Today - Wednesday, April 16, 2014
- New Gold (NGD +3.1%) is upgraded to Buy from Hold at Canccord Genuity, despite lowering its price target to $7.50 from $8, seeing an attractive entry point after the recent share price correction which has more than priced in the development risk with the Blackwater and El Morro projects.
- A similar Canaccord upgrade for Golden Star Resources (GSS -2.3%) fails to provide the same support, as shares cap an 11.7% drop so far this week and a 23.5% swoon in the past month.
- LyondellBasell (LYB +1.3%) ends talks to sell its Berre refinery in France, saying the bid failed to offer acceptable commercial terms and showed no guarantee of a restart for the refinery.
- Oil products trading company Sotragem reportedly made an offer last month to buy the refinery near Marseille, a deal that would have run counter to the trend that European refineries are closing due to overcapacity.
- Yamana Gold (AUY -1.5%) and Agnico Eagle Mines (AEM -3.3%) agree to acquire Osisko Mining (OSKFF) for C$3.9B, or C$8.15/share.
- The total offer consists of C$1B in cash, C$2.33B in AUY and AEM shares, and shares of a new company with an implied value of ~C$575M.
- The companies say the offer represents an ~11% premium to the implied value of Goldcorp's (GG +2%) hostile bid.
- The deal replaces a transaction announced April 2 in which AUY agreed to buy 50% of Osisko’s assets.
- LyondellBasell (LYB) says shareholders approved a proposal to repurchase an additional 10% of the company’s shares, and its supervisory board approves a 17% increase in the quarterly dividend.
- LYB says it has already repurchased ~46M shares to date and plans to buy back the entire 10% of its original authority given by shareholders in 2013 by the end of May.
- LYB +2.7% premarket.
- Syngenta (SYT) +1.7% premarket after reporting Q1 sales rose 2% to $4.68B, in line with analyst expectations, helped by a strong start to the European season and growth in emerging markets; excluding exchange rate moves, sales climbed 5%.
- Expects weaker currencies to knock ~$100M off FY 2014 EBITDA, particularly the devaluation of Ukraine's hryvnia, compared with an earlier forecast for a $50M impact; SYT gets 4%-5% of its total sales from the Commonwealth of Independent States, which includes Ukraine.
- Mild weather in Europe helped the planting season get off to a strong start and sales in its Europe, Africa and Middle East region rose 10%, helping compensate for a 7% drop in sales in North America, where a cold winter has delayed the start of planting.
- BHP Billiton (BHP) raises its outlook for iron ore output for the second time this fiscal year, citing a strong performance from its new Jimblebar mine in Australia, and productivity improvements across its operations.
- BHP now expects to produce 217M metric tons of iron ore from its Australian mines in the year through June, vs. previous guidance of 212M tons and an initial estimate of 207M tons and 187M tons last financial year.
- For the March quarter, BHP's share of iron ore production rose 23% Y/Y to 49.6M metric tons; oil output rose 10% Y/Y to 60.9M boe.
- Reports a 28% Y/Y rise in production of met coal and an 11% gain in thermal coal, and increases full-year guidance for met coal production to 43.5M tons from 41M.
- BHP +0.9% premarket.
Tuesday, April 15, 2014
- In addition to agreeing to sell its South American fertilizer business to Mosaic for $350M, Archer Daniels Midland (ADM) says it is abandoning plans to sell its cocoa business and will instead focus on divesting its chocolate operations.
- ADM says it did not agree to a sale of its global cocoa and chocolate business after extensive negotiations with a potential buyer, and will move ahead with a process to sell the chocolate business while retaining most of the cocoa press operations, which Stephens Inc. had said is worth $1.9B.
- ADM also will purchase the 20% of Alfred C. Toepfer International it doesn’t already own for €83M ($114M), a move ADM says will fully integrate the business into its global origination network.
- Rio Tinto (RIO -2.8%) may be making progress in resolving differences with Mongolia's government over the planned expansion of the Oyu Tolgoi mine, FT reports, as potential lenders extend a deadline to arrange financing for the project until the end of September.
- Turquoise Hill (TRQ -2.5%), the Rio-controlled company that owns most of Oyu Tolgoi, says all parties had requested the extension of the deadline, which had passed last month, suggesting agreement over the request between TRQ and the government.
- Rio and the government have battled over the costs of developing the next phase of the mine - critical for the miner as its largest new copper development, and for the country, since it will generate up to one-third of Mongolia's GDP.
- Rio shares are lower, however, after mixed Q1 production results with iron ore and coal production exceeding expectations but with most other commodities falling short.
- Mosaic (MOS +0.9%) agrees to acquire Archer Daniels Midland's (ADM -1.5%) fertilizer distribution business in Brazil and Paraguay for $350M.
- MOS says the acquisition would increase its annual distribution in the region to ~6M metric tons of crop nutrients from ~4M.
- The parties also negotiate terms of five-year fertilizer supply agreements providing for MOS to supply ADM's fertilizer needs in Brazil and Paraguay.
- Potash (POT) +2.3% premarket on speculation that BHP Billiton (BHP) may make another run at acquiring the fertilizer company after failing in a prior buyout attempt in 2010, according to the Globe & Mail.
- The report says industry speculation is "intense" because "the numbers work, the personalities are closer to working, [and] even the politics are not insurmountable because the landscape has shifted," but it adds that "there is no sign that any potential deal is underway."
Monday, April 14, 2014
- Rio Tinto (RIO) reports Q1 global iron ore production of 66.4M metric tons, up 8% Y/Y but slightly below expectations, while maintaining its FY 2014 iron ore production guidance of 295M tons.
