0x

Cash & Equivalents 10% 31 0.04 0.02 CFPS ($/sh) (0.02) (0.01) 0.04 0.07 0.10

Debt (9%) (28) (0.03) (0.02) P/CFPS n.m n.m 10.6x 5.7x 3.8x

Corporate G&A / Other (13%) (40) (0.05) (0.03) FCFPS ($/sh) (0.29) (0.19) 0.03 0.06 0.10

Total 306 0.38 £0.25 P/FCFPS n.m n.m 12.0x 5.9x 3.9x

Current NAV Multiple (Implied) 0.79x FCF Yield -77% -51% 8% 17% 26%

Earnings Value A$/sh £/sh EV/EBITDA n.m n.m n.m 4.7x 3.1x

EPS (2 year forward) 0.06 0.03 EBITDA Margin 0% 0% -1% 29% 41%

Current P/E multiple (implied) 6.5x Dividend Per Share ($/sh) 0.00 0.00 0.00 0.01 0.02


NAV valuation 1.00x 50% £0.25 Return on Assets (ROA) -1% -3% -1% 12% 20%

Earnings valuation 7.0x 50% £0.21 Return on Equity (ROE) -2% -4% -2% 13% 21%

VALUATION £0.23 Return on Capital Employed (ROCE) -2% -3% 0% 16% 26%

Net Debt/EBITDA 19.4x -6.4x 1.4x -0.1x -0.7x


Sensitivity Analysis NAV (£/sh) 17F EPS 17F CFPS Interest Cover n.m n.m n.m -0.1x 0.0x

Base case tungsten price forecast 0.25 0.04 0.07 Shares Outstanding (m) 266 808 808 808 808

Base case +10% 0.30 0.05 0.08 Income Statement 2014 2015F 2016F 2017F 2018F


Flat tungsten price (at spot $255/mtu) 0.04 0.01 0.03 Cost of Sales 0 0 (60) (72) (76)

News Catalyst (CY) Q4 14 Q1 15 Q2 15 Q3 15 G&A (5) (8) (10) (8) (8)

Geotech Drilling (mine life extension) Exploration 0 0 0 (5) (5)

Construction Other 0 0 0 0 0

Commissioning EBITDA (5) (8) 23 64 95

Production starts DD&A 0 0 (23) (21) (20)

EBIT (5) (8) (1) 43 76

Reserves & Resources (attributable) Tonnage Grade % Tungsten EV/t Net Interest Expense 2 (1) (3) (2) (0)

Reserves (P&P) 000 mtu 36 0.18 6,426 0.04 PBT (4) (9) (4) 40 75

Resources (M&I) 000 mtu 59 0.17 10,174 12.52 Non-Recurring Items/Other 0 0 0 0 0

Resources (Total) 000 mtu 145 0.15 22,298 5.76 Taxes/Recovery 0 1 (1) (8) (15)

Production & Cost 2016F 2017F 2018F 2018F Net Profit (Loss) - attributable (4) (9) (4) 32 60

Tungsten Production 000 mtu 287 380 374 356 Minority Interest 0 0 0 0 0

Tin Production 000t 0.44 0.58 0.52 0.44 Cashflow 2014 2015F 2016F 2017F 2018F

Tungsten Eq. Production 000t 312 406 396 374 Net Profit (Loss) (4) (9) (4) 32 60

EV/mtu Production (attributable) $/t 824 623 632 663 DD&A 0 0 23 21 20

C1 Cash Cost (net by-products) $/mtu 134 116 122 132 Non Recurring/Other (1) (2) 2 (0) 0

All-in Sustaining Cost $/mtu 184 148 155 167 Working Cap. Changes 0 0 8 0 0

Cash Flow From Operations (4) (11) 29 53 80


Acquis./Investments 0 (13) 0 0 0



Net Borrowings (17) 82 (15) (40) (14)

Dividends Paid & Other 0 (5) (5) (10) (18)

Cash Flow From Financing 163 78 (20) (50) (32)


Free Cash Flow (77) (155) 25 52 78






Other 6 20 20 20 20

Total Assets 249 316 297 279 307




Tungsten Price - APT ($/mtu) 357 264 313 406 450 Other Long Term Liabilities 2 5 5 5 5

Tin Price ($/t) 21,899 12,761 15,375 16,521 20,000 Total Liabilities 28 93 78 38 24

Exchange Rate (A$:US$) 0.90 0.76 0.75 0.75 0.75 Shareholder Equity 221 223 218 241 283

