Today - Monday, December 9, 2013
4:33 PMDarling offers 40M shares, $500M in senior notes, -4.2% AH
- Darling International (DAR) -4.2% AH after announcing a public offering of 40M common shares and an offering of $500M of its unsecured senior notes.
- DAR plans to use the net proceeds to partially finance its acquisition of the Vion Ingredients division of Vion Holding and for general corporate purposes.
3:56 PMPlatinum Group Metals files for 148.5M-share offering, shares halted
- Platinum Group Metals (PLG -0.8%) is halted as a syndicate of underwriters agrees to buy on a bought deal basis 148.5M common shares at a price of C$1.18/share for gross proceeds of ~C$175M.
- PLG says proceeds from the offering will be used to partially fund Phase 2 development at the WBJV Project 1 platinum mine; to fund its portion of ongoing exploration, engineering and extension work on the Waterberg joint venture project; and for general working capital purposes.
2:59 PMThompson Creek may close mines if moly price falls more
- Thompson Creek (TC -0.4%) may suspend production at its two molybdenum mines if the price of the ingredient used to strengthen steel falls further, CEO Jacques Perron tells Bloomberg.
- Molybdenum prices have dropped 18% YTD to ~$9.57/lb., and "it's going to be very difficult for us" if prices fall to $9, the CEO says.
- Perron dismisses recent concerns about TC's solvency, saying the company still would be able to pay off or refinance its debt even if copper sinks as low as $2.75/lb. and gold to $1,100/oz.
11:22 AMGuyana Goldfields approves $238M capex for Aurora Gold project
- Guyana Goldfields (GUYFF) says its board has approved $238M of spending for the Aurora Gold project to reach commercial production, subject to successful completion of project financing and other approvals expected to be finalized by Q2 2014.
- Construction is expected to last 18 months, with commissioning of the mill beginning in Q1 2015 and commercial gold production achieved by mid-2015.
11:07 AMSpeculative gold longs lowest since 2007; time to look elsewhere?
- Net speculative longs in gold (GLD +0.6%) last week fell 16% to 26,774 contracts, according to the CFTC, the lowest amount since June 2007. Shorts rose 6.2% to 79,631, about matching a high set in July. The exit continues in gold ETPs, with assets now off 31% YTD to the lowest level since February 2010.
- "There's probably another wave of panic selling ahead," says Sage Capital's Bob Smith, one of those who's exited gold, putting the money in stocks instead. "In the absence of calamity, there's not much to go on."
- The last 12 years (prior to 2013) were an aberration, says Morningstar's Samuel Lee. True believers should instead look to deep-value assets linked to gold, namely the miners (GDX +1.3%) - they over-expanded and failed to hedge against falling prices, but a play now is a bet executives have learned their lessons.
- An even better idea, says Lee? Admit the worst-case scenarios about global crises and currency debasement never panned out and move onto another asset - nonagency MBS. The cheap, illiquid sector creates opportunities for a good fund manager, he says. Lee's pick is the Pimco Dynamic Income Fund (PDI +0.7%) - an "implicit bet on housing prices."
- Gold ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, DGZ, AGOL, GLDI, DGLD, TBAR, UBG
- Gold miner ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST
10:29 AMLayne Christensen swings to loss, shares -11%
- Layne Christensen (LAYN -11%) shares plunge after the drilling services company swung to a bigger than expected Q3 loss, including a 48% drop in mineral services revenue, which made up 18% of the quarter's revenue.
- The segment's results were hurt by charges from a Foreign Corrupt Practices Act investigation after the SEC had found LAYN received $4.8M in benefits from making improper payments, and made an accrual at the time.
- LAYN says the outlook for mineral services remains challenged due to continuing declines in global mineral exploration activity, which will results for at least the balance of FY 2014.
- Geoconstruction revenue fell 55% on weaker demand in the U.S. and South America, although the division gained three new contracts in the quarter.
