Today - Friday, December 13, 2013
12:24 PMPretium Resources reports encouraging Valley of the Kings results
- Pretium Resources (PVG +3.8%) says 5,865 oz. of gold have been produced from the 10,302 dry metric tons of excavated material from the Valley of the Kings bulk sample program.
- PVG says preliminary analysis of the results from both processing and drilling have been "highly encouraging" of the reliability of the geological model and mineral resource estimate for Valley of the Kings.
11:41 AMCowen upgrades U.S. Steel, ArcelorMittal on rising steel prices
- U.S. Steel (X +2.8%) and ArcelorMittal (MT +1.2%) are upgraded to Outperform from Market Perform at Cowen, which prefers the most vertically integrated steel companies to insulate against rising raw material costs.
- Strengthening demand and an accelerating global economic recovery should enable producers with excess capacity to capture latent earnings, the firm says, but non-vertically integrated mills likely will face a margin squeeze from elevated iron ore prices.
11:20 AMFMC to sell Peroxygens unit to JPM's private investment arm
- Chemicals company FMC Corp. (FMC +0.1%) agrees to sell its Peroxygens business to affiliates of One Equity Partners, the private investment arm of JPMorgan Chase in a deal valued at ~$200M.
- Peroxygens is a supplier of hydrogen peroxide, persulfate products, peracetic acid and other specialty oxidants.
- FMC says it wants to focus on its core business segments in crop protection, health and nutrition technologies, and alkali chemicals and lithium.
9:52 AMAugusta's Rosemont Mine approved by U.S. Forest Service, +15%
- Augusta Resources (AZC +15.1%) soars at the open after announcing the U.S. Forest Service will issue a draft decision today approving its proposed Rosemont Mine in Arizona.
- AZC says the Forest Service picked the Barrel Alternative for the mine site; the proposal would leave untouched a neighboring canyon, which the service says is more ecologically valuable.
- Though the decision is a huge step, the mine is not yet a sure thing; key issues about impacts to neighboring streams, water quality and environmental mitigation remain unresolved.
9:02 AMBrigus Gold discovers new ore zone at Grey Fox
- Brigus Gold (BRD) reports the discovery of a potentially new ore zone at its Grey Fox mining project in Ontario, "further confirming that the Grey Fox project is open for expansion in all directions."
- Grey Fox is adjacent to BRD's Black Fox mine and mill, which produced ~90K oz. of gold last year and should produce 95K-105K oz. this year.
7:51 AMCoffee prices take a turn higher| 2 Comments
4:56 AMHouse OKs stopgap farm bill
- In addition to passing a two-year budget deal, the House has also approved a temporary farm bill that would avert a potential doubling of milk prices by extending the current law until January 31.
- The idea is to give negotiators more time to formulate new long-term legislation that would end "direct payment" subsidies to growers, cut food stamps and extend subsidized crop insurance.
- However, the stopgap bill is unlikely to pass in the Senate, as Democrats oppose it. If the legislation does fail, dairy subsidies would revert to the terms of an underlying law from 1949.
Thursday, December 12, 2013
5:10 PMAnglo American secures two big sales deals for Minas Rio iron ore
- Anglo American (AAUKF, AAUKY) says it has secured two large sales agreements for the majority of the forecast 26.5M metric tons of iron ore to be produced from Brazil's Minas Rio project, and says the oft-delayed project remains on course to start commercial production by the end of next year.
- Minas Rio should deliver a return on capital employed of 7% or more in 2016, a figure that will continue rise as the project ramps up production, Anglo CFO Rene Medori says at the company's investor day.
- Also, Anglo says it is working on a new mine plan that is expected to increase annual copper production at its Quellaveco copper project in Peru by ~25% to 281K tons/year, vs. earlier projections for the mine to produce 225K tons/year during a mine life of more than 30 years.
3:54 PMFDA to phase out non-medical use of antibiotics on farm animals
- In a major shift of national food policy, the FDA will phase out the non-medical use of antibiotics on farm animals in an effort to combat growing human resistance to the crucial drugs.
- The plan, announced yesterday, would push livestock and poultry producers to limit their use of antibiotics to treating sick animals, and to stop using the drugs to fatten cattle, hogs and chickens for human consumption.
- The FDA says it has received commitments from two major drug producers, former Pfizer subsidiary Zoetis (ZTS) and Elanco, which is owned by Eli Lilly (LLY).
3:19 PMJim Rogers hedges gold holdings
- I'd rather buy silver (SLV -3.8%) says Jim Rogers, when asked to choose between precious metals. Gold (GLD -2.1%), he says, is off about 30-35% from its highs while silver is down more like 60%. Rogers is an owner of both, but not adding just yet, and while he's hedged his gold holdings, he hasn't done so for silver because it's already down so far.
- "If it goes down more, I hope I'm smart enough to buy."
- PM ETFs: GLD, SLV, IAU, AGQ, PHYS, SIVR, USLV, ZSL, SGOL, UGL, DGP, GLL, DZZ, UGLD, DBS, DGL, DSLV, DGZ, AGOL, GLDI, DGLD, SLVO, TBAR, USV, UBG
3:00 PMLyondellBasell upgraded to Top Pick at RBC
- LyondellBasell (LYB +1.6%) is upgraded to Top Pick from Outperform with a $110 price target, up from $90, at RBC Capital, which cites strong organic and market driven growth potential and an under-levered balance sheet which should lead to $12B-$14B of potential cash for capital returns over the next three years.