Exchange Rate (US$:£) 1.65 1.50 1.50 1.50 1.50 Total Liab. & S/Holder Equity 249 316 297 279 307


Net Debt (Cash) (103) 51 33 (9) (69)

0

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500

2014 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F

Hemerdon Total Cash Cost AISC

Tungsten Production ('000 mtu, 100% basis) C1 Cash Cost / AISC ($/mtu)

Wolf Minerals 9 April 2015


Regulatory Notice & DisclaimerAureus Mining, Highfield Resources, Wolf Minerals, Condor Gold, Caledonia MiningCorp, Chaarat Gold, First Quantum Minerals, International Ferro Metals andHighland Gold are or have been during the 12-month period preceding the date ofthis research report, a client of Numis.Numis has received compensation for investment banking services from AureusMining, Highfield Resources, Wolf Minerals, Condor Gold, Caledonia Mining Corp,Chaarat Gold, First Quantum Minerals, International Ferro Metals and HighlandGold in the past 12 months.Numis and/or one or more of its affiliates has managed or co-managed a publicoffering for Aureus Mining and Condor Gold in the past 12 months.

Numis and/or one or more of its affiliates may receive or may seek to receivecompensation for investment banking services from Minera IRL, Aureus Mining,Highfield Resources, Wolf Minerals, Condor Gold, Caledonia Mining Corp, ChaaratGold, First Quantum Minerals, International Ferro Metals, Centamin Egypt,Ferrexpo, Randgold Resources, Fresnillo and Highland Gold in the next 3 months.As at the date of this research report, Numis and/or one or more of its affiliatesis making a market in Minera IRL, Aureus Mining, Wolf Minerals, BerkeleyResources, Condor Gold, Gemfields, Dalradian Resources, Caledonia Mining Corp,Chaarat Gold, First Quantum Minerals, International Ferro Metals, Centamin Egypt,Ferrexpo, Randgold Resources, Fresnillo, Highland Gold, Hochschild Mining,Acacia Mining and Petra Diamonds.

Numis may rely on information barriers, such as "Chinese Walls", to control the flowof information within the areas, units, divisions, groups, or affiliates of Numis.No part of the content of this research report may be copied, forwarded or duplicatedin any form or by any means without the prior consent of Numis and Numis acceptsno liability whatsoever for the actions of third parties in this respect.Numis research is being produced in accordance with COBS 12.3 as Non-Independent Research.

The following disclosures are addressed toUS-based recipients.Analyst CertificationThe names of the research analysts who prepared this research report are shownin bold beside each company comment. They hereby certify that all of the viewsexpressed herein accurately reflect the research analysts. personal views about anyand all of the subject securities and/or issuers.The research analysts who prepared this research report also certify that no part ofthe research analysts. compensation was, is, or will be, directly or indirectly, relatedto the specific recommendations or views expressed by the research analysts inthe research report.

Important DisclosureThis research report has been prepared and approved by Numis Securities Limited("Numis"), a securities dealer in the United Kingdom. Numis is not a registeredbrokerdealer in the United States and therefore is not subject to U.S. rules regardingthe preparation of research reports and the independence of research analysts.This research report is provided for distribution solely to "major U.S. institutionalinvestors" in the United States in reliance on the exemption from registrationprovided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended.Any recipient of this research report wishing to effect any transaction to buy orsell securities or related financial instruments based on the information provided inthis research report should do so only through Numis Securities Inc. ("Numis Inc").Numis Inc. may be contacted in writing or by phone: Numis Securities Inc., 275Madison Avenue, 40th Floor, New York, NY 10016, U.S. phone (212) 277 7300.Numis Inc. is an affiliate of Numis. Under no circumstances should any recipienteffect any transaction to buy or sell securities or related financial instruments throughNumis.

Numis Inc. accepts responsibility for the contents of this research report, subject tothe terms set out below, to the extent that it is delivered to a U.S. person other thana major U.S. institutional investor.

The research analysts who prepared this research report receive compensationbased upon various factors (such as the general perception of their ability and theircommitment to their analytical work) and upon the overall revenues including theinvestment banking revenues of Numis and/or one or more of its affiliates.

Numis, Numis Inc. and/or their affiliates, directors, officers, and employees mayhave or have had interests, or long or short positions, and may at any time makepurchases or sales as a principal or agent of the subject companies mentioned orreferred to in this report.

