KFM Weekly Investment Update: Monday, 23 December 2013

Local Market Summary

•Marengo (MMC) and Sentient Executive GP IV Ltd have agreed, among other things, to convert the US$10,000,000 working capital debt facility dated February 6, 2013, in order to provide the company and its PNG subsidiaries, Yandera Mining Company Limited and Marengo Mining (PNG) Limited, with additional flexibility to conduct their business.

•Despite depressed metal prices, Ramu NiCo Management (MCC) Ltd was proud to announce no layoffs in its national workforce. Market prices of Nickel have dropped from US17, 000 to US14, 000 a tonne. Board Chairman Zhoa Shimin said the company paid great importance to provide technical training to landowners and locals. Furthermore, Shimin noted that despite the current prices, the goal for the company was to achieve 70% design capacity in 2014 from which the company has managed to achieve 50% capacity during 2013.

•Pacific Balance Fund (PBF) has recorded a successful year. Melanesian Trustee Services Limited, the Trustee for PBF Chief Executive Kennedy Wemin announced that the Board had adopted the 2011 financials and had paid a K4m dividend to unit holders. The 2012 audits will be completed in early 2014 enabling the fund to have its accounts open for trading on the open market. The fund size is now K320m.

•KPL announced that it has appointed Mr Richard Robinson to the Board of KPL in the role of Non-Executive Director.

•Sir Manasupe Zerenuoc has been appointed to the Mineral Resources Development Corporation (MRDC) Board of Directors. Sir Manasupe said it is important that in moving forward the company reviews the investments and its investment strategies.

•Morobe Provincial Government passed K371m budget for the coming year. Governor Naru in handing down the budget K151m is to be handed to open members and the respective Joint District and Planning and Budget Priories Commission, while K92.7million will be paid to publicservants of the province.

•The KSI decreased 0.1% to 3,871, whilst the KSI Home declined by 0.5% to 8,174 for the week.

International Market Summary

•The Federal Reserve is likely to reduce its bond purchases in $10 billion increments before ending the program in December 2014. The Fed coupled its decision to taper bond purchases with a stronger commitment to keep its benchmark interest rate low. Chairman Bernanke said the decision was intended to “keep the level of accommodation the same overall.” Markets reacted positively to the news (see chart).

•The Bank of Japan kept its record easing while signalling progress in its fight against deflation, after a U.S. Federal Reserve decision to taper policy helped weaken the yen to a five-year low against the dollar.

•Oil (Brent) price was up 1.0% to US$109.9 and light crude closed up 2.2% higher at US$98.74.

•Gold was down 3.3% closing below the US$1,200 mark for the week.

•The Kina appreciated against the AUD by 1.8% to 0.4477 following a further weakening in the Australian Dollar and appreciated by 0.8% against the USD during the week

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pdfKFM Weekly Investment Update: Monday, 23 December 2013

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