IMF downgrade to global economic growth. (see link below for full report)

http://www.imf.org/external/pubs/ft/weo/2011/01/pdf/text.pdf

World economy to grow by 4.5% in 2011 and 2012 according to last night's IMF review.

• Advanced economies to grow at just 2.5%
• Emerging and developing economies to grow at 6.5%
• High ongoing debt levels in western economies coupled with the impact of the earthquake in Japan and some slowing of Chinese growth are likely to have reduced the IMF forecast for 2011

Commodity prices - are high on the agenda in the IMF report

• Commodity prices have increased more than expected and "conjure up the spectre of 1970's-style stagflation, they appear unlikely to derail the recovery"
• However the IMF comment that high commodity prices will have "small effects on growth and core inflation".
• The challenge is stronger in emerging and developing economies where the consumption share of food and fuel is larger and the credibility of monetary policy is often weaker
• The IMF reports suggests that commodities benefit from the lower credibility of paper in emerging and developing economies.

Chinese import figures for March are first non-seasonally affected set of monthly figures.

• Iron ore, copper and even oil imports all fell year-on-year
• China has been the key driver for the majority of commodities and any pull back in imports is likely to have a marked impact on LME price levels
• Supply issues and some metal hoarding helped prices higher in recent weeks
• Falling Asian markets may now drag metals prices lower

China is also looking at reducing 'Export Rebates' for some aluminium and stainless steel products. This should serve to limit export tonnages and may reduce electricity consumption and pollution levels in China

ECONOMIC NEWS

Dow Jones Industrials 0% at 12,450

HK Hang Seng -1.34% at 24,468

US - IMF comment that it is particularly urgent for the US to stem the risk of 'globally destabilising changes' in bond markets.

Japan - IMF cut Japanese GDP forecast to 1.4% from 1.6% following the earthquakes and tsunami. The cut seems remarkably light considering the severity of the events and the impact of the ongoing nuclear crisis which is now increased in 'official' severity. The Nikkei 225 fell more than 2%.

UK - IMF downgrades UK economy to 1.7% from 2% GDP growth. The UK is the only EU economy downgraded by the IMF in this latest review.

Germany - IMF upgrade GDP growth to 2.5% from 2.2%

France - IMF forecast 1.6% for 2011 and 1.8% for 2012

Ivory Coast - outgoing president is captured but it may take some weeks for peace to return to this nation

• The capture of outgoing president is a huge relief to neighbouring countries impacted by the crisis.

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$1.444/eur vs $1.445eur yesterday. Yen84.40/$ vs 84.57/$, SAr6.70$ vs 6.65/$ $1.625GBP vs 1.634/GBP

COMMODITY NEWS

Precious metals:

Gold US$1,461/oz vs US$1,474/oz on yesterday - profit taking and market falls in Asia pull back gold as equity markets go quiet. We expect to see Indian investors buying on price dips, other markets are likely to be seasonally quiet. Gold prices look well set for more positive action this year with prices forming a supportive base at higher price levels. Jewellery and coin demand remained abouve 54% of demand last year, a good indicator for future price strength according to the WGC.

Platinum US$1,790/oz vs US$1,805/oz yesterday - prices following gold

Palladium US$785/oz vs US$800/oz yesterday -

Silver US$40.45/oz vs US$41.25/oz yesterday - Fresnillo see demand for silver rising by 5% this year as producers hedge price levels. Options trader bets $1m that ETF funds will decline in July (Bloomberg)

Base metals:

Copper US$9,825/t vs US$9,875/t yesterday - C

Aluminium US$2,680/t vs US$2,710/t yesterday -

Nickel US$27,725/t vs US$27,500/t yesterday -

Zinc US$2,527/t vs US$2,525/t yesterday - Mitsui Mining production to fall by 16% in H1. Hachinoihe smelter to restart in June following shutdown due to earthquake damage.

Lead US$2,842/t vs US$2,852/t yesterday - VM Group reduce surplus forecast to 26,000t

Tin US$33,250/t vs US$32,980/t yesterday -

Energy:

Oil US$125/bbl vs US$126/bbl yesterday - prices tempered by fall in Asian markets, IMF growth forecasts and by potential for peace in Libya and capture of outgoing president in the Ivory Coast

Uranium prices fall by 0.8% as prices continue to fall

Iron ore - Indian CIF 63.5% rises by 14% to $186 - $188/t last week. FOB prices rise $18/t to $170 - $172/t (Interfax)

COMPANY NEWS

Glencore - looking for $9-$11 billion in largest IPO so far this year

KazakhGold - Management agree $509m sale of operating unit with Assaubayev company

Hambledon Mining* (HMB LN) 4.3p mkt cap £32m - gold production recovers from hard Kazak winter

• Monthly production rises from January to March as the harsh Kazak winter starts to thaw.
• Gold production doubled to 1,924oz in March from 931 in January highlighting the improvement in throughput and offsetting increased dilution and lower grades.
• Recovery rates also improved to 88.1% in March from 85.7% in January.
• So far Q1 gold production appears in line with expectations although gold production is 32% below that recovered in Q4 2010 due to the severe weather and maintenance schedules.
• Extreme cold in January reduced production and replacement of crushing and screening equipment was done while mine operations were suspended because of temperatures below -40 degrees.
• Underground development remains on track to start by end of this year.
• Key equipment has been ordered and the new access decline is progressing as planned.
• Management reported good results from the first eight drill holes drilled underground. The underground drilling program is for 25,000m.
• Results included: 33m at 4.78 g/t Au, 60.4m at 5.6 g/t Au, 8m at 10.75 g/t Au, 44m at 5.74 g/t Au, 26.3m at 5.13 g/t Au, 33m at 4.5g/t Au.
• £9.09m raised through placing by Fairfax IS plc.
• Tim Daffern, was appointed ceo. Formerly Tim was director of Mining at Angel Mining and a consultant at Wardell Armstrong. Daffern's track record and references ensure he is suited for operations in this remote part of Kazakhstan.

* Fairfax acts as Nomad & Broker to Hambledon Mining

Fairfax forecasts

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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