Additional DisclosureThis Numis Securities Limited ("Numis") research report is for distribution only undersuch circumstances as may be permitted by applicable law. This research reporthas no regard to the specific investment objectives, financial situation, or particularneeds of any specific recipient, even if sent only to a single recipient. This research

report is offered solely for informational purposes and is not to be construed asa solicitation or an offer to buy or sell securities or related financial instruments,nor is it to be construed as a recommendation for Numis to effect any transactionto buy or sell securities or related financial instruments on behalf of any recipient.There is no express or implied understanding between Numis or Numis SecuritiesInc. ("Numis Inc.") and any recipient of this research report that Numis will receiveany commission income in connection with this research report. The securitiesthat may be described in this research report may not be eligible for sale in alljurisdictions or to certain categories of investors. This research report is based oninformation believed to be reliable, but it has not been independently verified and isnot guaranteed as being accurate. This research report is not guaranteed to be acomplete statement or summary of any securities, markets, reports or developmentsreferred to in this research report.

Any statements or opinions expressed in this research report are subject to changewithout notice and Numis is not under any obligation to update or keep currentthe information contained herein. All statements and opinions expressed in thisresearch report are made as of the date of this research report and are not held outas applicable thereafter. Neither Numis nor any of its directors, officers, employees,or agents shall have any liability, however arising, for any error, inaccuracy orincompleteness of fact or opinion in this research report or lack of care in thisresearch report's preparation or publication; provided that this shall not excludeliability to the extent that this is impermissible under the law relating to UK financialservices.

Investing in any non-U.S. securities or related financial instruments (includingADRs) discussed in this research report may present certain risks. The securitiesof non-U.S. issuers may not be registered with, nor be subject to the regulationof the U.S. Securities and Exchange Commission. Information on such non-U.S.securities or related financial instruments may be limited. Foreign corporations aretypically not subject to audit and reporting standards and regulatory requirementscomparable to those in effect within the United States.

Past performance is not an indication or guarantee of future performance and norepresentation or warranty, express or implied, is made by Numis with respect tofuture performance. The value of any investment or income from any securities orrelated financial instruments discussed in this research report is subject to volatilityand can fall as well as rise. Investors may not get back the full amount they originallyinvested. The value of any investment or income from any securities or relatedfinancial instruments discussed in this research report denominated in a currencyother than U.S. dollars is subject to exchange rate fluctuations that may have apositive or adverse effect on the value of or income from any securities or relatedfinancial instruments discussed in this research report.


9 April 2015

The following disclosures are addressed tonon-US-based recipients.Numis regards this document as research. It has been approved under part IVarticle 19 of The Financial Services and Markets Act 2000 (Financial Promotion)Order 2005 (the “FPO”) by Numis Securities Limited (“Numis”) for communicationin the United Kingdom only to investment professionals as that term is defined inarticle 19(5) of the FPO. Its contents are not directed at, may not be suitable for andshould not be relied on by anyone who is not an investment professional includingretail clients. Numis does not provide investment advisory services to retail clients.This research report is not directed at you if Numis is prohibited or restricted byany legislation or regulation in any jurisdiction from making it available to you. Youshould satisfy yourself before reading it that Numis is permitted to provide researchconcerning investments to you under relevant legislation and regulations.Thisresearch report is not an offer or a solicitation to buy or sell any security. It doesnot constitute a personal recommendation and recipients must satisfy themselvesthat any dealing is appropriate in the light of their own understanding, appraisal ofrisk and reward, objectives, experience, and financial and operational resources. Ithas not been prepared in accordance with legal requirements designed to promotethe independence of research. Non independent research is not subject under theMarkets in Financial Instruments Directive (“MiFID”) to any prohibition on dealingahead of the dissemination of research. However, Numis is required by the FCAto have policies in place to identify and manage the conflicts of interest whichmay arise in its production, which include preventing dealing ahead.The prices ofthe investments referred to in this research report and the income from them maygo down as well as up and investors may realise losses on them. Neither pastperformance nor forecasts are a reliable indicator of future results. Numis acceptsno fiduciary duties to the reader of this research report and in communicating itNumis is not acting in a fiduciary capacity. Neither Numis nor any of its directors,officers, employees or agents shall have any liability, howsoever arising, for anyerror, inaccuracy or incompleteness of fact or opinion in it or lack of care in itspreparation or publication except where such is caused by its gross negligence,wilful default or fraud; nor shall it exclude or restrict any liability it has under theregulatory system to the extent that to do so is impermissible under the law relatingto financial services.