- Following 12%-16% EPS growth in 2012-13 mainly from higher U.S. ethylene margins (offset by weak refinery margins), the firm believes a pase of accelerated EPS growth of 25%-plus will begin in 2014 via three levers: low-risk, high-return capacity de-bottlenecks with staggered start-ups; share repurchases, assuming ~10% each year; and margin expansion and cost reductions.
12:41 PMCIBC: Thompson Creek needs 30% higher metal prices to avoid restructure
- Thompson Creek (TC -3.6%) needs metal prices to rise ~30% to avoid some form of restructuring, CIBC warns, but the miner "has time in its favor."
- However, the firm says TC is making positive progress at the Mt. Milligan copper and gold project, does not foresee near-term liquidity issues and considers the recent share price pullback as a buying opportunity for risk-tolerant investors.
- The firm notes that molybdenum currently accounts for 100% of TC sales but is forecast to fall to 40% next year.
10:59 AMIAMGOLD plunges 7% after suspending dividend
- IAMGOLD (IAG -7.1%) tumbles to new 52-week lows following the miner's suspension of its dividend; other gold miners also are racking up losses, and the top gold miner ETF (GDX -1.8%) thuds to 52-week lows.
- Given IAG's dividend yield had climbed to 6.5%, TD Securities says the move should not surprise anyone; indeed, it makes sense to conserve cash in an environment of low gold prices, and the move saves ~$94M/year.
- TD also points out that the market has reacted positively when miners such as Barrick (ABX -0.7%) and Kinross (KGC -0.4) cut dividends.
- IAG has enough liquidity to continue to operate its mines, Goldman Sachs says, but thinks the next step for the company should be to close cash-negative operations or monetize its niobium asset.
- Also hitting new 52-week lows: NEM -1.2%, GFI -3.8%, GG -1%.
- Other ETFs: GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST
10:39 AMAnglo American making progress toward improving profitability, CEO says
- Anglo American (AAUKF, AAUKY) CEO Mark Cutifani reaffirms his turnaround plan to bolster the miner's return on equity employed to more than 15% by 2016 from 11% in H1 of this year but expects to face headwinds next year.
- "We have identified ~85% of the incremental EBIT necessary to achieve the level of return we expect from the business, and we are working on the areas where we see additional potential," Cutifani says.
- Anglo has underperformed its diversified mining peers over the past six years; since 2007, it has more than doubled its total capital employed but its rate of return has been cut by more than half.
9:36 AMBanro names Clarke as permanent President/CEO
- Banro (BAA) appoints John Clarke to the permanent role of President and CEO after filling the interim role since March.
- In an operations update, cyanide irrigation of the Namoya heap leach pad began the first week of December, and the expansion at Twangiza has been substantially completed except for installation of the second elution circuit scheduled for Q1 2014.
Wednesday, December 11, 2013
5:43 PMReuters: Morgan Stanley launches sale of U.S. oil terminal business
- Morgan Stanley (MS) has launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne (TLP), Reuters reports, in what appears to be its first definitive step toward disassembling its vast energy trading group.
- The TransMontaigne MLP includes 48 fuel terminals with nearly 24M barrels of storage capacity on the Gulf coast, in Florida, the Midwest and across the Southeast, including along the strategically important Colonial Pipeline that ships gasoline and diesel from the Gulf to the East Coast.
- Stanley's trading division accounts for ~60% of the MLP's revenues due to long-term contracts to use its terminals, and some of these contracts could be sold as part of the package.
- A number of potential buyers including Qatar, a Chinese oil major and Russia's Rosneft have been rumored in the past year, but this report says likely potential buyers include MLP subsidiaries of major refiners or midstream companies.
5:11 PMIAMGOLD suspends dividend, shares -2.3% AH
- IAMGOLD (IAG) -2.3% AH after suspending future dividend payments until further notice.
- CEO Steve Letwin says the company is taking the action to preserve its balance shee and allows it to conserve cash and ensure the flexibility needed "to take advantage of opportunities when they arise."
- IAG joins the likes of Barrick Gold (ABX) and Kinross Gold (KGC), which cut or suspended their dividends earlier this year.
2:42 PMGold producers' balance sheets would weaken below 1250/oz., TD says
- Gold producers' balance sheets appear relatively stable with gold prices at ~$1,250/oz. but would weaken further on lower prices, TD Securities says in an analysis of miners' sensitivity to changes in gold prices.
- At $1,100/oz, companies with the highest forecast ratio of net debt to total capitalization include Barrick Gold (ABX -2.5%), Newmont Mining (NEM -1.9%), Agnico Eagle Mines (AEM -2.5%) and Detour Gold (DRGDF +3.3%).
- TD's top picks include Eldorado (EGO -3.1%), Goldcorp (GG -1.5%), B2Gold (BTG -3.7%), Primero Mining (PPP -0.6%) and Silver Wheaton (SLW -2%).
- ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST.
2:19 PMWorthington to close Baltimore steel plant, shares -2.5%
- Worthington (WOR -2.5%) discloses that its Baltimore steel facility will close by the end of its 2014 fiscal year ending May 31, concluding it can more efficiently service its Mid-Atlantic customers from other company facilities and partners.
- With the consolidation of the steel industry, many of the mills that previously supplied the Baltimore plant have closed, negatively impacting the supply chain there, WOR says.