Cotton & Western Mining Inc. (CWRN)

[Digra Ive]

Iron Ore prices update.

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MBIO Index 14 January 2011; $174.72/tonne MBIO Index 13/1/11 $174.02/tonne % Change +0.4%/tonne $ Change +$0.70/tonne The MBIO Index today calculated to $174.72/tonne cfr Qingdao on a 62% Fe basis. This is a rise of $0.70/tonne on yesterday as the index finishes the week at the highest level since 5th May 2010. The index has risen $4.53/tonne this week which represents the biggest weekly rise in two months. Assessments for 63.5% Indian material have also risen today to $181-$183/tonne after staying flat yesterday at $180-$181/tonne. It was reported this week that the East Indian state of Orissa is now considering restricting iron ore exports as Karnataka did last year. A ban in Orissa does not look set to take place in the near future however, and in Karnataka a number of miners continue to challenge the legal ruling. Tropical cyclone Vince is approaching the northwest coast of Australia and the ports servicing the Pilbara. Poor weather is expected at this time of year but with such tight supply elsewhere the effect is likely to be more noticeable. Freight rates continue to decline with the routes to China from India at below $7/tonne, Australia at $12.50/tonne and Brazil now below $18/tonne. These low rates further highlight the strength of the iron ore price on a FOB basis. Steel prices have pushed up this week partly on the back of rising raw materials cost, most notably that of coking coal as the floods in Queensland continue to cause havoc with shipments. Further rises in the iron ore spot prices are expected in the short term but a number of mills have seemingly done their buying before the upcoming holiday and so further rises are likely to be reflection on a worsening supply situation