Gresham "Group 150\' - May 2011

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Gresham "Group 150\' - May 2011

  1. 1. MAY 2011 Gresham Group 150 May 2011 Darren Martin Gresham Advisory Partners dmartin@gresham.com.au +61 8 9486 7077 +61 412 144 719 ASX RESOURCES - GROUP 150 We are pleased to present the May edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. The final week of trading saw the resource companies give back advances made in the first three weeks of the month. The cumulative market value of Group 150 decreased 2.0% from $603.84 billion to 591.5 billion at the end of April, mainly driven by falls in the top 50, with two-thirds recording a fall in market value. The entry point into the Group 150 increased to $130.6 million, up from $123.9 million for the previous month. The ASX/S&P 200 Resources Index decreased 2.0% for the month, underperforming both the ASX All Ordinaries and ASX/S&P 200 Index which decreased 0.6% and 0.3% respectively. April recorded a rebound in M&A with nine transactions announced, focussed predominantly on copper and gold. The major deal for month was the A$7.4b overbid by Barrick Gold for Equinox, which immediately forced the under bidder in Minmetals Resources Group to raise the white flag. Gold Road lead the “Winners” for April (in terms of growth in market capitalisation), entering the Group 150 in position 117, after recording a 78.7% increase in value. Other included: Alcyone (+64.9%), Northern Minerals (+49.9%), Independence (+45.8%), and Resource & Investment (+41.3%). Revisiting our “WA 2010 : Gresham Year in Review” report released last August, our crystal ball view on the gold sector provides for an interesting read: Gold’s fresh all-time high of over US$1,260 an ounce in June of this year was conclusive evidence of what everybody already knows – gold is firmly back in vogue. The last decade has seen gold “return from the dead” as the world’s turmoils shine the spotlight on its credentials as an investment. Relative to other asset classes, returns to holders of physical gold since 2000 – when the industry was being told to adjust to US$250 an ounce – have been stellar. Gold’s performance in Australian dollar terms has been somewhat diluted by an appreciating currency in recent months, but is nonetheless sufficiently impressive to bring Australian gold equities sharply back into focus. Since that time, the gold price has advanced further and is currently trading around US$1,550 an ounce. Despite the increase, the continuing appreciation of the Australian dollar provides a comparable outcome in Australian dollar terms. Interestingly this impact does not appear to be reflecting on the value of gold equities. Gresham Advisory Partners Limited Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisoryEdition 14 business and one of Australia’s largest and highest ranking independent corporate advisors. 1
