Gold $1,459/oz - prices hold recent recovery despite seasonally weak time of year

• Inflationary concerns and likely growing Chinese demand continue to drive gold .
• Portuguese bailout appears to have had little impact as news of bailout .
• Yemeni protests ongoing and problematic for the Middle East and Saudi Arabia.
• US - if Democrat and Republican parties don't agree on the Federal budget then the US government could shutdown. In this event all but key staff are sent home, presumably without pay. This has happened 17 times in US history so there is precedent. The longest stalemate lasted 21 days in 1995.

ECONOMIC NEWS

Dow Jones Industrials +0.27% at 12,426.75

Nikkei 225 +0.07% at 9,590.93

HK Hang Seng -0.03% at 24,276.54

Portugal - After months of speculation the Portuguese government has announced that the country will, as expected, require a bailout. The general consensus is that by requesting the bailout the Portuguese government is acting responsibly and in the best interests of the nation. The final cost of the 3^rd Eurozone bailout is at this stage is still up in the air.

• Goldman Sachs has predicted that Portugal will be the last euro region country to seek a bailout.

Europe - ECB Policy makers meet in Frankfurt today. A rate rise is widely expected despite previous comments by Jean-Claude Trichet that implied that a series of rate rises was not imminent. If a rate rise does emerge it will be the first time in 40 years that Europe's benchmark rate has been raised before rates in the US.

UK - Factory output growth stalled in February suggesting that the industrial recovery may be short lived.

• House prices were little changed last month according to figures released by Halifax

China - Goldman Sachs is this morning predicting that China will start reducing its tightening measures as the efforts to cool inflation and the property market finally appear to be having an effect.

• The State Administration of Work Safety has blamed illegal operations and poor management for a number of mining accidents last month that killed 21 people

Australia - Positive jobless figures were released today. The statistics bureau announced that the unemployment rate rate declined to 4.9% from 5%.

Brazil - Another currency measure has been announced. The government has stated that it will extend a 6% tax on repatriated forex borrowings with a maturity of up to 720 days in an effort to control the recent slide against the dollar.

Ivory Coast - Fierce fighting has continued as rebel forces surround the compound of incumbent President Laurent Gbagbo. The French military had to move in and rescue the Japanese Ambassador as gunman invaded his home near to the Presidential Palace reportedly killing 4 people, in an episode of worryingly savage lawlessness. Gbagbo has rubbished claims that he is surrendering stating that he is only "negotiating a truce"

Mexico -As thousands take to the streets in protest against the wave of drug related violence that currently grips the country, a number of mass graves have been unearthed in scenes more akin to Africa. The escalation of violence in the country and specifically along the boarder with the US has now escalated to a scale that could pose a serious threat to the political stability of the nation.

Currency - the aussie dollar moved up to a record against the dollar this morning on the back of the positive jobs data in the country. Additionally the yen strengthened as investors speculated that Brazil's tax on loans would lead to the selling of the real. The dollar is up slightly this morning against the basket of its most traded counterparts.

US$1.428/eur vs $1.429eur yesterday. Yen85.27/$ vs 85.17/$ SAr6.68$ vs 6.69/$ $1.632GBP vs 1.633/GBP

COMMODITY NEWS

Precious metals:

Gold US$1,456/oz vs US$1,456/oz on yesterday -

• Standard Chartered have revised their 2012 average forecast to US$1,650 from US$1,200
• Figures released today showed that Russian gold reserves rose last week.
• Japan's largest smelter, operated by Pan Pacific Copper has reportedly been buying copper cathode from overseas in order to meet sales commitments as a result of production restriction caused by the earthquake.

• SPDR gold trust holdings remain at 1,212.75 (38.990moz) Current value US$55,869bn

Platinum US$1,779/oz vs US$1,798/oz yesterday -

Palladium US$781/oz vs US$791/oz yesterday -

Silver US$39.43/oz vs US$39.37/oz yesterday -

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

Base metals:

Copper US$9,515/t vs US$9,515/t yesterday - Prices are up this morning as the market digests the idea that monetary tightening measures in China may well be reduced.

• Yesterday Freeport-McMoRan stated that it expects demand in China to continue to increase and will support prices, citing an increase in construction spending in the last few months and an improving demand for autos.
• First Quantum has announced that it is looking to buy another copper project in Peru.
• Officials in Peru have announced the suspension to the review of the Southern Copper corp mine on the back of protests that left a handful of people injured and one protestor dead.

