Gold $1,418/oz - prices slide as US dollar gains

Dollar gains against basket of major currencies as US consumer spending starts to rise

• Despite this the US dollar is now falling against the Euro this morning

How mad are financial rules and regulations becoming and could these be considered as barriers to trade

This morning we received an email from Preqin Client Services

• Its states that under directive AB-1743 in California on new requirements for fund management professionals. Professionals seeking to gather commitments from certain public pension plans including Calpers and Calstrs that placing agents will now have to register as lobbyists, undergo ethics training in Sacramento and adhere to certain other regulations.
• Sacramento here we come!

ECONOMIC NEWS

Dow Jones Industrials +0.41% at 12,220.59

Nikkei 225 -0.60% at 9,478.53

HK Hang Seng -0.65% at 23,008.25

Zimbabwe - Aquarius Platinum put out an announcement on Friday concerning discussions underway with relevant authorities to ensure compliance with the 51% indigenisation regime following the publication of a statutory instrument setting out the requirements for the Indigenisation and Economic and Empowerment Act.

• The indigenisation of 51% of mining assets in Zimbabwe has been on the table for some time, with industry participants expecting this stance to be moderated. Clearly this doesn't appear to be happening; consequently the Zimbabwe risk clearly remains very high. Such action will inevitably severely limit mining investment within the country.

US - Ahead of a report due for release later today, expectations are that consumer spending in the US increased last month on the back of an improving labour market.

• Pending Home sales figures will be released later today.

UK - According to a poll conducted by Lloyd's Banking Group, business confidence declined in March to the lowest level in two years. The gauge of sentiment that aims to predict economic developments in the UK 4 months in advance fell to a reading of 1 from 3 last month.

• Q4 2010 GDP revised figure will be released tomorrow.

China - The Chinese Ministry of Commerce has called for the US to correct any wrongdoing against China's export commodities on the back of the World Trade Organisation reversing a previous ruling that favoured the US anti-dumping and countervailing measures against imports of Chinese products such as steel pipes.

• On Friday the People's Bank of China stepped up efforts to further tighten excessive liquidity in the market through a number of open market operations.
• The China Energy Research Society has announced that China may rise 6% to 3.45billion tons of coal equivalent this year.

Japan - Speculation that the economy will be boosted by rebuilding efforts but overall will experience a deterioration of its fiscal situation is leading government bonds down this morning.

Australia - Prime Minister Gillard is expected to face a more stringent fight over her plans to tax carbon emissions and mining profits after her Labor Party lost power in New South Wales after 16 years.

Germany - State elections have dealt German Chancellor Angela Merkel's coalition a defeat in its south western heartland as votes for the anti-nuclear green party soar.

Libya - Rebels continue to advance into the West of the country. Yesterday rebels recaptured the eastern oil town of Ras Lanuf and advanced farther west with the help of air support from Coalition forces.

Syria - US Secretary of State Hillary Clinton has stated that the US will not enter into the internal conflict in Syria despite the growing similarities between Libya.

• Al Jazeera is reporting that authorities have deployed security forces to the northern city of Latakia as a result of violent protests that have reportedly left at least 12 people dead and more than 150 injured. Unrest continues to spread as President Bashar al-Assad's attempts to calm the situation with proposed reforms and spending plans fall on deaf ears.

Ivory Coast - Internationally recognised President Alassane Ouattara has spoken out over the appointment of an African Union representative, tasked with resolving the disputed election, on the grounds that the official is to closely associated with his rival incumbent President Laurent Gbagbo.

• The UN refugee agency has stated that close to 1 million citizens have fled fighting or been displaced since the disputed election.

Currency - The yen is off this morning against the dollar as the market anticipates positive consumer spending data will emerge from the US later today. The pound is off this morning against the dollar on the back of the negative business confidence figures

US$1.407/eur vs $1.414eur yesterday. Yen81.69/$ vs 81.22/$ SAr6.86$ vs 6.87/$ $1.598GBP vs 1.607/GBP

COMMODITY NEWS

Precious metals:

Gold US$1,418/oz vs US$1,440/oz on Friday - Prices are off this morning as the dollar strengthens, investors lock in profits from the rally last week and sentiment improves regarding the ongoing recovery in the US.

• Local Media in China has reported that the People's Bank of China Deputy Governor has stated that the country should not buy gold and other commodities, as the resultant price increases hurt the country to much.

• SPDR gold trust holdings remain at 1,213.96 (39.029moz) Current value US$56,030bn

Platinum US$1,733/oz vs US$1,745/oz-

Palladium US$743/oz vs US$749/oz -

Silver US$36.75/oz vs US$37.50/oz -

Rhodium US$2,375/oz vs US$2,375/oz -

Base metals:

Copper US$9,550/t vs US$9,712/t on Friday - Prices are off this morning on dollar strength and demand fears.

• We are looking for copper prices to pull back to $8,500/t when supply concerns following the Japanese earthquake and power rationing subside
• Additionally the company reports that treatment and refining charges have climbed as a result of the problems in Japan and reduction in smelter capacity.

Aluminium US$2,385/t vs US$2,636/t on Friday -

• A number of LME monitored stockpiles in the US are falling despite rising prices suggesting that demand is continuing to grow.

Nickel US$26,725/t vs US$27,030/t on Friday -

Zinc US$2,352/t vs US$2,409/t on Friday -

• Imports by Japan are increasing as a result of the capacity problems facing the country. As a result Bloomberg is reporting that China is boosting shipments in order to meet demand from its neighbour.

