Eoin Treacy's view South Africa is blessed with world class resources, the exploitation of which is limited by governance related issues. A clear policy of support for the mining industry would go a long way towards helping the country achieve its extraction potential and would also contribute to reducing the negative current account and trade balances.

On my first trip to Sodwana Bay near the Mozambique border, if my memory serves me correctly, the dive master reassuring us that the black tint on some of the sand dunes was not pollution but, that there was literally titanium "in them thar hills". South Africa's declining gold output has made headlines but should not negate the fact that the country remains a major exporter of platinum, coal and other industrial resources.

BHP Billiton dominates the Johannesburg All Share with 25% of the Index. It continues to encounter resistance in the region of ZAR25,000 but a sustained break of the progression of rising reaction lows, currently near ZAR21,600, would be required to question the consistency of the medium uptrend. The All-Share has so far had less of a pullback and but has a relatively similar pattern otherwise.

The US Dollar gave up most of its 2008 advance against the Rand by September 2009 and has subsequently lost momentum. While some additional US Dollar strength appears likely in the short-term, a sustained move above ZAR8 would be required to question the consistency of the medium-term downtrend. The Euro remains in a medium-term downtrend against the Rand and a sustained move above ZAR10 would be required to break the progression of lower highs and question the consistency of the move.

The FTSE/JSE Banks Index has rallied impressively over the last year and is currently testing the 2007 highs. While the trend remains consistent, it is overextended relative to the 200-day moving average and some further reversion back towards the mean appears likely before significant additional upside is achieved.

The FTSE/JSE Gold Mining Index has firmed recently in the region of 2150, which also offered support on a number of occasions since 2007. However, it needs to sustain a move above 2750 to break the medium-term progression of lower highs and indicate demand has regained the upper hand.

The FTSE/JSE Africa Platinum Mining Index continues to post a progression of higher reaction lows from the 2008 nadir and these would need to be taken out to begin to question medium-term upside potential.

South Africa remains a country with enormous potential and economic governance is slowly improving, reflected in the performance of the stock market. While significant challenges remains, provided this trajectory of improvement remains intact, the invest environment is likely to remain benign over the medium-term; some short-term over extension excepted.


Newmont reports 105% increase in net income despite cost pressures - This article by Dorothy Kosich for Bloomberg may be of interest to subscribers. Here is a section:

As Newmont reported a 105% increase in first-quarter net income and remains on track for ounces of gold production this year, CEO Richard O'Brien told analysts Tuesday the company is experiencing operating costs pressures "primarily driven by lower production volumes in Nevada, Peru and Ghana, and as a function of high cost underground production at Nevada and higher mill production at Yanacocha."

On a year-over-year basis, CIS increased from $431 to $480 an ounce. O'Brien reassured analysts that lower cost production from the new Boddington mine in Australia "should offset some of these operating costs as we ramp up the full production towards the end of the year."

"Despite these operating costs pressures, we continue to expect full year performance in line with our existing outlook."

Equity gold production was 1.3 million ounces during the first quarter, while copper production increased 143% to 90 million pounds, due to Phase V mining at the Batu Hijau operation in Indonesia. O'Brien advised the company continues to expect equity gold production ranging between 5.3 million and 5.5 million ounces this year.