Aluminium US$2,691/t vs US$2,661/t yesterday -

Nickel US$27,000/t vs US$25,815/t yesterday -

Zinc US$2,458/t vs US$2,419/t yesterday -

Lead US$2,786/t vs US$2,786/t yesterday -

Tin US$32,574/t vs US$31,930/t yesterday -

Energy:

Oil US$121.12/bbl vs US$122.12/bbl yesterday - Prices are off this morning the market speculates that rising prices will dampen demand in China and the US. China's National Development and Reform Commission has announced that retail prices for diesel and gasoline will start to rise as result of the climbing crude price.

Gas US$4.112/MMBTU vs US$4.226/MMBTU yesterday - Forecasts of warmer weather are expected to limit consumption and leave supplies higher.

Uranium US$59.00/lb vs US $62.30/lb last week -

Other:

Iron Ore - Sundance Resources is said to be making progress towards finding a partner for the Mbalam project in central west Africa and has narrowed the search down to 3 potential Chinese state owned partners.

Rare Earths - The Trade and Industry Minister of South Africa has reportedly stated that the government plans to establish a 15bn rand rare earths industrial complex in the Western Cape province as the race to commercialise the industry outside of China intensifies.

COMPANY NEWS

Blackthorn Resources - (BTR AX) 69c, mkt cap A$84m - Potential to extract lead and silver from Perkoa in Burkina Faso

• Evaluation of the Perkoa zinc project in Burkina Faso continues as Glencore take command of the project
• Lead and silver by-products may be viable products from zinc mining / processing at Perkoa potentially adding significant value to the project
• Glencore joint venture conditions completed and Glencore project management team is mobalised and now running the project
• Placement of $10m worth of new stock to Glencore done at 20% premium to shares at the time taking number of new shares to 122m and elevating Glencore to the largest shareholder.
• Cash now stands at A$16m
• Glencore to take a firm decision on the Perkoa project by end June.
• Assuming Glencore press ahead with Perkoa's development then construction should start this year with production due H1 2012. Management expect a maiden JORC resource this year
• Blackthorne's Mumbwa JV with BHP Billiton, a IOCG exploration project in Zambia, are due within months.

Mwana Africa (MWA LN) 7.5p, mkt cap £40m - Freda Rebecca JORC resource estimate rises 61% to 1.67moz

• The Freda Rebecca indicated resource estimate rises 61% to 1.67moz grading 2.48g/t at a 1.5g/t cutoff.

• The resource expands further to 2.3moz grading 2.42g/t on an indicated and inferred resource (1.5g/t cutoff)
• These are good grades and the upgrade to 1.67moz to 2.3moz is a meaningful advance indicating that the geologists are able to extend the mine plan as previously envisaged.
• Phase II expansion to take mine to 50,000oz is good news, and is far short of the mines potential but is a great effort considering the ongoing challenge of working in Zimbabwe.
• We visited the mine 18 months ago and are hopeful that this operation could eventually see production rates rise substantially from here.
• The second milling circuit is in place with leach tanks etc.. and it is the expansion of the underground mine which is critical to the running of the second circuit.
• Companies are still struggling to finance operations in Zimbabwe and are not helped by regular statements from the government on their intention to apply 51% local indigenisation (BEE).
• We hope that the valued Bindura Nickel assets which are in joint venture with Mwana Africa should already meet much of the BEE criteria.
• The local listing of the company on the Zimbabwean stock exchange may be seen as meeting key indigenisation criteria within some quarters of the Zimbabwe government.
• If this does prove to be the case then a local listing for miners may become an accepted method for local empowerment.

Conclusion: There is much hope for mining development in Zimbabwe. Mwana Africa are far ahead of many others and appear relatively well placed to manage the government's indigenisation demands. Knowing how to operate in country and having an long-running operational base gives Mwana significant advantage and should open up new opportunities in time. We view the shares positively at 7.5p.

Serabi Mining (SRB LN) 40p, mkt cap £25m - Drilling intersects near surface gold at Piaui in the Amazon

• Its been a few years since we have visited Serabi Mining and apart from the disaster of mechanising the Pialto gold mine and watching its costs cripple the company not much seems to have occurred for some time.
• It is good to see drilling now showing gold grades on the first target to be drilled for some time
• The idea of this company was to use cash flow from the Pialto gold mine to fund exploration in the area with the hope of finding something really big in the region.
• There are thousands of guarampero gold mining sites which are easily visible from the air all over this region of the Amazon and some very large gold deposits are likely to have fed into these alluvial workings.
• The problem is finding the original hard rock sources in thick jungle, waterlogged terrain and with the ever present threat of bandits and potentially hostile locals.