  2. 2. Group 150 Top 150 asX LisTed resource companies - apriL By Market Capitalisation Mkt Cap (A$m) % Mkt Cap (A$m) % Apr Mar Company 30-Apr-11 31-Mar-11 Change Apr Mar Company 30-Apr-11 31-Mar-11 Change 1 1 BHP Billiton Ltd. (ASX:BHP) $252,878.2 $257,343.5 (1.7%) 51 63 Alkane Resources Limited (ASX:ALK) $602.6 $512.5 17.6% 2 2 Rio Tinto Ltd. (ASX:RIO) $159,889.3 $165,221.6 (3.2%) 52 53 Bougainville Copper Ltd. (ASX:BOC) $601.6 $641.7 (6.2%) 3 3 Newcrest Mining Ltd. (ASX:NCM) $31,726.1 $30,462.3 4.1% 53 50 OM Holdings Limited (ASX:OMH) $595.0 $702.9 (15.4%) 4 4 Fortescue Metals Group Ltd. (ASX:FMG) $19,145.3 $19,954.7 (4.1%) 54 58 Northern Iron Limited (ASX:NFE) $591.5 $579.7 2.0% 5 5 Coal & Allied Industries Ltd. (ASX:CNA) $9,662.0 $10,350.3 (6.7%) 55 56 Gujarat NRE Coking Coal Limited (ASX:GNM) $579.7 $589.6 (1.7%) 6 9 Equinox Minerals Ltd. (ASX:EQN) $6,824.9 $4,941.3 38.1% 56 68 Metminco Limited. (ASX:MNC) $575.8 $455.5 26.4% 7 6 Alumina Ltd. (ASX:AWC) $5,514.8 $6,002.8 (8.1%) 57 66 Aditya Birla Minerals Limited (ASX:ABY) $564.1 $463.8 21.6% 8 7 Iluka Resources Ltd. (ASX:ILU) $5,197.7 $5,525.9 (5.9%) 58 59 Discovery Metals Ltd. (ASX:DML) $555.1 $550.8 0.8% 9 8 OZ Minerals Limited (ASX:OZL) $4,663.5 $5,165.5 (9.7%) 59 48 Summit Resources Ltd. (ASX:SMM) $549.3 $719.3 (23.6%) 10 10 New Hope Corp. Ltd. (ASX:NHC) $4,068.1 $4,134.5 (1.6%) 60 50 Resolute Mining Ltd. (ASX:RSG) $547.1 $581.7 (5.9%) 11 11 Riversdale Mining Ltd. (ASX:RIV) $4,033.1 $3,912.6 3.1% 61 69 CuDeco Ltd. (ASX:CDU) $520.5 $449.6 15.8% 12 12 Lynas Corporation Limited (ASX:LYC) $3,533.8 $3,803.3 (7.1%) 62 62 Sphere Minerals Limited (ASX:SPH) $514.0 $514.0 0.0% 13 14 MacArthur Coal Ltd. (ASX:MCC) $3,504.3 $3,473.9 0.9% 63 61 Beadell Resources Ltd (ASX:BDR) $513.3 $528.8 (2.9%) 14 13 Aquila Resources Ltd. (ASX:AQA) $3,399.3 $3,496.2 (2.8%) 64 64 Cockatoo Coal Limited (ASX:COK) $503.0 $497.9 1.0% 15 15 Whitehaven Coal Limited (ASX:WHC) $3,170.2 $3,303.5 (4.0%) 65 60 Aspire Mining Limited (ASX:AKM) $482.4 $536.0 (10.0%) 16 16 Atlas Iron Limited (ASX:AGO) $2,883.4 $3,042.5 (5.2%) 66 55 Gryphon Minerals Ltd. (ASX:GRY) $472.2 $602.1 (21.6%) 17 17 Paladin Energy, Ltd. (ASX:PDN) $2,568.3 $2,807.5 (8.5%) 67 80 Guildford Coal Limited (ASX:GUF) $467.3 $389.4 20.0% 18 18 Aquarius Platinum Ltd. (ASX:AQP) $2,317.5 $2,497.1 (7.2%) 68 75 Murchison Metals Limited (ASX:MMX) $457.7 $433.7 5.5% 19 19 PanAust Limited (ASX:PNA) $2,283.1 $2,327.0 (1.9%) 69 71 Jabiru Metals Limited (ASX:JML) $452.5 $442.6 2.2% 20 20 Mount Gibson Iron Ltd. (ASX:MGX) $2,035.2 $2,154.3 (5.5%) 70 54 Ampella Mining Limited (ASX:AMX) $437.1 $608.9 (28.2%) 21 21 Aston Resources Limited (ASX:AZT) $1,943.0 $1,930.7 0.6% 71 67 Arafura Resources Limited (ASX:ARU) $430.5 $459.9 (6.4%) 22 22 Extract Resources Ltd. (ASX:EXT) $1,676.9 $1,981.7 (15.4%) 72 65 Panoramic Resources Ltd. (ASX:PAN) $426.5 $470.0 (9.3%) 23 26 Medusa Mining Limited (ASX:MML) $1,511.5 $1,317.6 14.7% 73 73 Kagara Ltd (ASX:KZL) $418.1 $435.8 (4.1%) 24 23 Gloucester Coal Ltd. (ASX:GCL) $1,452.2 $1,544.9 (6.0%) 74 83 Tiger Resources Ltd. (ASX:TGS) $414.6 $364.4 13.8% 25 25 Ivanhoe Australia Limited (ASX:IVA) $1,344.1 $1,390.2 (3.3%) 75 70 Kingsrose Mining Limited (ASX:KRM) $414.2 $448.2 (7.6%) 26 40 Independence Group NL (ASX:IGO) $1,333.7 $914.5 45.8% 76 72 Mineral Deposits Ltd. (ASX:MDL) $407.1 $441.2 (7.7%) 27 28 Zimplats Holdings Ltd. (ASX:ZIM) $1,291.7 $1,291.7 0.0% 77 74 Rex Minerals Limited. (ASX:RXM) $404.3 $435.5 (7.2%) 28 27 Perseus Mining Ltd. (ASX:PRU) $1,242.1 $1,309.9 (5.2%) 78 79 Integra Mining Ltd. (ASX:IGR) $399.7 $391.3 2.1% 29 30 Western Areas NL (ASX:WSA) $1,206.0 $1,215.0 (0.7%) 79 78 Metals X Limited (ASX:MLX) $396.0 $409.7 (3.3%) 30 29 Sundance Resources Ltd. (ASX:SDL) $1,089.0 $1,262.5 (13.7%) 80 76 Ramelius Resources Ltd. (ASX:RMS) $389.6 $416.7 (6.5%) 31 35 Sandfire Resources (ASX:SFR) $1,061.0 $1,017.4 4.3% 81 84 Hunnu Coal Limited (ASX:HUN) $374.0 $361.9 3.3% 32 31 Kingsgate Consolidated Limited (ASX:KCN) $1,049.3 $1,175.1 (10.7%) 82 82 Silver Lake Resources Limited (ASX:SLR) $373.9 $372.1 0.5% 33 24 Energy Resources of Australia Ltd. (ASX:ERA) $1,039.5 $1,516.4 (31.4%) 83 81 Moly Mines Ltd. (ASX:MOL) $367.7 $384.2 (4.3%) 34 38 Regis Resources Limited (ASX:RRL) $1,034.9 $970.1 6.7% 84 85 Saracen Mineral Holdings Limited (ASX:SAR) $344.4 $361.6 (4.8%) 35 39 Mirabela Nickel Ltd. (ASX:MBN) $968.4 $963.5 0.5% 85 77 Elemental Minerals Limited (ASX:ELM) $343.3 $409.9 (16.2%) 36 32 Intrepid Mines Limited (ASX:IAU) $950.1 $1,066.7 (10.9%) 86 87 Gold One International Limited (ASX:GDO) $339.1 $343.1 (1.2%) 37 33 Gindalbie Metals Ltd. (ASX:GBG) $940.3 $1,061.5 (11.4%) 87 98 Indophil Resources NL (ASX:IRN) $330.0 $304.1 8.5% 38 47 Bandanna Energy Limited (ASX:BND) $938.3 $754.9 24.3% 88 88 Perilya Ltd. (ASX:PEM) $325.7 $338.8 (3.9%) 39 36 CGA Mining Limited (ASX:CGX) $936.5 $1,016.5 (7.9%) 89 92 Conquest Mining Limited (ASX:CQT) $323.7 $324.7 (0.3%) 40 41 Mantra Resources Limited (ASX:MRU) $912.1 $905.3 0.8% 90 97 Marengo Mining Limited (ASX:MGO) $318.4 $308.1 3.3% 41 42 Minara Resources Ltd. (ASX:MRE) $900.5 $894.6 0.7% 91 90 Troy Resources NL (ASX:TRY) $315.8 $331.9 (4.9%) 42 44 Jupiter Mines Ltd. (ASX:JMS) $873.8 $817.7 6.9% 92 91 Adamus Resources Ltd. (ASX:ADU) $306.5 $331.7 (7.6%) 43 34 Coalspur Mines Limited (ASX:CPL) $863.1 $1,051.2 (17.9%) 93 89 Flinders Mines Limited. (ASX:FMS) $291.3 $336.8 (13.5%) 44 37 White Energy Company Limited (ASX:WEC) $850.3 $971.7 (12.5%) 94 103 Straits Resources Limited (ASX:SRQ) $287.1 $264.3 8.6% 45 46 Grange Resources Limited (ASX:GRR) $755.1 $755.1 0.0% 95 95 Cape Lambert Resources Limited (ASX:CFE) $285.9 $311.7 (8.3%) 46 43 Brockman Resources Limited (ASX:BRM) $739.9 $857.2 (13.7%) 96 86 South Boulder Mines Ltd. (ASX:STB) $285.9 $361.3 (20.9%) 47 49 ST Barbara Ltd. (ASX:SBM) $722.9 $709.8 1.8% 97 108 Focus Minerals Limited (ASX:FML) $271.8 $251.9 7.9% 48 45 Bathurst Resources Ltd (ASX:BTU) $718.1 $760.7 (5.6%) 98 96 Carabella Resources Limited (ASX:CLR) $270.1 $308.3 (12.4%) 49 51 OceanaGold Corporation (ASX:OGC) $700.0 $700.0 0.0% 99 110 BC Iron Limited (ASX:BCI) $268.0 $232.1 15.5% 50 52 Allied Gold Ltd. (ASX:ALD) $647.2 $656.6 (1.4%) 100 101 Galaxy Resources (ASX:GXY) $264.9 $278.5 (4.9%)Includes ASX Resource companies excluding oil and gas 2