10:16 AMMosaic to buy $2B in shares from Cargill trusts
- Mosaic (MOS -1.1%) agrees to repurchase 43.3M class A shares held by charitable trusts associated with the Cargill family with a market value of ~$2B.
- The buyback helps resolve the ownership of 128.8M MOS shares Cargill Inc. transferred to charitable trusts and Cargill family members in 2011 when it sold its 64% stake in MOS.
- "This is a major step toward our goal of a more efficient balance sheet by mid-2014,” according to MOS CEO Jim Prokopanko, but investors may be disappointed by the structure of the agreement and the size of the repurchase.
8:29 AMPeabody to close Wilkie Creek Mine in Australia| 1 Comment
7:47 AMCME to launch Edmonton Sweet contract| Comment!
6:47 AMWhiteWave to acquire Earthbound Farm for $600M in cash
- WhiteWave Foods (WWAV) is acquiring Earthbound Farm - the largest organic produce brand in North America - for $600M in cash
- The acquisition is expected to be accretive to EPS (+$0.07 before transaction costs) in the first year after close. Subject to regulatory approvals etc., it is expected to be completed during Q1 2014. WhiteWave plans to operate Earthbound Farm as a separate business unit.
- Earthbound's anticipated 2013 net sales are over $500M.
- WhiteWave will fund the acquisition with borrowings under its existing credit facilities, and intends to increase its credit facilities by $500M to fund further growth.
Friday, December 6, 2013
6:42 PMCorn traders worry as China rejects shipments said to contain GMO strain
- Corn futures (CORN) fell amid mounting concerns that export demand will suffer because China has been rejecting U.S. grain containing an unapproved genetically modified strain.
- This week, China rejected more than 120K metric tons in five separate shipments of U.S. corn after inspectors found the genetically engineered insect-resistant MIR 162 strain; regulators had rejected U.S. grain for the same reason last month.
- Traders worry the actions could herald a period of reduced shipments to China from the U.S., the world's biggest corn producer and exporter.
- Biotech company Syngenta (SYT) has resubmitted an application for the GMO strain to be allowed in China.
4:45 PMADM still looking for overseas deals despite GrainCorp setback
- Archer Daniels Midland (ADM) is still looking for deals overseas despite last week's failure of the GrainCorp acquisition that upended its plans in Asia, CFO Ray Young says.
- ADM is interested in acquisitions as well as other investments and joint ventures to help spread its business deeper into Asia, South America and eastern Europe, areas where ADM's vast storage and transportation network may be attractive to smaller agribusiness operators, Young says.
- The global agricultural business, already dominated by a handful of major players, will continue to consolidate, the CFO says.
3:54 PMChart Industries -7% after cautious comments from William Blair
- Consensus earnings estimates for Chart Industries (GTLS -7.1%) are likely to drop, William Blair says after meeting with management; the firm sees slower China activity, uncertainty in biomedical, and issues concerning large heat exchanger projects pressuring gross margins in 2014.
- The firm keeps a Market Perform rating on the stock and believes GTLS remains well positioned longer term.
2:49 PMRBC pessimistic on Agnico-Eagle Mines but upgrades Franco-Nevada
- Agnico-Eagle Mines (AEM -0.2%) is downgraded to Sector Perform from Outperform with a $31 target price, down from $38, at RBC Capital, the result of lower financial estimates generated by the firm's reduced long-term gold price assumption from $1,400 to $1,300/oz.
- The firm forecasts negative free cash flow at AEM in 2014 and believes the market will need to see capital and operating guidance before it re-rates shares higher.
- Meanwhile, RBC upgrades Franco-Nevada (FNV -0.2%) to Outperform with a $53 target, up from $43, citing operating royalties and new feasibility and development stage gold assets (Brucejack, Golden Meadows, Kirkland Lake, ABX royalty portfolio), which the firm says have the potential to add 8%-12% in annual revenue.
