Seeking Alpha
  • Today - Tuesday, April 28, 2015

  • 11:31 AM
  • 10:58 AM
    • Freeport McMoRan (FCX +3.5%) moves higher after Morgan Stanley upgrades shares to Overweight from Equal Weight with a $29 price target, as higher volumes and declining costs mitigate concerns about financing needs.
    • FCX's copper growth projects are near "an inflection point," Stanley says, forecasting production increases at copper mines will drive a 28% Y/Y increase in volumes, 22% decline in cash costs, and a 14% decline in total capex in 2016
    • The firm says operating cash flow should exceed capex by $1.7B in 2016 and $2.3B in 2017; even if copper prices collapse to near marginal cost, the firm does not expect FCX to burn cash in 2016-17, meaning 2015 is the only “bridge year” when the company burns cash, prompting less concern about financing needs to achieve growth targets.
    | 1 Comment
  • 10:48 AM
    • AK Steel (AKS +7.2%) surges higher despite posting a wider than expected Q1 loss, as revenues rose 27% Y/Y to $1.75B.
    • Shipments surged 39% Y/Y to 1.75M tons, helped by a boost from an acquisition and strong demand from the automotive sector, but fell 13% from Q4 shipments of ~2M tons; average selling prices fell 8.9% Y/Y.
    • AKS took a $256M writedown related to its investment in iron ore pellet joint venture Magnetation LLC, citing near-term liquidity issues caused primarily by a recent significant decline in global iron ore pellet pricing.
    • AKS had warned last month that it would post a Q1 loss, with a 14% Q/Q decline in shipments to ~1.73M tons, due to high levels of steel imports.
    | Comment!
  • 10:47 AM
    • Iran has fired on a U.S. cargo ship and directed it to Bandar Abbas port on the southern coast of the country, reports Al Arabiya News. The ship is believed to have as many as 34 U.S. sailors aboard.
    • Trading at about $56 per barrel not long ago, WTI crude oil is now up to $57.44.
    • USO +0.7%
  • 10:11 AM
    • Alamos Gold (AGI +2.9%) says a Turkish court has dismissed the injunction order that had been granted against the environmental impact assessment for the company’s Agi Dagi gold project, meaning the Turkish Ministry of Environment’s approval of the EIA has been "returned to good standing.”
    • AGI says it is looking forward to resuming work on the project.
    | Comment!
  • 9:15 AM
    • The EU will impose anti-dumping duties next month on imports of grain-oriented electrical steel from five countries, Reuters reports, citing sources familiar with a European Commission proposal.
    • The Commission plans to set tariffs of as much as 35.9% for Japanese imports of grain-oriented electrical steel following a complaint lodged last year by the European steel producers association, Eurofer.
    • Duties also will cover imports from China (28.7%), Korea (22.8%), the U.S. (22%) and Russia (21.6%).
    • Grain-oriented electrical steel is a highly-specialized product used by power producers and distributors to produce transformer cores and is made by only 16 producers worldwide, including ArcelorMittal (NYSE:MT) and ThyssenKrupp (OTCPK:TYEKF) in Europe, Posco (NYSE:PKX) in Korea, and A.K. Steel (NYSE:AKS) in the U.S.
    | Comment!
  • Monday, April 27, 2015

  • 8:42 PM
    • Barrick Gold (NYSE:ABX) -3% AH after reporting Q1 earnings and revenues that trailed analyst estimates, and production that also slightly lagged expectations.
    • ABX says net Q1 EPS was $0.05 on revenues of $2.25B, below the consensus estimate of $0.09 EPS on $2.35 in revenues and less than year-ago results of $0.08 and $2.65.
    • Q1 gold production totaled 1.39M oz. at an all-in sustaining cost of $927/oz., with $316M in operating cash flow; year-ago production was 1.59M oz. and the Q1 analyst consensus was 1.49M.
    • ABX left unchanged its production and cost forecast for the year at 6.2M-6.6M oz. of gold at all-in sustaining costs of $860-$895/oz., and remains committed to debt reduction of at least $3B by the end of 2015.
    • Says it has started a process to sell a stake in its Zaldivar copper mine in Chile, and announced a "significant" new gold discovery, known as Alturas, in Chile.
  • 6:45 PM
  • 3:58 PM
    • BHP Billiton (BHP +0.9%) says it is contesting A$522M ($409M) in Australian tax bills on its Singapore marketing operations up to 2010, after having paid almost no tax in Singapore since 2006.
