Seeking Alpha
  • Today - Thursday, April 17, 2014

  • 12:37 PM
    • A potential spinoff of BHP Billiton's (BHP +0.2%) most unloved assets - likely including its nickel, manganese and aluminum operations - probably would not boost profit at either the new or old entity, as profit margins for the unfavored business have evaporated at the bottom of the commodity cycle, according to a Bloomberg analysis.
    • CLSA Asia-Pacific Markets says such a spun-off company may be valued at $7.5B, just 4% of BHP’s market value.
    • BHP now trades at ~6.6x analysts’ EBITDA forecasts for the year ending in June, a spun-off entity would have to command a multiple of more than 9x to generate value for shareholders, a J.P. Morgan analyst calculates - "a bit too ambitious," he says.
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  • 11:53 AM
    • Almaden Minerals (AAU +6.2%) reports positive results from the first preliminary economic assessment on its Ixtaca gold and silver deposit in Mexico.
    • The PEA concludes that the Ixtaca deposit may be economically viable and the company should proceed to a pre-feasibility study.
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  • 10:53 AM
    • With natural gas in storage at more than a decade low, there needs to be plenty of inventory-building this spring and summer, but the season is off to a slow start with the EIA reporting a build last week of just 24 bcf vs. 36 bcf expected. Stocks today stand at 850 bcf, 50% off the level from one year ago and vs. a 5-year average for this time of year of 1 trillion cubic feet.
    • Futures jump in response, with the May 2014 contract up 4% to $4.707. UNG +3.5%
    • ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, KOLD, UNL, NAGS, DCNG
    | 7 Comments
  • 9:53 AM
    • Alcoa (AA +0.8%) is upgraded to Sector Perform from Underperform with a $15 price target, up from $12, at RBC, based on the recent stronger than expected performance in the alumina and global rolled products businesses.
    • The firm admits that it had underestimated the upside potential for the shares and now sees lower downside risk than before, but it believes much of the business improvement and near-term growth likely is reflected in the share price.
    | 4 Comments
  • 8:49 AM
    • DuPont's (DD) -0.7% premarket as Q1 earnings plummet by more than half from the year-ago quarter after losing the one-time boost from the sale of its coating business.
    • DuPont estimates adverse winter weather reduced Q1 EPS by $0.07 due to increased operating costs and lost sales.
    • Sales in DD's agricultural business fell 6% to $4.39B, as volume growth in the Americas was constrained by the harsh weather as well as shifts in the timing and planted area.
    • However, volumes increased in the company's industrial segments and margins improved in almost all of them.
    • Reaffirms guidance for FY 2014, sees EPS of $4.20-$4.45 vs. $3.88 last year and $4.32 analyst consensus, based on anticipated growth in global industrial market demand.
    | 2 Comments
  • 7:47 AM
    • Chemtura (CHMT) agrees to sell its agrochemicals business to Platform Specialty Products (PAH) for ~$1B, as CHMT moves to focus on industrial chemicals such as fumigants and lubricants.
    • The agrochemicals unit last year generated revenue of ~$450M and EBITDA of ~$100M.
    • PAH management has made clear its ambition to grow into a leading player in the specialty chemical sector via acquisitions.
    • The deal will be paid for with $950M in cash and 2M PAH shares.
    | Comment!
  • Wednesday, April 16, 2014

  • 4:35 PM
    • CVR Partners (UAN) appoints Mark Pytosh as President and CEO of the CVR GP general partner, effective May 5.
    • Pytosh was appointed as a director in 2011 and has served as CFO for environmental and energy services company Tervita; he also spent 18 years in the investment banking industry.
    | 1 Comment
  • 12:52 PM
    • 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.
    | 1 Comment
  • 10:59 AM
    • 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.
    | Comment!
  • 9:51 AM
    • 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.
    | 6 Comments
  • 9:09 AM
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  • 8:59 AM
    • 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.
    | 1 Comment
  • 7:47 AM
    • 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.
    | 1 Comment
  • Tuesday, April 15, 2014

  • 5:27 PM
    • 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.
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  • 2:58 PM
    • 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.
    | 2 Comments
  • 12:41 PM
    • 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.
    | 1 Comment
  • 8:36 AM
    • 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."
    | 15 Comments
  • Monday, April 14, 2014

  • 6:57 PM
    • 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.
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  • 6:38 PM
    • 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.
    | 1 Comment
  • 5:18 PM
    • 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.
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