Monday, September 15, 2014
5:14 PM| Comment!
- African Barrick Gold (OTC:ABGLF) says it will drop its parent’s name when it unveils a new corporate identity in November.
- Barrick Gold (NYSE:ABX), which owns 64% of African Barrick, says it fully supports the plans.
- Details of the new name for African Barrick and its five-year plan will be released Nov. 27, CEO Brad Gordon says.
- Midway Gold (MDW +8.6%) says it is advancing construction and mining has begun at its Pan Gold Project in Nevada, its first open pit heap leach project, with the leach pad complete and ready for ore.
- MDW says the project is proceeding on a schedule that should allow for gold production to begin late this year, although the schedule for completion has slipped by about a month due to heavy summer rainfall.
- News that China’s industrial production growth in August slipped to its lowest level since the 2008 global financial crisis could cause iron ore prices to extend their slide after reaching their lowest level in five years.
- Morgan Stanley says in a report that the price of iron ore could drop to as low as $70/ton from the current level of ~$82, but adds that prices may rebound towards $90/ton by year-end as China’s seasonal demand typically weakens before picking up again in Q4.
- Stanley’s forecast for a rally in the final quarter follows a similar prediction last week from Vale (VALE +0.8%), the world’s largest supplier, which said prices may be poised for a rebound to as much as $100/ton by year-end because of declining inventory at ports.
- Also: RIO +0.6%, BHP -0.8%.
- China cut its gold purchases by about half from a year ago, according to the World Gold Council, and India by 39%. At least part of the reason for the steep declines is what analysts like to call "tough comps," as buyers piled in a year ago amid the slide in the metal's price.
- Commerzbank sees Asian buying gaining in Q3, noting Indian purchases usually ramp up ahead Diwaii - a Hindu festival falling this year on October 23.
- Gold is going to need it, say some analysts, as a pickup in Asian demand will be necessary to balance out slumping speculative interest.
- Gold is ahead by $3 per ounce today to $1,235. It began the year at about $1,200 and rose to nearly $1,400 by mid-March.
- ETFs: GLD, IAU, SGOL, UGL, DGP, GLL, UGLD, DZZ, GLDI, DGL, DGZ, OUNZ, DGLD, AGOL, TBAR, UBG, GLDE, GYEN, BAR, GEUR, BARS, GGBP
- Freeport McMoRan (NYSE:FCX) says mining activities at its eastern Indonesian unit have not been affected by an accident that claimed one life, but development work has been suspended as the company and a government team investigate the incident.
- An Indonesian worker was killed over the weekend by falling rocks while working at the underground mine Grasberg Block Cave.
- FCX is developing the underground mine, which it expects to yield ~160K metric tons/day of ore; open-pit mining will end late 2016.
- Primero Mining (PPP +5%) says it expects to produce 220K-240K gold equiv. oz. at cash costs of $675-$725/oz. in 2014, a modest decrease in production and a modest increase in costs compared to previous estimates.
- PPP slightly lowers production guidance for its recently acquired Black Fox complex in Ontario to 65K-75K oz. from a previous outlook for 70K-80K, at unchanged cash costs of $850-$900/oz., with all-in sustaining costs increasing to $1,400-$1,450/oz.
- PPP also says new high-grade drilling results further expand the known mineralization at depth at Black Fox and provide additional confidence in the Grey Fox project.
- Nucor (NYSE:NUE) agrees to acquire the Gallatin Steel business from ArcelorMittal (NYSE:MT) and Gerdau (NYSE:GGB) for ~$770M.
- NUE says adding the Gallatin flat-rolled products mill in Kentucky, with an annual capacity of ~1.8M tons, will broaden its footprint in the U.S. midwest and will increase its total flat-rolled product annual capacity by 16% to ~13M tons.
- NUE expects the deal to be immediately accretive to cash flow and accretive to earnings after working through purchase accounting-valued finished goods inventories.
- MT and GGB each owned 50% interests in Gallatin.
- NUE +0.9%, MT -0.5% premarket.
- AngloGold Ashanti (NYSE:AU) +6.1% premarket after saying it is dropping its plan to spin off its global operations into a new London-listed company and seek a $2.1B rights issue.
- The plan met strong resistance from a number of shareholders, including John Paulson, whose hedge fund holds a 6.6% stake in the company.
Friday, September 12, 2014
- Cargill is suing Syngenta (SYT -0.7%), alleging the seed maker's push to sell corn seeds containing genetic modifications that were not approved in China led to "significant damages" to Cargill and the U.S. agricultural industry generally when China rejected corn shipments.
- China has rejected imports of U.S. corn since last November because of the presence of SYT's MIR-162 insecticide resistance trait; resulting in a 90% drop in exports of U.S. corn to China during H1 of 2014.
- South Africa’s central bank pressed AngloGold Ashanti (AU +2.2%) to increase the size of a planned share sale that’s opposed by hedge fund manager John Paulson, Bloomberg reports.
- AU is said to have initially sought to raise just over $1B from investors to strengthen its balance sheet, but that was increased to $2.1B to satisfy the concerns of the South African Reserve Bank over the split of the company into separate entities housing South African and international operations.