  3. 3. MAY 2011 Mkt Cap (A$m) % Mkt Cap (A$m) % Apr Mar Company 30-Apr-11 31-Mar-11 Change Apr Mar Company 30-Apr-11 31-Mar-11 Change 101 93 Greenland Minerals and Energy Ltd (ASX:GGG) $260.4 $314.4 (17.2%) 126 124 Blackgold International Hold. Ltd (ASX:BGG) $180.0 $184.5 (2.4%) 102 100 Nucoal Resources NL (ASX:NCR) $258.8 $289.9 (10.7%) 127 121 Continental Coal Limited (ASX:CCC) $176.6 $192.1 (8.1%) 103 94 Catalpa Resources Limited (ASX:CAH) $258.1 $314.1 (17.8%) 128 133 Azumah Resources Ltd (ASX:AZM) $173.4 $160.9 7.8% 104 104 Noble Mineral Resources Ltd. (ASX:NMG) $256.3 $262.8 (2.5%) 129 128 WPG Resources Ltd (ASX:WPG) $173.1 $170.6 1.5% 105 113 Hillgrove Resources Ltd. (ASX:HGO) $254.0 $226.2 12.3% 130 123 Peninsula Energy Limited (ASX:PEN) $171.2 $185.7 (7.8%) 106 105 Orocobre Limited (ASX:ORE) $249.8 $262.2 (4.7%) 131 129 Astron Ltd. (ASX:ATR) $165.2 $168.4 (1.9%) 107 99 Equatorial Resources Limited (ASX:EQX) $241.0 $302.3 (20.3%) 132 181 Alcyone Resources Ltd (ASX:AYN) $164.1 $99.5 64.9% 108 102 Mincor Resources NL (ASX:MCR) $240.7 $275.8 (12.7%) 133 140 Kangaroo Resources Limited (ASX:KRL) $158.1 $139.9 13.0% 109 115 Atlantic Ltd (ASX:ATI) $237.7 $219.4 8.3% 134 158 Tribune Resources Limited (ASX:TBR) $157.0 $118.2 32.8% 110 114 Resource Generation Limited (ASX:RES) $236.4 $226.1 4.6% 135 135 Stanmore Coal Limited (ASX:SMR) $155.8 $155.8 0.0% 111 118 African Energy Resources Limited (ASX:AFR) $231.1 $211.5 9.3% 136 142 YTC Resources Limited (ASX:YTC) $155.0 $138.9 11.6% 112 109 Highlands Pacific Limited (ASX:HIG) $229.8 $240.1 (4.3%) 137 134 Robust Resources Limited (ASX:ROL) $154.6 $159.7 (3.2%) 113 112 Tanami Gold NL (ASX:TAM) $227.1 $229.7 (1.1%) 138 131 Pluton Resources Limited (ASX:PLV) $154.4 $163.5 (5.6%) 114 116 Northern Energy Corporation Ltd (ASX:NEC) $224.7 $217.5 3.3% 139 126 Berkeley Resources Ltd. (ASX:BKY) $149.9 $176.0 (14.8%) 115 106 Iron Ore Holdings Limited (ASX:IOH) $223.5 $261.4 (14.5%) 140 148 Altona Mining Limited (ASX:AOH) $148.7 $127.5 16.6% 116 119 Exco Resources Ltd. (ASX:EXS) $220.0 $204.4 7.6% 141 138 Kentor Gold Limited (ASX:KGL) $148.7 $143.3 3.8% 117 153 Gold Road Resources Limited (ASX:GOR) $217.6 $121.8 78.7% 142 132 IMX Resources Ltd. (ASX:IXR) $147.1 $161.5 (8.9%) 118 127 NKWE Platinum Ltd. (ASX:NKP) $214.8 $171.2 25.5% 143 139 Sihayo Gold Limited (ASX:SIH) $145.7 $141.5 3.0% 119 107 Deep Yellow Ltd. (ASX:DYL) $214.2 $253.7 (15.6%) 144 146 Reed Resources Ltd. (ASX:RDR) $144.2 $133.3 8.2% 120 125 Cerro Resources NL (ASX:CJO) $211.9 $183.2 15.7% 145 144 Cobar Consolidated Resources Ltd (ASX:CCU) $142.5 $135.2 5.4% 121 122 Kula Gold Limited (ASX:KGD) $202.7 $185.8 9.1% 146 151 Ausgold Limited (ASX:AUC) $140.8 $122.6 14.8% 122 111 Platinum Australia Limited (ASX:PLA) $200.1 $231.5 (13.6%) 147 186 Northern Minerals Limited (ASX:NTU) $139.9 $93.3 49.9% 123 117 Red 5 Ltd. (ASX:RED) $199.0 $211.8 (6.0%) 148 130 Australasian Resources Ltd (ASX:ARH) $139.4 $168.1 (17.1%) 124 143 Resource and Investment NL (ASX:RNI) $192.5 $136.2 41.3% 149 137 African Iron Limited (ASX:AKI) $134.3 $144.0 (6.7%) 125 120 FerrAus Ltd. (ASX:FRS) $182.1 $198.3 (8.2%) 150 141 Golden West Resources Limited (ASX:GWR) $130.6 $139.3 (6.2%)Source: Capital IQnew enTranTs - apriL eXiTs - apriL117 