    • BHP told an Australian Senate panel that during 2006-14 its Singapore marketing business earned profits of $5.7B on which it paid just $121K in tax in Singapore, but that 58% of the profit earned by the Singapore hub is subject to tax in Australia at the company tax rate of 30%.
    • The A$522M in taxes BHP faces from Australia include contested tax plus interest and penalties owed on transfer pricing - the price at which BHP's Australian entities sell commodities they mine to the Singapore marketing business.
    • Rio Tinto (NYSE:RIO) revealed at the tax hearing that it pays a 5% tax rate on its Singapore marketing operations.
    | 1 Comment
  • 11:59 AM
    • Newmont Mining (NEM +4%) is upgraded to Buy from Neutral with a $30 price target, raised from $26, at Credit Suisse, which cites the success of NEM's strategy to improve performance since its new CEO took on the reins in 2013.
    • Credit Suisse says NEM has been able to achieve operational consistency, which the firm expects to continue going forward, and cost savings, which it believes is higher than the current perception in the market; NEM's balance sheet has strengthened considerably, and the miner's current cash flow multiple does not reflect its longer-than-average reserve life.
    • NEM's Australian assets now benefit from lower cost structures which could open up new opportunities, the firm adds.
    | 1 Comment
  • 11:26 AM
    • Did Medley Advisors get another leak from the Fed? Ahead of a 2-day FOMC policy meeting starting tomorrow, gold has one of its biggest moves (higher) in recent memory - up about $16 per ounce over the past hour to $1,201 per ounce.
    • GLD +2%
    • One could look at the dollar (UUP, UDN), but it's off only marginally (though down a full 1% vs. the aussie as rate cut expectations Down Under get scaled back).
    • Turning back to the Fed, it's got to account for a long recent string of weaker-than-expected economic reports and Q1 GDP growth that's likely going to come in at less than 1%.
  • 10:45 AM
    • Shareholder proxy firm ISS recommends activist investor Nelson Peltz for a spot on DuPont's (DD +3.1%) board, plus one other nominee put forward by Peltz's Trian Fund Management.
    • "This is not a broken company - but there is compelling evidence that the dissidents are onto something in their critique," ISS says following last week's release of disappointing Q1 results.
    • DuPont and Trian have tried to make offers to settle the increasingly bitter proxy fight over the company's future, but both sides have been steadfast on whether Peltz deserves a seat on the board.
  • 9:30 AM
    • Notable for the sizable inflows they saw beginning early this year as investors attempted to pick a bottom in crude, oil ETFs have registered about $2.7B of outflows over the last month, according to Macquarie.
    • Some credit the ETF buying with putting a floor underneath oil in mid-March (inflows were $6B YTD then), and they now worry if the reversal sets the stage for black gold to resume its bear market.
    • Thanks to contango,oil ETFs are strictly a trader's vehicle, and the WSJ's Nicole Friedman notes while front-month oil futures are higher by 7.3% YTD, the USO is lower by 3.4%. Similarly in 2009, front-month futures flew 78% from the bottom, while USO gained just 19%.
    • Crude is higher by 0.7% today to $57.56 per barrel.
  • Friday, April 24, 2015

  • 6:50 PM
    • In another day of broad losses among in precious metals miners, Newmont Mining (NYSE:NEM) enjoyed a 6.5% surge following strong Q1 results that included impressive cost reductions in gold and copper production.
    • J.P. Morgan analysts especially liked the strong first quarter at Batu Hijau and Yanacocha and the deferral of some capex that allowed NEM to generate $344M in free cash flows and pay down $200M in debt; the firm says full-year guidance could be raised if cost reductions can be maintained in Q2.
    • Otherwise, it was not a good day for mining equities, following another drop in gold futures which tumbled to their lowest level in more than a month.
    • NEM CEO Gary Goldberg expects gold prices to gain ~25% to $1,500/oz. by 2020 on rising demand from China and a weaker dollar; for now, Goldberg says the strong U.S. dollar is “definitely having an adverse effect” on gold prices, and he expects the dollar will “eventually come back off of its highs in the next couple of years."
