Redhawk Res Inc RHWKF

Canaccord's Morning Coffee - Tuesday April 15, 2014

[rebel20]

Copper
NEWSFLASH: THE CHINESE STILL LOVE THEIR COPPER.

Chinese companies continue to buy BIG copper-mining assets, even as copper prices are softening – copper prices are down almost 10% on the year. Yesterday, Glencore Xstrata announced the sale of its Peruvian Las Bambas copper mine to a consortium of Chinese buyers for US$5.85 billion (higher than expected).

The consortium was made up of MMG Ltd., Guoxin International Investment Corp. and CITIC Group. Glencore Xstrata has been in discussions with for the sale of Las Bambas for many months now. As Citigroup has stated, "The long-term copper supply-demand fundamentals remain attractive. It‟s both an infrastructure play - used for power grids, real estate etc. - and also a consumer play, like appliances and computers, there are only a few large scale new copper mines coming online in
the near future, and most are not for sale."

Teck Resources (TCK.B) CEO Don Lindsay was recently quoted by Bloomberg in saying, "Take copper, all the new CEOs repeat the same mantra that they want to cut costs. I think that phase will last for a while and set the scene for the next cycle" within three years to 2017 when copper and zinc may be in deficit again. Lindsay went on to add that many mining investors these days are looking for short-term profits, while mining is actually a long-term investment. That‟s also contributing to underinvestment in the industry.