Gold Road Resources Limited (ASX:GOR) Mungana Goldmines Ltd (ASX:MUX)132 Alcyone Resources Ltd (ASX:AYN) Iron Road Limited (ASX:IRD)134 Tribune Resources Limited (ASX:TBR) Nyota Minerals Limited (ASX:NYO)146 Ausgold Limited (ASX:AUC) Dragon Mining Limited (ASX:DRA)147 Northern Minerals Limited (ASX:NTU) Papillon Resources Limited (ASX:PIR)Based on market capitalisation as at 30 April vs 31 MarchGroup 150 Leaders and LaGGers - markeT capiTaLisaTion performance - apriL Leaders Laggers * Included material placement, acquisition and/or option conversion during month 3
  4. 4. Group 150Group 150 markeT capiTaLisaTion 700.0 +64.4% 359.8 591.5 606.3 605.4 603.8 589.2 600.0 564.7 572.4 9.9 10.2 9.4 23.4 9.9 21.9 21.7 9.5 528.8 524.8 7.6 8.3 21.6 21.0 522.3 Market Valuation (A$b) - Group 150 19.4 20.5 5.7 503.5 494.1 6.6 5.4 12.8 486.0 13.7 470.8 485.5 17.8 500.0 5.9 14.5 467.0 5.5 153.7 151.1 150.0 148.2 5.2 12.1 13.8 5.8 14.8 144.5 147.2 5.1 13.1 4.8 12.3 142.2 111.6 113.1 114.9 133.2 101.7 113.0 121.2 400.0 108.1 109.5 3.1 8.4 167.7 164.9 166.6 165.3 159.9 152.5 153.8 162.2 161.3 300.0 88.0 138.2 141.4 138.5 150.6 131.7 130.8 137.5 67.1 200.0 240.0 228.7 242.6 233.3 237.8 251.6 245.6 255.6 257.3 252.9 100.0 226.8 212.8 209.5 223.3 206.2 216.6 193.2 0 Jun-09 Dec-09 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 BHPBilliton Rio Tinto Company 3 - 50 Company 51 - 100 Company 101 - 150asX indeX performance - apriL Group 150 mkT cap - By commodiTymerGer & acquisiTions - announced in apriL Percent Premium - Premium - Date Value Consideration Target Acquirer Sought 1 Day Prior 1 Month Prior Announced (A$m) Offered (%) (%) (%) 28-Apr-2011 Rand Uranium (Pty) Ltd. Gold One International Limited (ASX:GDO) 228.9 100 - - Cash 25-Apr-2011 Equinox Minerals Ltd. (ASX:EQN) Barrick Gold Corporation (NYSE:ABX) 7,386.1 98 8.7 48.6 Cash 20-Apr-2011 Exco Resources Ltd., Cloncurry Copper Project Xstrata Queensland Limited 175.0 100 - - Cash 20-Apr-2011 Rocklands Richfield Limited (ASX:RCI) Jindal Steel And Power (Australia) Pty Ltd 94.7 86 47.1 61.3 Cash 18-Apr-2011 Gold One International Limited (ASX:GDO) Baiyin Nonferrous Metal (Group) Co., Ltd. 75.6 18 21.8 43.2 Cash 13-Apr-2011 Afarak Platinum (Proprietary) Limited Aquarius Platinum Ltd. (ASX:AQP) 103.7 74 - - Cash; Equity 4-Apr-2011 KCM Mining Ltd. Energio Limited (ASX:EIO) 40.0 95 - - Equity 3-Apr-2011 Equinox Minerals Ltd. (ASX:EQN) Minmetals Resources Limited (SEHK:1208) 6,437.1 96 22.4 20.1 Cash 1-Apr-2011 Jinka Minerals Ltd. Kentor Gold Limited (ASX:KGL) 10.8 100 - - CashSource: Capital IQAnnounced Australian Resources (excluding oil and gas) Mergers and Acquisitions >A$10m4