    • In today's trade: ABX -0.9%, AU -4.2%, GG -2.6%, SBGL -7.7%, GOLD -2%, AUY -2.5%, NGD -1.9%, GFI -4.4%, SLW -1%, PAAS -1.6%, EGO -4.1%, RGLD -2.7%, FNV -2.1%, KGC -0.4%, IAG -1.4%, BTG -1.9%, HL -1.9%, AGI -1.6%, AUQ -3.1%.
  • 3:38 PM
    • Southern Copper (SCCO +2.7%) reports Q1 earnings of $0.35/share, beating the analyst consensus estimate of $0.29, on revenues that fell 6% Y/Y to $1.27B, below the $1.32B consensus, as copper prices fell.
    • Q1 EBITDA declined 16.9% Y/Y to $556.1M, and margin fell from 49.4% to 43.6%.
    • SCCO's Q1 copper production rose 8.9% Y/Y to 177.6K tons, and says it expects its copper output to nearly double to 1.15M tons in 2017 from last year.
    • Separately, Peru's energy and mines minister says the government could ask SCCO to make additional changes to its $1.4B Tia Maria project after protests turned deadly this week.
    | 1 Comment
  • 1:50 PM
    • U.S. oil drillers took another 31 rigs out of service last week, falling for the 20th consecutive week and bringing the total number of active rigs down to 703 from their October peak of ~1,600, according to the latest weekly survey from Baker Hughes (NYSE:BHI).
    • More than half of the oil rigs idled this week were in in Texas, as the state’s rig count fell by 19 to 393, down from 894 a year ago; of that number, a dozen were sidelined in the Permian Basin in west Texas.
    • The total U.S. natural gas rig count rose by eight to 225 rigs; the overall total U.S. rig count declined 22 to 932 (four rigs were listed as miscellaneous).
  • 12:57 PM
    • A mid-morning slide in gold has it lower by 1.5% on the session to $1,176 per ounce. The metal is down by about 2.5% for the week.
    • After opening the year at about 1,200 per ounce and rallying to more than $1,300 by the end of January, gold reversed and bottomed at $1,150 in mid-March.
    • In the news today is another soft economic report from the U.S. and comments out of Greece suggesting the government is prepared to make whatever concessions are necessary to prevent a default and/or EMU exit.
    • GLD -1.6%
  • 12:47 PM
    • China’s decision to scrap export quotas and taxes on rare earth elements may boost stalled demand for the products, Lynas (OTCPK:LYSCF, OTCQX:LYSDY) CEO Amanda Lacaze tells Bloomberg.
    • Users have been drawing down on stockpiles while awaiting clarity over China’s policy on the export of the elements, Lacaze says.
    • China, which produces ~85% of global supply, announced yesterday it will remove export tariffs on rare earths beginning May 1.
    • Lynas, which said March was the first month in the company’s history in which it was cash flow positive, is seeking to restructure its debt before September, the CEO says.
    • Relevant tickers: MCP, REE, AVL, GSM, GMO, OSN, REMX
  • 12:29 PM
    • Vale (VALE +9.1%) continues to surge, headed for its biggest weekly gain in 16 years and gaining nearly 50% since Wednesday's announcement that it produced record-high levels of iron ore, nickel and other commodities during Q1.
    • Also on Wednesday, BHP Billiton (BHP +3.4%) said it was curbing expansion plans and supplies from higher-cost mines dropped, easing concerns over a global glut and sparking iron ore biggest one-day price jump since 2012.
    • "Vale is reacting to the rebound in iron ore prices,” said an equity analyst at CM Capital in Sao Paulo. “Most of Vale’s costs are fixed, so whenever there’s an increase in prices, there’s a direct impact on earnings.”
    • Iron ore prices jumped 5.5% overnight to $57.81/dry ton and have rallied 23% since bottoming out at $47.08 on April 2.
    • Also: RIO +1.6%, CLF +3.7%.
  • 10:22 AM
    • Canada’s largest pension fund says it will vote against Barrick Gold’s (ABX -1.3%) executive pay structure and withhold its vote for the miner’s lead director and chairman of its compensation committee.
    • The Canada Pension Plan Investment Board joins other investors in coming out against the advisory vote on ABX's executive compensation at next week's annual shareholder meeting; however, it also says it will vote in favor of other 12 ABX board nominees, including Chairman John Thornton, whose 36% pay rise last year has drawn much criticism given ABX’s weak stock performance.
    • While CPPIB owns less than 1% of ABX shares, it is an influential voice in Canadian markets given its size and the emphasis it places on good corporate governance.
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