10:59 AMSandstorm partner pulling out of Serra Pelada project, shares halted
- Sandstorm Gold (SAND +0.9%) says partner Colossus Minerals (COLUF) is pulling out of underground development at the Serra Pelada mine in Brazil to reduce ongoing costs.
- SAND says it will need additional funding in order to proceed with the project, and will review its investment for a partial or full impairment as there can be no assurance that adequate funding will be available for Colossus in the future.
- Trading remains halted.
10:46 AMSaskatchewan premier blasts Potash for cutting jobs while preserving dividend
- Saskatchewan Premier Brad Wall is bashing Potash Corp. (POT) for its announced 1,000-plus job cuts while preserving its dividend for shareholders.
- "All the stakeholders in the company should share in the down times - not just workers, not just sub-contractors, but shareholders," Wall said in a letter to POT chairman Dallas Howe.
- The province will lose ~440 jobs, most at the Lanigan division, where one of two mills will suspend production by year-end, and at the Cory division, where production will be reduced.
Thursday, December 5, 2013
6:17 PMAlexco Resources +2.4% AH on Keno Hill economic assessment
- Alexco Resources (AXU) +2.4% AH after releasing a preliminary economic assessment for expanded silver production from the eastern part of its Keno Hill Silver District in Yukon.
- AXU projects average annual delivery of 3.1M oz. of payable silver, 6.8M lbs. of lead, 6.6M lbs. of zinc and 1,050 oz. of gold from ~150K metric tons/year of consolidated mine and mill production.
- AXU's forecast 38% internal rate of return includes its silver purchase agreement with Silver Wheaton (SLW); initial capital requirements are ~$25M.
3:35 PMBarrick's Thornton opens the door to hedging
- Barrick Gold (ABX -1.6%) has signaled a potentially titanic shift in the gold mining industry: a second look at hedging.
- John Thornton, set to become sole chairman of ABX, says “I don’t know why you wouldn’t look at it, if for nothing else as a kind of analytical intellectual exercise... I don’t understand people in the industry who would say you should never do that."
- Analysts say the large gold producers aren’t going to start hedging big chunks of their output, since no one wants to be seen selling at the bottom, and many investors still want their mining investments to track the price of the metal - but when the top man at the top gold producer says hedging isn’t a dirty word, that alone may open the door.
- Gold ETFs: GLD, IAU, PHYS, SGOL, UGL, DGP, GLL, DZZ, UGLD, DGL, DGZ, AGOL, GLDI, DGLD, TBAR, UBG.
- Gold miner ETFs: GDX, GDXJ, NUGT, DUST, GLDX, GGGG, RING, PSAU, JNUG, JDST.
12:52 PMVale considers selling stakes in coal, fertilizer businesses
- Vale (VALE +1.7%) says it might sell stakes in its global fertilizer and coal businesses to strategic partners to lighten project costs but isn't targeting the segments for divestments as it still considers them part of its long-term core.
- The two segments account for a small portion of Vale's revenue - a combined 7.9% in Q3 - and have weighed on cash flow.
- Vale says it is considering selling a 15%-25% stake in its coal division, although it plans to invest ~$2.8B in the business next year.
- Vale's efforts to become a major player in fertilizers took a hit this year when it suspended a $6B potash project in Argentina; it has just $52M set aside for investing in new fertilizer projects next year.
10:49 AMGeneral Moly offers upbeat outlook for Mt. Hope project
- General Moly (GMO +7.9%) forecasts operating costs for its Mt. Hope projec; GMO expects direct operating costs over the first full five years of operation to average $6.28/lb. and costs applicable to sales to average $7/lb., including anticipated royalty payments calculated at $15/lb. of molybdenum, which the company regards as a sustainable long-term price.
- Economics for GMO's 80% ownership in Mt. Hope anticipates an after-tax net present value, discounted at 8%, of $707M and an internal rate of return of 17.6%.