  5. 5. MAY 2011aussie doLLar GoLd and The “consoLidaTion corridor” Revisiting our “WA 2010 : Gresham Year in Review” report released last August, our crystal ball view on the gold sector provides for an interesting read: Gold’s fresh all-time high of over US$1,260 an ounce in June of this year was conclusive evidence of what everybody already knows – gold is firmly back in vogue. The last decade has seen gold “return from the dead” as the world’s turmoils shine the spotlight on its credentials as an investment. Relative to other asset classes, returns to holders of physical gold since 2000 – when the industry was being told to adjust to US$250 an ounce – have been stellar. Gold’s performance in Australian dollar terms has been somewhat diluted by an appreciating currency in recent months, but is nonetheless sufficiently impressive to bring Australian gold equities sharply back into focus. Since that time, the gold price has advanced further and is currently trading around US$1,550 an ounce. Despite the increase, the continuing appreciation of the Australian dollar provides a comparable outcome in Australian dollar terms. June 2010 April 2011 Gold Price US$/oz $1,250 $1,550 Exchange Rate AUD:USD 0.85 1.09 Gold Price A$/oz $1,470 $1,422 Gold Price – US$ vs A$ per ounce Gold Price (per ounce) Interestingly this impact does not appear to be reflecting on the value of gold equities. In spite of a producers facing a margin squeeze from flat A$ revenues and increasing cost pressures, valuations have increased quite dramatically since June 2010.Source: Bloomberg, Capital IQ 5
  6. 6. Group 150aussie doLLar GoLd and The “consoLidaTion corridor” Share Price Performance - Since 30 June 2010Sentiment is KingThe insatiable appetite for commodities from China and the recent emergence of India continues, and basic economic theory and currentindustry dynamics would point towards a sustainable and long-term increase in prices.Many producers argue that gold price increases are justifiable on supply pressures alone. However, with most of the gold ever minedsitting in vaults (estimated at in excess of 40 years of current production rates), the source of secondary supply is potentially enormous.While the greater portion of this stored gold is part of government reserves and “sticky”, sentiment towards gold as an investment andstore of value is critical to medium-term prices. Just as the gold price has benefited from the renewed market attraction to gold as aninvestment class, if confidence in traditional financial investments recovered, any large move to lighten gold weighting could tip thesensitive supply–demand balance and result in a large fall in price.But for the long-term gold bulls, the game is just beginning, and many suggest there is strong potential to see a US$2,000 gold pricein the next 12 months and US$3,000 in the next 5 years. The gold bulls would have us believe that whether financial markets go into afurther meltdown (e.g. through systematic sovereign default) or gradually suffer the crippling impacts of inflation, gold is the place to be.These arguments continue to garner support, and as they gain traction the gold sector promises to remain an interesting place.M&A Activity – “Consolidation Corridor”Given the fundamental changes in gold sentiment, and a recent appetite to supplement gold revenues with copper exposure, we expectrationalisation in the sector to continue. Majors understand that M&A capability is critical. To replace reserve depletion and pursuegrowth, the majors continue to target the more nimble