KFM Weekly Investment Update: Friday, 29 July 2016

Local Market Summary:

•The proposed legislative changes to the Mineral Resources Authority (MRA) Act
and Mining Act may discourage further investments in the country, according to
Highlands Pacific Limited (HPL). HPL Chairman Ken MacDonald warned that the
current downturn in commodity prices was not a time when more corporate risks
should be introduced into mining legislation

•MRA has granted Ramu NiCo regular operation permission and also issued an
order for the restart and operation of high pressure acid leach, and the relaxation
of cessation order of blasting at the Basamuk limestone quarry. Ramu Nico’s
Basamuk refinery deputy manager Adam Lukey said this is a very positive step
and a memorable day for the company

•A subsidiary under Kumul Consolidated Holdings (KCHL) known as Kumul
Agriculture, which will manage agri-business undertaken by KCHL, is expected to
be finalised in a few weeks. KCHL GM of Projects and Investments Lutz Heim said
Kumul Agriculture was intended to be a holding company of entities such as Sepik
Agriculture Enterprise, which was the entity responsible for Sepik Plain Agriculture
Project and other projects devoted to agri-business

•Newcrest Mining has recorded an increase in gold production and a decrease in
copper production for the financial year 2016. According to Newcrest’s June
Quarterly Report, the company’s net debt was reduced by 27.0% or A$0.8bn
(K2.6bn) over the year to A$2.1bn (K6.8bn). MD and CEO, Sandeep Biswas
confirmed that the company managed to deliver a solid performance considering
the challenges experienced at some sites. He further stated that the 27.0%
reduction in net debt reflected their focus on cash generation and look forward to
safely building upon this performance with the continued ramp up of Cadia East
and the ongoing operational improvements at Lihir

•Nambawan Super Limited (NSL) opened its new head office, Nambawan Plaza, at
the Old Parliament Haus in Town, Port Moresby. NSL’s General Manager for
Property, Andrew Eslser, said there is another construction under the same
investment in progress next door the office which will be a ultra-high luxury
residential apartments

•Lead explorer of Frieda River copper-gold project in West Sepik, PanAust, says
the company’s performance in the first half of 2016 has seen its key business
metrics demonstrate strength and capability of its people, culture, systems and
processes. MD Dr Fred Hess said two key milestones were reached in last
month’s quarter, in respect of PanAust’s pursuit of organic growth. These are the
completion of the feasibility study for the Frieda River Copper-Gold project and
registration of a special mining lease (SML) application with MRA

•This week’s BPNG auctions in Central Banks Bills were offered only for 28 days
with an oversubscription of K417.5m out of a total of K252.0m on offer. The
weighted average yield was 1.1%. Auctions in Treasury Bills were
undersubscribed by K139.6m out of K175.3m on offer. Weighted average yields
were 2.6% for 91 days, 4.7% for 182 days and 7.7% for 364 days

•In this month’s BPNG GIS auctions, the government offered K90.0m worth of GIS
however, only received a total of K20.0m worth of bids. Thus, the auctions were
under-subscribed for the month. Weighted average rates for 3 years remained at
9.0%, 5 years was at 10.5%, 10 years was 11.5% and 13 years was at 12.5%

•Both the KSi Index and KSi Home index remained unchanged for the week at
4,695.9 points and 9,821.4 points, respectively

International Market Summary:

•Global equities struggled for traction as participants digested a welter of corporate
earnings reports and watched with trepidation as oil prices sank to levels not seen
for more than three months

•US stocks rose, lifting the S&P 500 within striking distance of an all-time high,
amid a mix of corporate results as investors await data Friday on the strength of
the American economy (GDP). The S&P staged an afternoon comeback to end
0.2% higher at 2,170.1. Ford led transportation shares lower, while Facebook
boosted tech firms

•European stocks fell, as bank shares were dragged down and as investors
grappled with a stream of corporate earnings reports from key companies such as
Royal Dutch Shell and Adidas

•The Bank of Japan (BOJ) announced a modest dose of stimulus in a sign that it
may be running up against the limits of monetary policy, disappointing investors
who expected a bolder move to complement a new government spending plan to
jolt the economy. The BOJ pledged to increase purchases of exchange-traded
funds but kept interest rates steady at the close of its two-day meeting on Friday,
confounding market expectations of hefty stimulus

•Australian shares have managed to hang on and make it five sessions of gains as
most stocks were higher on Friday, but weakness in the mining and energy space
dragged. The ASX 200 closed 0.1% higher at 5,562.4

•Oil futures, pushed lower with WTI crude headed for its sixth straight session
decline and sticking to their lowest levels in more than three months. The day’s
move left Brent more than 20.0% down from a 2016 high reached in June — a
decline largely based on unexpected growth in US crude inventories and worries
surrounding a potential slowdown in demand have kept pressure on oil prices
(refer graph)

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pdfKFM Weekly Investment Update: Friday, 29 July 2016

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