- The Pilbara mine produced 63.4M metric tons, down 4.6% Q/Q, with the reduced volumes blamed on cyclones and heavy rains; Rio's share was 50.6M tons.
- Rio's mined copper production totaled a better than expected 156.5K tons, up 17% Y/Y, and maintains its mined copper expectations for 2014 at 570K tons.
- Axiall (AXLL) -1.9% AH after saying it expects Q1 will be hit by three significant headwinds: repairs at its Lake Charles, La., chemicals facility; severe winter weather; and a Q/Q increase to normal maintenance spending.
- Damage from the December 2013 fire at the PHH vinyl chloride monomer manufacturing facility at the Lake Charles chemicals complex has been repaired and the facility has resumed operations, but the facility is not expected to reach full operating rates until May.
- AXLL expects to report Q1 EBITDA of $65M-$70M.
- The war of words is heating up between GrafTech International (GTI) and Nathan Milikowsky, its largest independent shareholder, and a proxy fight is on the horizon - but to save the company, or just to clear Milikowsky's name?
- Milikowsky was booted from GTI's board last year, but he isn't going away quietly: After nominating five new nominees to the company’s board and lobbying for his own reinstatement, he wants the board hire a new law firm to review the investigation that led to his ouster.
- GTI responded today with another settlement proposal, offering to take two of Milikowsky’s proposed directors and it saying it would consider reinstating him but only after an arbitration process that could take many months; the proposal is unlikely to appease Milikowsky, who likely will wage a proxy fight to elect himself and his fellow nominees.
- HudBay Minerals (HBM) attempts to strike down Augusta Resources' (AZC) shareholder rights plan, asking British Columbia's securities regulator to cease trade AZC’s poison pill so that its hostile takeover bid can proceed as planned.
- CEO David Garofalo says AZC's board has had more than enough time to study its alternatives after receiving HBM's hostile takeover bid.
- HBM is offering 0.315 of its shares for each AZC share, which gives the bid a value of slightly more than $400M, but AZC shares have traded well above the offer price as investors expect a higher bid.
- Platinum prices are surging, stoked by worries over supplies due to the crippling mine worker strike in South Africa and the potential for increased sanctions against Russia.
- Platinum mining in South Africa has plunged by more than a third since workers went on strike in January to demand higher pay; mining companies had built up their inventories before the strike, but stockpiles have dwindled as the strike reaches its 11th week.
- South Africa is the source of roughly 80% of the world's platinum, while Russia is the second largest producer; platinum is used primarily in catalytic converters of diesel-burning vehicles, which are common in Europe.
- Platinum producers: AGPPY, AGPPF, AAUKY, AAUKF, IMPUY, IMPUF, LNMIF, LNMIY.
- ETFs: PPLT, PTM, PGM
- Fortuna Silver Mines (FSM +4.5%) reports record quarterly silver and gold output from its San Jose mine in Mexico and Caylloma mine in Peru, saying Q1 silver production jumped 55% Y/Y to ~1.53M oz. and gold production climbed 81% to 8,150 oz., and says costs remained in line with its guidance for the year.
- FSM also says it is on track to produce 6M oz. of silver and 32.3K oz. of gold this year.
- Marine Harvest (MHG) +3.4% premarket after reporting Q1 operating results it says were the best in its eight-year history, following a larger than expected harvest and rising prices for salmon and other fish.
- MHG earned an operating profit of 1.08B Norwegian kroner ($181M) in the quarter, more than double 482M kroner in the year-ago period and beating analyst expectations; volume was lower, but strong pricing, due partly to constrained supply, lifted results.
- MHG is scheduled to report Q1 earnings April 30.
- As expected, Glencore Xstrata (GLNCY) has agreed to sell its Las Bambas copper project in Peru to a consortium led by China Minmetals for $5.85B.
- Glencore Xstrata is divesting the mine in order to meet Chinese conditions for the approval of Glencore's purchase of Xstrata.
- The Las Bambas transaction is yet another example of a Chinese company buying a resources asset to help feed high domestic demand. China accounts for around 40% of global copper demand, while Las Bambas is expected to produce 400,000 metric tons of copper a year when it starts output in 2015, or equivalent to 12.5% of China's copper imports.
- The buying group also includes Guoxin International Investment Corp and Citic Metal. (PR)
Friday, April 11, 2014
- China’s rejection of genetically modified corn is becoming a big problem for exporters: In the first full tally of the impact, a U.S. grain industry group says the rejected shipments have totaled ~1.45M metric tons, far more than the 545K tons China has reported and the 900K tons that has circulated in news media.
- The rejected shipments have cost grain companies $427M from lost sales and reduced prices for China-bound shipments that must be resold elsewhere, and has affected the price of corn and soybeans, resulting in hundreds of millions of dollars in losses for farmers.
- Big seed companies such as Syngenta (SYT), Monsanto (MON) and DuPont (DD) generally are aligned with traders such as Cargill and ADM in the desire to grow and sell as much grain as possible, but now the two groups are debating who should bear the costs for the rejected shipments.
- ETFs: DBA, CORN, RJA, SOYB, DAG, JJA, RGRA, AGA, AGF, USAG, FUD, UAG, DIRT, TAGS, ADZ
- Alcoa's (AA) credit rating is cut to junk - one level below investment grade to BB+ from BBB- - at Fitch, which expects earnings this year and next to continue to reflect weakness in the price of aluminum while the debt-to-EBITDA ratio rises to as much as 2.9.
- "Alcoa is aggressively transforming the company," it says in a statement, noting that its debt is at the lowest level since 2007 and it has no significant maturities due before 2017.
- Alcoa was cut to junk by Moody’s last May; S&P rates the company's debt BBB-, its lowest investment-grade level.