All statements and opinions are made as of the date on the face of this document andare not held out as applicable thereafter. Research will carry the date of publicationor, on research printed overnight, the date on which it was sent to the printers.Where a price is quoted in research it will generally, in the absence of contrarywords, be the latest practicable price prior to distribution or, in the case of researchprinted overnight, the closing price at the close of business. Unless otherwise stated,prices in this research report are derived from quotations on the London StockExchange. A list of significant items which could create a conflict of interest and othermaterial interests in relation to research, together with Numis’s policy for managingsuch conflicts of interest, is set out on the Numis website (www.numis.com/x/regulatory.html).

Numis or one or more of its associates or a director or an employee of Numis or ofan associate may from time to time have a position, or may have undertaken or mayundertake an own-account transaction, in a security referred to in this document orin a related security. Such a position or such a transaction may relate to the marketmaking activities of Numis or to other activities of Numis.

Numis or one or more of its associates may from time to time have a broking,advisory or other relationship with a company which is the subject of or referredto in this research, including acting as that company’s official or sponsoring brokerand providing corporate finance or other financial services. It is the policy of Numisto seek to act as corporate adviser or broker to many of the companies whichare covered by the Research Department. Accordingly companies covered in anyresearch may be the subject of marketing initiatives by the Corporate FinanceDepartment.

A company covered in this research may have paid for an analyst’s reasonableexpenses to visit their premises or offered modest hospitality or entertainment;further details are available on request.

Research will specifically identify sources of information for material facts, wherethese are not regulatory company announcements and published company financialdocuments. In those cases (but not otherwise) where the subject company has seena draft of the research report and has suggested factual amendments which areincorporated by the researcher, this will be noted on the research.

In longer pieces of research the risk warnings (if any) attaching to a particularcompany will be set out; in shorter pieces (typically no more than one-side long)there is a cross-reference to the archive of research on the Numis website where,under the appropriate company name, details of such matters can be viewed.

The archive of research (available to all clients who normally receive Numisresearch) is available on the Numis website (http://www.numis.com/x/research-sectors.html).

Numis accepts no responsibility whatever for any failure by a person residentoutside the United Kingdom to observe the foregoing. No part of the content of anyresearch material may be copied, forwarded or duplicated in any form or by anymeans without the prior consent of Numis and Numis accepts no liability whatsoeverfor the actions of third parties in this respect.

Numis believes that its research service as a whole amounts to ‘substantiveresearch’ as defined by the FCA

Sector Notes (mentioning 6 or more companies)Our sector notes may contain references to information on companies (e.g. targetprices and recommendations) which has already been published by us (see ourwebsite at http://www.numis.com/x/us-research.html) and consequently, details ofour assumptions, the material investment risks and/or the basis for each company.starget price may not be repeated in these sector notes.

Valuation and RisksFor details relating to valuation and risks in printed research, please refer to thecompany comment contained herein. In electronic pieces of research please referto the relevant company section of the Numis website http://www.numis.com/x/research-sectors.html

Ratings KeyIn making a recommendation the analyst should compare his target price with theactual share price and then make a recommendation derived from the percentagethus calculated.:As from 14 February 2005, the formula is:Buy >= +20%Add >= +10% to +19.99%Hold 0% to +/-9.99%Reduce <= -10% to -19.99%Sell <= -20%Upon the initial establishment of a recommendation and target price for a company,an additional 10 % deviation in the price from the default bands set out above ispermitted before the recommendation has to be changed in subsequently publishedresearch documents.

Distribution of RatingsUS Requirement

01/01/2014 - 31/12/2014UK Requirement

01/10/2014 - 31/12/2014All

SecuritiesCorporate

ClientsAll

SecuritiesCorporate

ClientsBuy 42.2% 72.8% 45.7% 76.2%Add 23.2% 21.6% 23.1% 18.4%Hold 29.2% 5.6% 25.6% 5.4%Reduce 4.3% 0.0% 4.1% 0.0%Sell 1.1% 0.0% 1.5% 0.0%Total 100% 100% 100% 100% The above table shows the

split of recommendationsbased on the lastrecommendation for eachresearch stock during the lastfour calendar quarters.

The above table shows the splitof recommendations based onall recommendations duringthe last calendar quarter forall securities and within eachcategory the proportion ofissuers to which Numis suppliedmaterial banking services in theprevious 12 months.

