KFM Weekly Investment Update: Friday, 05 June 2015

Local Market Summary:

•Prime Minister Hon Peter O’Neill announced the introduction of the legislation that would
ensure the independence of the Securities Commission of PNG and will open the POMSoX
to greater competition. Three new Bills which will be tabled in Parliament include Securities
Commission Act 2015, Capital Market Act 2015, and Central Depository Act 2015

•BPNG says the new Organic Law on Sovereign Wealth Fund (SWF) presented to Parliament
in February is expected to be passed after the final reading later this year. BPNG Governor
Mr Loi Bakani stated that final amendments must be incorporated to ensure its consistency
with the Kumul Act before final reading. He added that the State should maintain its
commitment to have the SWF operational next year to prudently manage revenue inflows
from LNG and other mineral projects in a sustainable way

•Prime Minister O’Neill welcomed Japan’s JX Nippon Oil and Gas Company’s interest to
expand investment in the country’s resource sector. This followed a courtesy call by JX
Nippon’s vice-president Mr Hironori Wasada to the Parliament House this week. Mr O’Neill
reaffirmed the Government’s support for the company to pursue investment opportunities
and expand operations that employ PNG citizens. JX Nippon is one of the co- ventures in
the US$19.0bn (K50bn) PNG LNG Project with a 4.9% stake

•Deloitte Access Economy partner Mr Paul Liggins said that the PNG Governments move to
privatisation of state assets is a positive move. He added that this would assist in further
developing the country’s economy by building on the capacity of states assets

•The 10.0b cubic feet of gas will be made available for domestic market under an agreement
with ExxonMobil PNG and cheaper at 18-21 toea per kilowatt, says Petroleum and
Energy Minister Hon Nixon Duban. He also stated that the price is more reasonable as per
negotiations compared to diesel which is currently available at 80 toea per kilowatt

•Comrade Trustee Services Limited has relocated its head office to the newly built Comrade
Haus building at Frangifani street, Hohola (behind MVIL office) from 6th Floor Defense
Haus Down Town. Operations at the new office will commence by Tuesday, 09/06/15.
Members Services office located on the ground floor of Defense Haus will remain open
during this _me

•OK Tedi Mining has reported a net profit a4er tax of K360.1m on last year’s performance.
The company said in its 2014 annual report that the result was an increase of 99.0% from
its 2013 results. CEO Mr Nigel Parker said OTML had improved its profitability in 2014
despite the company’s financial performance being negatively impacted by volatility in
global metal prices. Specifically, sales revenue amounted to K2,469.9m, dividends were
declared at K123.8m and total taxes paid to the PNG Government were K356.8m Parker
said. OTML’s cash operating costs in 2014 were K1,283m a decrease of 21.0% or K321.4m
over 2013

•Nautilus Minerals has plans to expand its activities into the Bismarck Sea and the Pacific,
PNG country manager Mr Mel Togolo says. He said there was potential for expansion in
the Bismarck especially with a current deposit located close to the Solwara 1 site, found off
the west coast of New Ireland. Mr Togolo said Solwara 1 isa small project given its short
life span and with the recommencing of exploration, Nautilus is looking towards other
potential sites

•NBPOL is focusing on domestic supply of beef to ensure that import is reduced, CEO Mr
Nick Thompson says. PNG still imports large quantities of beef, NBPOL estimates that it
could supply under their two brands about half of the beef consumed in PNG

•This week’s BPNG Treasury Bill auction was oversubscribed by K58.5m out of the K200.0m
on offer across both 182 and 364 terms. Weighted average yields were 4.5% for 182 days
and 7.2% for 364 days from last week’s auctions

•The KSi index ended the week 1.5% lower at 3,554.96 similarly the KSi Home Index ended
0.6% lower finishing the week at 9,751.33

International Market Summary:

•US share markets fell with investors cautious ahead of the US non-farm payrolls data release,
despite the Fed’s ‘growth has returned to the economy over the past two months’

•European stocks are lower, long-term core bond yields are nudging higher, and major forex
pairings are little changed as investors await an important guide to the health of the US
economy, the latest sign of the volatility rattling markets as investors struggle to reassess
an increasingly murky global economic outlook

•China’s stock market suffered one of its biggest falls this year before staging a dramatic
recovery to end in positive territory, adding to a week of large and sudden moves amid
jitters over a clampdown on lending to investors

•The Australian share market weathered its heaviest week of losses in three years as the
sell-off of the big four banks continued to drag, and investors braced for a long weekend
set with big news from abroad. The benchmark S&P/ASX 200 finished down 6 points today,
or by 4.8% to 5498.5 (refer graph)

•Light crude was down 3.8% to US$58.06 as oil prices sank as traders assessed ample global
crude supplies ahead of the OPEC Countries’ meeting

•PGK/USD and PGK/AUD each closed the week lower, at 1.1% to 0.3675 and 1.9% to 0.4774

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