- The bank’s insistence may help explain why AU is moving forward with a plan that saw its shares fall sharply and drew criticism from investors including Paulson.
- Potash (NYSE:POT) says it has rescued the last of 96 miners trapped after a fire in one of its Saskatchewan potash mines, after some of them had spent more than 24 hours underground.
- Fire broke out Wednesday in a water truck inside POT's Allan mine, and the workers were sent to underground refuge stations while a crew entered the mine and put out the fire.
- POT says it will assess the situation before deciding when to resume mining.
Thursday, September 11, 2014
- Yamana Gold (AUY -1.2%) is lower after Morgan Stanley, Credit Suisse and Raymond James cut their price targets on the stock to $10.70, $10.50, and $10, respectively.
- In the case of Morgan Stanley, the lower target still implies upside of more than 40%; AUY has said the Pilar mine in Brazil has shown improvements with output increasing M/M, but the ramp up is tracking modestly below expectations, thus the firm's tempered outlook.
- An update on Canadian Malartic and meeting quarterly expectations are potential catalysts expected over the next 6-8 weeks.
- John Paulson, whose hedge fund holds a 6.6% stake in AngloGold Ashanti (AU -1%), says he opposes the miner’s plan to raise $2.1B from investors while spinning off non-South African assets because it will destroy shareholder value.
- AU announced yesterday it will create a new company holding its foreign assets; it plans to retain 65% of the new company, with the remaining equity distributed to shareholders.
- Paulson has said AU could unlock value if it split into a high-growth international business and a mature gold producer in South Africa, but "the way this restructuring is being implemented, it’s destroying value because of dilution."
- Taminco (TAM +11.8%) says it has agreed to be acquired by Eastman Chemical (EMN +0.1%) for $26/share.
- The merger agreement includes a 30-day go-shop period, when TAM will solicit and evaluate any alternative proposals.
- EMN says the acquisition strengthens its presence in attractive niche markets such as food, feed and agriculture, and adds a world-class technology platform in alkylamines to its portfolio.
- EMN expects the deal to be accretive to 2015 EPS by greater than $0.35, excluding acquisition-related costs and charges, and to 2016 EPS by greater than $0.60.
- Alcoa (NYSE:AA) says it has signed a multi-year supply contract with Boeing (NYSE:BA) valued at more than $1B to supply aluminum sheet and plate products.
- Alcoa says the deal makes it the sole supplier to Boeing for wing skins on its metallic structure aircraft; Alcoa says its plate products, such as wing ribs and skins, also will be on every Boeing platform.
- The contract is the largest ever between the two companies.
- Southern Copper (NYSE:SCCO) says it still hopes to buy a share in Anglo American's (OTCPK:AAUKF, OTCPK:AAUKY) $3.3B Quellaveco project in Peru, and that talks must now take place at the highest level.
- Negotiations on a potential sale of part of Anglo's ~82% stake in Quellaveco fell apart in the past year because each company wanted a controlling stake, but talks restarted two months ago and SCCO is now offering to hold an equal share if it can operate Quellaveco, SCCO CEO Oscar Gonzalez says.
- A lack of financing has held up Quellaveco, which is expected to produce 225K metric tons/year of copper.
- Patagonia Gold (OTC:PATAF) +9% in London following this morning's operational update.
- Lomada Mine reported record production in August, with a total of 2,961 ounces of gold recovered from the main and trial heap leach pads combined at an all-inclusive cash cost of $625 per ounce.
- The second large excavator delivered and operational. Lomada is on-track to achieve expansion target of 3,000 ounces of gold per month production by end of Q3.
- Exploration for 2014 focused on the El Tranquilo block with the identification and development of 22 new and existing targets. Exciting new mineralization discovered at El Calafate and La Canada, near to Flagship deposit, Cap-Oeste. Additional drilling planned for late 2014.
Wednesday, September 10, 2014
- Iron ore continues to slide, hitting fresh five-year lows on concerns about rising supply and slowing demand.
- Today’s decline - the price of benchmark ore for immediate delivery into China dropped another $1 to $82.20/metric ton - came as Goldman Sachs analysts wrote of "the end of the Iron Age," saying the long period of above trend in profitability enjoyed by the iron ore industry has been destroyed by the billions of dollars major producers have ploughed into new, low-cost capacity.
- The steelmaking material, which is critical to the profitability of several large mining groups including BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE), has dropped by nearly 40% this year, the worst performance among metals and bulk commodities.
- Goldman forecasts $80 iron ore next year and lowers its estimates for 2016 and 2017 to $79 and $78, respectively; Goldman says big producers will still be able to generate good returns at those prices but their ability to return capital to shareholders will be impaired.
- A director resigned from Cliffs Natural Resources (CLF -0.3%), saying management won’t listen to dissenting views and criticizing the approach to corporate governance by new Chairman/CEO Lourenco Goncalves.
- Richard Riederer, who had served on the CLF board for 12 years, cited "an unwillingness to discuss options and bullying of directors who considered other options."
- Riederer is the second person to quit the board since July, when a slate of nominees from Casablanca Capital was elected following a proxy contest.