Gold $1,474/oz - higher as inflationary pressures in developing markets prompt investors to hold more gold

• We target $1,485/oz this week
• Chinese inflation is out of control according to Soros but currency stability suits the Chinese government
• ECB rate holds the Euro at its new stronger level against the US dollar despite US economic recovery
• FED comments that rates should remain low for longer help to supply cheap money worldwide
• Libyan and other Middle Eastern conflicts have raised oil prices driving inflation and concern over paper money
• Second earthquake in Japan last week generated some uncertainty but has little impact on markets
• Miners are unable to meet the supply demand gap with Central Banks likely to remain net buyers of metal

ECONOMIC NEWS

Dow Jones Industrials -0.24% at 12,380

HK Hang Seng +0.37% at 24,305

US - Congress passes short term funding measures to keep budget discussions ongoing. Budget cuts of $38.5bn appear to have been won by the GOP.

India - Industrial production slowed to 3.6% yoy in February vs 3.95% in January

France - Industrial production rose by 0.4% yoy in February vs 0.7% in January.

Libya - African Union persuades Qaddafi to agree to cease-fire. The proposed plan should also enable delivery of humanitarian supplies.

Currency - US dollar likely to weaken further despite economic recovery as impact of QE continues to drive the market. SA rand gains further on comments that US interest rates are likely to remain low for longer.

US$1.445/eur vs $1.440eur yesterday. Yen84.57/$ vs 85.08/$, SAr6.65$ vs 6.65/$ $1.634GBP vs 1.641/GBP

COMMODITY NEWS

Precious metals:

Gold US$1,474/oz vs US$1,465/oz on yesterday -

Platinum US$1,805/oz vs US$1,799/oz yesterday - prices are following gold and prospects for greater auto sales

Palladium US$800/oz vs US$789/oz yesterday -

Silver US$41.25/oz vs US$40.13/oz yesterday -

Base metals:

Copper US$9,875/t vs US$9,821/t yesterday - China copper imports rose by +29% in March on February. The copper import number is 33% lower yoy but the news still helped copper prices higher overnight with some profit taking seen on the close.

Aluminium US$2,710/t vs US$2,697/t yesterday -

Nickel US$27,500/t vs US$27,445/t yesterday -

Zinc US$2,525/t vs US$2,499/t yesterday -

Lead US$2,852/t vs US$2,845/t yesterday -

Tin US$32,980/t vs US$32,850/t yesterday -

Energy:

Oil US$126/bbl vs US$124/bbl yesterday - Ongoing Middle Eastern conflicts serve to maintain high oil prices as US and other economies continue to grow.

COMPANY NEWS

BHP Billiton (BLT LN) 2650p, mkt cap £160bn - Rumours of potential bid for Woodside Petroleum

• We rarely see smoke without some sort of fire
• In this case it feels as if the market is being tested for its views on an acquisition by BHP Billiton for Woodside Petroleum.
• BHP would make a good buyer / partner in our view as there should be some sensible synergies and the Australian government might prefer to see one of its national champions involved in preference to a bid from a Chinese or Japanese entity.
• BHP's oil and gast division is larger than Woodside and is more diverse. Its plans for the Gulf of Mexico were delayed by the BP disaster but this area is coming back on track fast
• Woodside has a number of capital hungry LPG projects which are destined to feed Asian LPG terminals in time
• The nuclear incidents in Japan are likely to delay the construction of new nuclear power stations around the world effectively creating a gap for new sources of power in time.
• BHP is trying to deny reports that it is looking at a takeover of Woodside but the Australian state premier says that he is directly aware of moves by unspecified companies to take over the company (Dow Jones)
• Woodside's gas fields and pipelines across Australia are of strategic importance to mining and the economy of Australia and the Australian government is not going to want to see Shell's remaining 24% stake in Woodside falling into overseas hands.
• BHP looks to us to be a natural suitor and the deal would make a sensible scale acquisition for the company.
• The Woodside ceo, Don Voelte, claims to have no knowledge of a bid

EMED MINING * (EMED LN) 17p mkt cap £120m - Quarterly update highlights progress made at Rio Tinto

• EMED appears to have turned a major corner with respect to its Rio Tinto Mine in Spain.
• A number of obstacles to the permitting process now seem to have been cast aside following an incident where four mine workers staged a dangerous underground protest which caught the attention of local and national Spanish media.
• The situation served to highlight the ludicrous local politicking and delays suffered by the project and the need to generate employment in this part of Spain. The issue has also highlighted potential misuse of EU funds into the region to assist project evaluation.
• Rio Tinto should move to process some 9mtpa of ore throughput to produce some 37,000tpa of copper.
• Cash costs should average 1.35c/lb C1 and 1.57c/lb C3.
• The resource stands at 203mt grading 0.46% copper with 123mt classified as economic reserve.

* Fairfax acts as a UK broker to EMED Mining. Fairfax placed stock in the recent issue to institutions.

Frontier Mining (FML LN) 6p, mkt cap £114m - Acquisition of Coville completes

• Frontier and Coville already operate in co-operation on the Benkala copper project in Kazakhstan
• The Benkala copper project has an NPV of $190m based on a 0.5% grade and 63% recovery rates and 1856,000t of contained metal.

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

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

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

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

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

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