For the split of recommendations by sector for the period from 1 Oct 2013 to 30 Sep2014, please contact the Research Department of Numis Securities Ltd.

The following graphs display the three year recommendation, target price and shareprice history for the subject corporation(s) of this research report. In those instanceswhere the subject corporation(s) have been traded on the London Stock Exchangeor Alternative Investment Market for less than three years, the graph will show thehistory since the date the subject corporation(s) were admitted to trading. Prices inthe graph(s) below are in pence unless otherwise stated.


9 April 2015

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http://www.numis.com/x/regulatory.html

http://www.numis.com/x/research-sectors.html


http://www.numis.com/x/us-research.html



May

'12

Aug

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Dec

'12

Apr

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Aug

'13

Dec

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Apr

'14

Aug

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Dec

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Apr

'15

600

500

400

300

200

100

0

Acacia Mining

Recommendation Price Target Price

Three Year - Recommendation, Target Price, Share History

Buy

Add

Hold

Reduce

Sell

Created By BlueMatrix

Source: Numis Securities Research

May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

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Dec

'13

Apr

'14

Aug

'14

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80

70

60

50

40

30

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10

Aureus Mining



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

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'15

180

160

140

120

100

80

60

40

20

Caledonia Mining Corp



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

'15

45

40

35

30

25

20

15

10

5

Chaarat Gold



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

'15

1600

1400

1200

1000

800

600

400

Antofagasta



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

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40

35

30

25

20

15

10

Berkeley Resources



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

'15

140

120

100

80

60

40

20

Centamin Egypt



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

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Dec

'14

Apr

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250

200

150

100

50

0

Condor Gold



Buy

Add

Hold

Reduce

Sell




9 April 2015

May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Jan'

15

Apr

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100

90

80

70

60

50

40

30

Dalradian Resources



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

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Dec

'13

Apr

'14

Aug

'14

Dec

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Apr

'15

1800

1600

1400

1200

1000

800

600

400

First Quantum Minerals



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

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Aug

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Dec

'13

Apr

'14

Aug

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80

70

60

50

40

30

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Gemfields



Buy

Add

Hold

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Sell



May

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Aug

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'12

Apr

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Aug

'13

Dec

'13

Apr

'14

Aug

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Dec

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250

200

150

100

50

0

Highland Gold



Buy

Add

Hold

Reduce

Sell



May

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Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

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500

400

300

200

100

0

Ferrexpo



Buy

Add

Hold

Reduce

Sell



May

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Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

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2200

2000

1800

1600

1400

1200

1000

800

600

Fresnillo



Buy

Add

Hold

Reduce

Sell



May

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Aug

'12

Dec

'12

Apr

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Aug

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Dec

'13

Apr

'14

Aug

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Dec

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Apr

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350

300

250

200

150

100

50

0

Highfield Resources



Buy

Add

Hold

Reduce

Sell



May

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Dec

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Aug

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Dec

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Apr

'14

Aug

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Dec

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Apr

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600

500

400

300

200

100

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Hochschild Mining



Buy

Add

Hold

Reduce

Sell




9 April 2015

May

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Apr

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50

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International Ferro Metals



Buy

Add

Hold

Reduce

Sell



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70

60

50

40

30

20

10

0

Minera IRL



Buy

Add

Hold

Reduce

Sell



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Aug

'12

Dec

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Apr

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Aug

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Dec

'13

Apr

'14

Aug

'14

Dec

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Apr

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10000

9000

8000

7000

6000

5000

4000

3000

Randgold Resources



Buy

Add

Hold

Reduce

Sell



May

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Aug

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Dec

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Apr

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Aug

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Dec

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Apr

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Aug

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'14

Apr

'15

35

30

25

20

15

10

Wolf Minerals



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

'15

1200

1000

800

600

400

200

0

Kaz Minerals



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

'15

300

250

200

150

100

50

Petra Diamonds



Buy

Add

Hold

Reduce

Sell



May

'12

Aug

'12

Dec

'12

Apr

'13

Aug

'13

Dec

'13

Apr

'14

Aug

'14

Dec

'14

Apr

'15

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

Timmins Gold



Buy

Add

Hold

Reduce

Sell




9 April 2015

Denver Gold Group - Metals & Mining · 2015-04-13 · our caution, expecting "riskier" stocks, to...

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Transcript of Denver Gold Group - Metals & Mining · 2015-04-13 · our caution, expecting "riskier" stocks, to...