MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Wednesday, June 19, 2013
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3:30 PM The CF Industries (CF +1%) ammonia plant where a fatal blast occurred last week will be idle for weeks longer than scheduled, but the extra downtime will have little impact on nitrogen output or the ability to supply customers, according to the manager of the Louisiana complex: "This is a small part of our operation... We'll have to redistribute product from different places, but overall it won't have an impact." Comment!
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10:16 AM Gevo (GEVO +6.2%) continues to rise on momentum from yesterday's news that it has resumed production of isobutanol at its Minnesota plant. But Raymond James downgrades shares to Market Perform, seeing production challenges ahead and positive margins unlikely to emerge before Q1 2014, with the next plant perhaps not coming online until beyond 2014. 1 Comment
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10:06 AM Century Aluminum (CENX -2.5%) is downgraded to Underperform from Neutral with a $9 price target at BAML, which says its newly lowered estimated 2013 LME price of $0.87/lb. vs. $0.93 offsets an eventual benefit from CENX's recently negotiated lower power costs. The firm also notes sentiment toward added aluminum capacity globally has soured. Comment!
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8:13 AM Cliffs Natural Resources (CLF) -1.8% premarket after shares are downgraded to Underperform from Neutral with a $16 price target (from $24) at BAML, which notes CLF's high cost of iron ore and met coal production. The firm thinks CLF will struggle to compete with new Australia capacity but sees no reason for a liquidity panic. 1 Comment
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Tuesday, June 18, 2013
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5:56 PM Vale (VALE) shares advanced today after Brazil's government unveiled a long-awaited bill to reform the country's mining code, proposing new royalties of up to 4%, double the current rate, and a new mine regulatory agency. The new rules were expected, but investors had been holding back on buying shares for fear they might turn out worse. Comment!
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5:00 PM PetroLogistics (PDH) says it's successfully completed repairs to its propane dehydrogenation facility and the facility has resumed propylene production. The facility was closed earlier this month for repairs on two of the eight reactors at the plant. Total costs for all completed repairs are expected to be less than $2.5M. Shares +0.7% AH. Comment!
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4:18 PM If you want a bullish take on gold (GLD), Ron Paul has one for you. Asked why the yellow metal hasn't performed very well of late, he says "markets do these kind of things … they go up and then they take a rest," but "if you look at the record since the Fed has been in existence, we have about a two cent dollar" and based on "about six thousand years of history" the prognosis for commodity money is pretty good. "As long as we have excessive computerized money … we're going to see gold go up." How far, you ask? "If we're not careful, to infinity," Paul warns. 25 Comments
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3:29 PM Prospect Global Resources (PGRX +51.2%) terminates the rights offering which was scheduled to expire yesterday, obtains an extension of its obligation to raise $7M until June 24, and says its ongoing engineering optimization work and analyses will result in release of a pre-feasibility study in July. Comment!
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12:52 PM Argentina's Santa Cruz province slaps a 1% annual tax on mine resources, a move mining companies say they will challenge in court. While the percentage seems small, miners say it will cost them $100M in new taxes next year, as the tax amounts to ~8% of the total resources of a mine with a 15-year life. Among miners with operations in Santa Cruz: AU -3.5%, MUX -2.3%, GG -2.5%, PAAS -1.4%. Comment!
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12:35 PM Indonesia likely will allow Freeport McMoran (FCX -0.6%) to resume open-pit mining at the Grasberg mine later this week, the country's resources minister says, five weeks after a fatal accident nearby shut multiple mining operations and forced FCX to cancel shipments of concentrate. Grasberg accounts for more than half of FCX's production. 2 Comments
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12:17 PM Thousands of opponents of the $5B Minas Conga copper and gold project in Peru march on Lake Perol, vowing to stop Newmont Mining (NEM -3%) from eventually draining it to reservoirs NEM and partner Buenaventura (BVN -2.6%) are building. Protesters, who fear the mine would threaten their water, say they plan to build a permanent camp near the lake to impede work on the site. Comment!
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10:13 AM Mechel (MTL +11.2%) leaps higher on news the company's board authorized the buyback of up to $100M of ADRs representing Mechel's common shares. Comment!
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9:19 AM Steel Dynamics (STLD) issues downside guidance for Q2, seeing EPS of $0.10-$0.14 vs. $0.24 consensus estimate, citing anticipated slower economic growth in China. Overall steel shipments are expected to rise slightly Q/Q, as decreases in merchant bar volume should be more than offset by increased sheet and other long product shipments. Comment!
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8:49 AM BHP Billiton's (BHP) plans to sell a coal mine in New Mexico to the Navajo Nation for ~$85M have been derailed by proposed reforms of the state's electricity market. The Navajos had expected to close a deal with BHP by July 1, but it can't go ahead until a separate deal is completed between two utilities for part of a power station that buys coal from the mine on Navajo land. Comment!
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7:52 AM Mechel (MTL) reports a Q1 net loss of $321M, with adjusted EBITDA of $210M and a 16% Y/Y decline in revenues to $2.48B, as the Russian miner says it was hurt by unfavorable price trends in global markets but expects changes to its asset structure and debt portfolio will enable it to survive an extended slowdown. MTL +1% premarket. Comment!
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7:07 AM Gold (GLD, IAU) bulls may take comfort as Dennis Gartman jumps on the bearish bandwagon, calling the metal an "aging athlete" and "a broken commodity." The man who loved "stuff that hurts when you drop it on your foot" 2 years ago says the price is headed to $1K if $1.2K support is broken. HSBC's James Steel disagrees, seeing strong physical demand lifting the price to $1.6K in H2 and $2K in the longer term. 9 Comments
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6:47 AM Rio Tinto's (RIO) recently on-the-block 59% stake in Iron Ore Co. of Canada draws the interest of state-owned Chinese giant Minmetals. "We have invested in the neighborhood before," President Wang Jionghui tells the WSJ. Active pursuit of a deal would depend on various factors such as partners, he adds. The stake likely has a value somewhere in the $4B range. Comment!
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Monday, June 17, 2013
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6:37 PM Golden Star Resources (GSS) +1.9% AH after providing an operational update, saying it is confident operations are viable in the current gold price environment and existing cash and cash flow from operations can cover its sustaining capital requirements for 2013. Gold production is seen at 290K-310K oz., ~10% lower than prior guidance, resulting in $45M less in operating costs. 3 Comments
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3:20 PM J.P. Morgan turns a bit more positive on mining stocks (XME), moving to Neutral from Underweight on the sector as miners cut capex and the sector's relative price/book ratio is back to 2009 lows. While the firm remains skeptical that free cash flow yield could turn positive again in 2014, it says the market could give the sector the benefit of the doubt for a while. Sector favorites: RIO, GLCNF.PK. Comment!
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