juniors which demonstrate greater efficiency in exploration and also have theadvantage of commissioning new production while flying below the radar of NGOs and the lofty expectations that governments have ofglobal producers.The gold sector remains prospective for renewed M&A activity. We continue to believe that a “consolidation corridor” exists in the ASX-listedgold sector, encompassing late stage developers of gold mines and single project producers. Companies which successfully commissiona project are rewarded by the market with a higher rated share price that positions them well to look to acquire other developers onthe back of their proven track record. Yet these same companies also become attractive to larger producers seeking low risk growth andreserve replenishment. The emerging producers become both targets and acquirers – hence the expression “consolidation corridor”.Size still matters, with significantly greater market ratings attributed to larger companies with production diversification and operatingscale. This scale gives them a strong advantage to acquire the more lowly rated juniors. Notwithstanding this, and consistent with the past10 years, we expect movement amongst the junior to bulk up to a size that justifies the M&A expense of the majors.In recent years, West Africa has provided the foundation for a number of new companies which have enjoyed stellar runs in share priceon the back of both exploration success and potential “blue-sky”. A number of market commentators questioned the valuations againstunderlying fundamentals but recent murmurs of unrest in a number of these countries has flowed through to the share price of late.The gold sector continues to suffer a real investment void post the Lihir/Newcrest transaction and boards of companies in the“consolidation corridor” could face the prospect of receiving an offer which provides significant short term value creation for shareholdersover the next 12 months.6
  7. 7. MAY 2011Base meTaLs - secTor performance Share Price Performance - April 2011 Copper Nickel ZincShare Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance 7
  8. 8. Group 150coaL - secTor performance Share Price Performance - April 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance8
  9. 9. MAY 2011diversified - secTor performance indusTriaL mineraLs - secTor performance Share Price Performance - April 2011Share Price Performance Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance Share Price Performance 9
  10. 10. Group 150GoLd - secTor performance Share Price Performance - April 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance10
  11. 11. MAY 2011iron ore - secTor performance Share Price Performance - April 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance 11
  12. 12. Group 150uranium - secTor performance Share Price Performance - April 2011Share Price Performance Share Price Performance - Since 31 December 2010Share Price Performance Share Price Performance - Since 30 June 2010Share Price Performance12
