Morning View

The Fairfax Mining team is very pleased to welcome Carole Ferguson into the fold today.

Economic News

Europe – As Europe moves towards a (temporary?) resolution on Greece, S&P this morning stated that the debt roll over is effectively placing the country in “selective default”

• Protests continue across Greece as the prospect of increasing austerity measures and privatisations hit home.

• Additionally the EU has forecast that Greece will unsurprisingly remain in recession for the rest of the year. New forecast suggest growth will shrink 3.75% in 2011.

• The exact details of the bailout are yet to be finalised despite the approval being passed on Saturday night.

China – New domestic estimates suggest that Inflation in the country may climb to 6.2% in June on the back of soaring food prices, specifically pork. Further rate rises are now imminent.

• China’s non manufacturing industries expanded at the slowest pace in four months in June. The index dropped to 57 from 61.9 in May according to the China Federation of Logistics and Purchasing.

US – All eyes will be on the non farm payroll figures released at the end of the week. Expectations are that payrolls will expand from the repressed pace last month. The question will be though whether.

• New domestic forecasts suggest that US homes may climb in value in Q3 as the number of foreclosures declines.

Japan – The Bank of Japan’s Tankan Index showed last week that large manufacturers expect the economy to be back on a growth path by next quarter.

Australia – Figures released this morning show that retail sales unexpectedly fell in May for the second time in 3 months. Sales fell 0.6% in May after having risen 1.2% in April.

UK – Figures this morning show that the Reed Index, a measure of employment creation accelerated in June as insurance and engineering companies increased hiring.

South Africa – The National Union of Metalworkers started a strike today following a pay dispute with the country’s steel and engineering industries. The union is expecting around 320,000 workers to participate in the strike

Tanzania – Mantra Resources from Australia is planning to construct a US$400m uranium mine in Tanzania in the next 3 years. The government offered 34,500ha for the project expected to yield US$250m in gross annual turnover for 15 years. There are at least 54m pounds of uranium oxide deposits in Tanzania.

Currency – The euro is off this morning on the back of the comments from S&P. The Australian dollar declined this from its 7 week high on the back of the retail sales figures.

US$/1.453eur vs $1.453/eur yesterday. Yen80.77/$ vs 80.65/$, SAr6.730/$ vs 6.757/$ $1.608/GBP vs 1.608/GB

Commodity News

Precious:

Gold US$1,494oz vs US$1,498/oz yesterday – Gold is up this morning in the face of weakening dollar index as euro currency gains on a release of a €8.7bn loan to Greece and expectations ECB to raise interest rates during its meeting on July 7.

• South Africa, a 5th largest producer of gold in the world, reported a 3.4% output increased to 1.4moz compared to 1Q last year.

• SPDR gold trust holdings remained at 1,205.81 (38.767moz) value US$57.470bn

Platinum US$1,723/oz vs US$1,706/oz yesterday

Palladium US$761/oz vs US$752/oz yesterday

Silver US$34.05/oz vs US$34.23/oz yesterday

Rhodium US$1,970 vs US$1,970/oz yesterday

Base metals:

Copper US$9,467t vs US$9,405t yesterday – Metal prices increased and are now close to US$9,500 after the US posted a better-than-expected manufacturing data on Friday.

• China might wait with further monetary tightening as its services and manufacturing industries growth rates sharply slowed down in June which in turn is likely to support the demand for copper in the near term.

• Miners at state-owned Coldelco will hold a 24-hour strike on July 11 against job cuts.

Aluminium US$2,509/t vs US$2,532/t yesterday

• Novelis, the leader in aluminium rolled products with a 20% world’s production share, announced to build a US$15.8mln continuous casting line at Pieve Emanuele, Italy, and commission it by 2012.

Nickel US$23,190/t vs US$23,475/t yesterday

Zinc US$2,359/t vs US$2,350/t yesterday

• India’s Hindustan, local largest producer, increased zinc prices by 2.7% to INR121,400/mt and lead prices by 1.7% to INR135,000/mt.

Lead US$2,673/t vs US$2,675/t yesterday

Tin US$25,649/t vs US$26,100/t yesterday

Energy:

Oil US$111.76/bbl vs US$111.09/bbl yesterday – Oil prices advanced after Greece was approved to receive a €8.7bn loan from IMF and EU easing concerns about Europe’s economic recovery pace. A falling price should help the global economic recovery.

• Exxon Mobil shut the pipeline at its refinery in Billings, Montana, after the spill that happened on July 1 and 1,000bbl of crude leaked into Yellowstone River.

• Russia’s crude oil exports declined 6% to 5.06mbbl in June as government increased export duties on the commodities to the highest level since 2008.

• Repairs of the Yemeni oil pipeline, with a capacity of 12,000bbl per day, that connects production in the centre of the country, Marib province, and the Red Sea port for export will be soon completed.

Natural Gas US$4.299/mmbtu vs US$4.333/mmbtu yesterday

Uranium – US$54.25/lb vs $54.25 last week

Other:

Coal – Market expectations are prices will increase in 2012 as more of thermal and coking coal will be used in power generation and more amounts imported by China and India.

Iron Ore – Murchison Metals, an Australian iron ore producer, said the construction of the Oakajee port and the Jack Hills mine will cost US$6.4bn and 3US$3.7bn, respectively. The financing of the projects still remains a challenge.

Steel – NLMK, Russian steel maker, produced 11.5mt in 2010 and said it plans to acquire downstream projects in India, Middle East and South East Asia in a move to cap finished goods’ demand in those regions.

Company News

Bellzone (LON:BZM) – Infrastructure update

• Company announces a progress update for Kalia Project Rail and Port Infrastructure Project.

• The infrastructure project is owned and managed by Kalia Horizon Minerals - the 90:10 joint venture company established by China International Fund Limited and Bellzone respectively.

• The company will put infrastructure feasibility studies to Guinea Government by Q4 2011.

• To date the first 74km of 286km rail route has been submitted and agreed in principle by the Government

• Both the port and rail studies are currently underway.

• Port design and layout expected to be completed and due for review by JV partners this month.

• The company has exclusive rights to develop the project.

Horizonte Minerals (LON:HZM) – Diamond drilling program starts at Falcao.

• Company announces that it has started its 3000m diamond drilling program at its Falcao project in the southern part of the Carajas mining district in Brazil.

• The program comes on the back of geologic mapping, aromag and radiometric work conducted in October 2010.

• The previous work confirmed a 300m to 600m wide zone at greater than 50ppb with isolated results as high as 13.5g/tgold.

• The drilling program aims to test the gold soil anomaly which is currently 4km long and varies from 200m to over 800m in width at values of +50ppb Au

• Ten drill holes between 200m and 300m have been spaced over the 4,700m strike extent.