Lead US$2,639/t vs US$2,683/t -

Tin US$31,715/t vs US$31,750/t -

Energy:

Oil US$114.90/bbl vs US$115.58/bbl yesterday - Prices are off this morning as speculation increases that demand will remain weak in Japan as the result of the ongoing nuclear crisis delaying the country's rebuild.

Gas US$4.434/MMBTU vs US$4.290/MMBTU yesterday

Uranium US$60.00/lb vs US $60.00/lb last week -

Coal - The Ministry for Industry in Vietnam has announced that the country is expecting to have to import coal from 2015 on the back of rising demand from its thermal power plants.

• New forecasts suggest that European coal could rise to US$141/t to the highest level in 2 years as demand spikes influenced by events in Japan.
• Falling stockpiles at the Chinese Port of Qinhuangdao has lead to benchmark prices rising for the first time in a month.
• Macquarie has announced that it expects Japanese coal imports to decline by around 8million tonnes.

Other:

Iron Ore - Speculation is increasing that restrictions and taxes on Iron Ore exports from India will be easing imminently according to Metals Bulletin. An exact date for the ban to be overturned has not been announced but estimates suggest that it could be overturned as soon as next month.

COMPANY NEWS

Sable Mining (SBLM LN) 23.5p mkt cap £217m - Results from Lubu indicate coking coal potential

• Sable Mining has announced further results from its Lubu Coal Concession in Zimbabwe. The results show reasonable thicknesses across three seams, although yields are relatively low averaging 21%.
• Management view the latest results as indicating potential for a large multi coal depsopit. Drilling continues aimed at increasing the current 360mt non JORC resource and publish a JORC resource by mid year.

Conclusion: Coal is an exciting commodity for exposure to and this deposit appears to have good size potential. However, we note the recent news from Zimbabwe (Aquarius announcement) indicating the 51% indigenisation programme is pushing ahead which could make this attractive less attractive for investors.

Triple Plate Junction (TPJ LN) 6.5p, mkt cap £19m - Long gold intersection in PNG

• Triple Plate Junction have issued first drill results from their Crater Mountain Gold Project.
• This meaningful announcement has been issued in Australia but not yet in London
• The first hole at the Crater Mountain Gold project in PNG hit 1.62g/t over an 82m intersection within a longer 284m section which grades 0.82g/t of gold.
• The length of this hole suggests that the drilling has intersected a large mass of mineralised material. The project is described as of low sulphidation epithermal gold mineralisation

European Nickel (ENK LN) 15.38p mkt cap £40.28m - Operational update

• A company update highlights progress being made in the Philippines at the company's flagship Acoje nickel laterite, with the heap leach trial pad being stacked with agglomerated ore and acid irrigation to commence soon. The trial will give indications of performance and rain mitigation techniques will be tested as the deposit sits in a tropical environment of high rainfall.
• Should the heaps be completed exposed to the environment, then high rainfall has the potential to dilute the acid and potentially lead to structural damage to the heaps.
• Direct ore shipments from Acoje have started with partner DMCI mobilised to site two weeks ago with trucking to start today. DMCI will take on the financial, operational and marketing side of the DSO operation and pay a royalty fee to ENK.
• In a significant positive development, the company has now been refunded US$2.84m from the Turkish government for not having received its forestry permit, and a further US$500k VAT refund is expected shortly. With feasibility work underway at Acoje these funds will be helpful.
• Management has also signed a deal with Arena Resources for its Barlo, Pan de Azucar and Guimeras exploration licenses for US$50k, with a further US$550k in cash and 5m shares upon the listing of Arena within 6 months on the ASX. Two further payments of US$1m in cash or shares are payable open a JORC resource being proved up of 50-100kt of 1.0%+ Cu equivalent and a further A$5m in cash or shares upon a completed BFS at each of the three licenses.

Conclusion: Having shifted focus from Caldag to Acoje the results of the heap leach studies is the key for the company going forwards. Other deals signed are certainly beneficial such as the DSO shipments. We look forward to progress at the heap leach trial that will demonstrate the viability of the process on a tropical laterite under tropical conditions e.g. high rainfall.

Mining last week:

Carbine Resources* (CRB AX) 33c, mkt cap A$34m - Nazala gold assays return up to 6.03g/t from geochemical sampling

Baobab (BAO LN) 36p, mkt cap £61m - Independent estimation of 200-250mt at Muande iron & phosphate target

Gem Diamonds (GEMD LN) 224p mkt cap £379m - Confirms review of potential value enhancing opportunities

Greenland Minerals (GGG LN) 35p, mkt cap £50m - Update for takeover offer for Auzex Resources

Amur Minerals (AMC LN) 12p, mkt cap £31.6m - Announces subscription agreement to raise £2.5m

Centamin Egypt (CEY LN), 127p Mkt cap £1,380 BUY - Centamin appoints Ed Haslam, ex Lonmin to the board

ENRC* (ENRC LN) 905p mkt cap £11,639m - Profit doubles to $2.19bn for FY 2010

Shanta Gold* (SHG LN) 31.5p, mkt cap £57m - Company breaks ground at the New Luika Gold Mine

BUY - Target price 71p

African Barrick (ABG LN) 529p mkt cap £2,169m - Drilling up date from Nyanzaga project

Archipelago (AR/ LN) 63p mkt cap £355m - US$15m working capital facility

Fortescue Metals - heavy rain in Pilbara downgrades production forecasts

Iofina (IOF LN) 23.25p mkt cap £24m - Contract win

Vital Metals (VML LN) 11c/s, mkt cap A$25m -

⁺Fairfax employees may have previously held, or currently hold, shares in the companies mentioned in this note.

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