  13. 13. MAY 2011consensus commodiTy price forecasTs - apriL Gold (US$/oz) Silver (US$/OZ) $2,500 $60 $47.91 $2,000 $50 $1,564 $1,444 $1,331 $1,231 $40 $30.50 $1,500 $1,134 $30 $22.00 $20.00 $19.44 $1,000 $20 $500 $10 $0 $0 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 Copper (US$/lb) Nickel (US$/lb) $6.00 $16.00 $4.43 $4.69 $12.18 $5.00 $4.23 $11.56 $3.87 $10.72 $10.29 $3.71 $12.00 $9.75 $4.00 $3.00 $8.00 $2.00 $4.00 $1.00 $0.00 $0.00 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 Zinc (US$/lb) Lead (US$/lb) $1.50 $2.00 $1.09 $1.11 $1.11 $1.09 $1.02 $1.50 $1.13 $1.16 $1.20 $1.12 $1.00 $1.07 $1.00 $0.50 $0.50 $0.00 $0.00 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 Tin (US$/lb) Uranium (US$/lb) $20.00 $100 $17.50 $14.54 $13.66 $13.72 $65.00 $63.25 $15.00 $75 $60.00 $10.36 $55.25 $53.00 $12.50 $9.07 $10.00 $50 $7.50 $5.00 $25 $2.50 $0.00 $0 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014 AUD:USD NYMEX (US$/bbl) $1.25 $1.09 $200 $1.01 $0.95 $0.89 $0.87 $1.00 $150 $112.68 $107.50 $110.00 $95.00 $100.00 $0.75 $100 $0.50 $50 $0.25 $0.00 $0 Spot 2011 2012 2013 2014 Spot 2011 2012 2013 2014Source: Bloomberg Consensus Estimates - Median / High / Low 13
  14. 14. recenT resources TransacTions Group 150 Mergers and Acquisitions Mergers and Acquisitions 2010 2009 GRAM 2009 2009 2008 2008 2006 Advised BHP Advised BG Advised Guandong Advised Allied Gold Advised Kalahari Advised Gem Advised IAMGOLD Billiton on its Group on its $1bn Rising on its $216m on its $54m Minerals on its Diamonds on its Corporation on its $204m offer for takeover offer for cornerstone acquisition of $140m proposed $300m acquisition $265m acquisition United Minerals Pure Energy investment in Pan Australian merger with of Kimberley of Gallery Gold. Corporation. Resources Aust. Solomons Gold. Extract Resources. Diamonds. Limited. TakeoverDefence Takeover Defence 2010 2010 2010 2009 2009 2007 2007 Advised Polaris Advised Indophil Advised Advised Energy Advised Brandrill Advised Summit Advised Tethyan on Metals NL on on $545m Centaurus Metals on its $86m Limited on its Resources on its its $220m $178m takeover recommended Resources on its proportional takeover $45m takeover A$1.2bn takeover competing takeover offer by Mineral offer from Zijin $20m merger offer by China offer by Ausdrill by Paladin Energy. offer by Crosby and Resources with Glengarry Guangdong Nuclear Limited. Antogafasta/Barrick. Limited. Resources. Power Group. Strategic Advisory, JointJoint Ventures and Capital Markets Strategic Advisory, Ventures and Capital Markets 2010 2010 2009 2008 2009/08 2008 2008 Advised BHP Introduced Advised BHP Advised Advised Iluka on its Advised Advised Iluka Billiton on its Denham Capital to Billiton on the Bannerman $114m Murchison Metals Resources on its US$116bn iron Trans Tasman disposal of the Resources on its institutional on its joint venture $54m Narama coal ore production Resources resulting Yabulu Nickel financing with placement and with Mitsubishi. divestment to joint venture with in NZ iron sands refinery. Resource Capital $353m accelerated Xstrata. Rio Tinto. investment. Funds. right issue. 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