Sirius Minerals (SXX LN) 12.5p, mkt cap £177m - signing of agreement with native title group in Queensland

• Sirius Minerals are pushing the Adavale potash project in Queensland, Australia.
• The company has collected a group of potash assets of variable quality and needs to be more convincing of the quality and its potential to move to production to generate more interest.
• The company recently raised £20m at 13p per share as investors look for anything potash related to put their money into.
• Potash projects are often difficult and expensive to put into production and relatively few produce products of good saleable quality. While a portfolio approach significantly reduces the risk of single project failure Investors should be wary of the costs of maintaining and evaluating a wide ranging portfolio.

Mining this week:

Angle Mining (ANGM LN) 5p, mkt cap £23m - First gold imminent. Moves to raise A$8m in medium term note

Anglo Pacific (APF LN) 327p mkt cap £356m - Company admitted to the FTSE 250 - Buy

China Minmetals bids $6.3bn for Equinox following the collapse of its bid for Lundin Mining

Cluff Gold (CLF LN) 116.5p mkt cap £153m - New exploration license granted in Mali

Coal of Africa (CZA LN) 84p mkt cap £444m - Vele Integrated water license granted

Mantra Resources (MRU AX) 6.68, mkt cap A$898m - ARMZ revised offer terms New offer A$7.02/s (A$6.87/s + A$0.15 special unfranked dividend)

Pan African (PAF LN) 11.75p mkt cap £170m - Government awards mining license on Manica

Ormonde Mining* (ORM LN) 10.13p mkt cap £25m - Consolidation of 100% of Barruecopardo: Corporate - BUY - TP 19p

Antofagasta (ANTO LN) - to remain focussed as a copper company with gold and molybdenum by-products

Allied Gold (AGLD LN) 40p, mkt cap £131m - Trading Halted on the ASX pending release on capital placement

Carbine Resources (CRB AU) 37p, mkt cap A$37m - Geochem show further 1.2km of gold anomalies

Kirkland Lake Gold (KGI LN) 890p mkt cap £602m - Reserve and resource update adds ounces

Sable Mining (SBL LN) 23p mkt cap £213m - Acquisition of iron ore project in Sierra Leone

Zanga Iron Ore Company (ZIOC LN) 155p, mkt cap £429m - resource grows to 4.0tbn from 3.3tbn

Medusa Mining* (MML LN) 465p mrt cap £853m - Drilling at Co-O returns further spectacular grades

Corporate - Buy - TP 549p

Aurum Mining (AUR LN) 3.75p, mkt cap £2m - raises £2m in share placing

Angel Mining (ANGM LN) mkt cap 4p, mkt cap £19m - draws down $8m in equity draw down facility

Baobab Resources (BAO LN) 47p mkt cap £93m - IFC commits to support Tete jv with US$1.3m of funds

Glencore IPO already said to be oversubscribed by bankers close to the deal

Sable Mining (SBLM LN) 23.5p, mkt cap £213m - Lubu coal in-situ coal tonnage 786mt in Zimbabwe

Sundance (SDL AX) 49p, mkt cap $1.3bn - Cameroon iron ore project capex est US$4.6bn

DISCLAIMER - Non Independent Research

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

DISCLAIMER

This note has been issued by Fairfax I.S. PLC in order to promote its investment services.

This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and FSA's Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research.

This document is not based upon detailed analysis by Fairfax of any market; issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise.

The value of investments contained herein may go up or down. Where investment is made in currencies other than the base currency of the investment, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Securities issued in emerging markets are typically subject to greater volatility and risk of loss.

This [note] is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.

Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. This information is for the sole use of Eligible Counterparties and Professional Customers only and is not intended for Retail Clients, as defined by the rules of the Financial Services Authority ("FSA") and subject to Fairfax's Terms of Business as published or communicated to clients from time to time.

It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of you own commercial judgment. Fairfax I.S. PLC is not responsible for any errors, omissions or for the results obtained from the use of the information in this document.

This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. Fairfax does not make any guarantee, representation or warranty, (either expressly or implied), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon information sources believed to be reliable and prepared in good faith.

Fairfax's officers, directors and employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).

Fairfax I.S. PLC is a company registered in England and Wales with company number 5496355 and whose registered office address is 7, Queen Street, Mayfair, London W1J 5PB. Fairfax I.S. PLC is authorised and regulated by the Financial Services Authority whose address is 25, The North Colonnade, Canary Wharf, London E14 5HS and is a Member of the London Stock Exchange plc.

Source: FAIRFAX I.S. PLC