The world's top three platinum producers - Amplats (AGPPY, AGPPF), Impala Platinum (IMPUY, IMPUF) and Lonmin (LNMIF, LNMIY) - say they will bypass the union representing tens of thousands of South African miners and offer a new wage deal directly to their employees, after talks aimed at ending three months of strikes hit an impasse.
Although the move doesn't bring an end to negotiations with the AMCA union, it could further damage already strained relations between management and strike leaders.
A Brazilian appeals court rules in favor of Vale (VALE) in a dispute over taxation of foreign units that last year forced the mining company to pay 22.3B reais (~$10B) in a settlement with Brazil's tax authorities.
Brazilian treaties with Belgium, Luxembourg and Denmark prevents Brazil from taxing the profits of Vale units in those countries, the court rules.
Cliffs Natural Resources (CLF) -4% AH after Q1 earnings miss estimates and revenues plunge 18% Y/Y, primarily due to falling iron ore and met coal prices as well as a 2% decrease in global iron ore sales volumes, much of which was weather related.
Delivered record production of 1.5M tons at Bloom Lake, in spite of the weather; also improved liquidity by 32% over the past year to $1.9B.
Reiterated its FY 2014 North American coal production volumes of 7M-8M tons, but lowers revenue/ton guidance to $80-$85 from its previous outlook of $85-$90.
Says iron ore demand from North American customers is very strong, which CLF expects to provide a healthy demand in 2014.
Nucor's (NUE -1.2%) Q1 earnings rose 31% but missed estimates, and the steelmaker forecast only "some improvement" in the current quarter when analysts had expected to see significant growth.
Morgan Stanley analyst Evan Kurtz says NUE's lukewarm Q2 forecast could point to worse than expected earnings, while noting that the company tends to give conservative guidance; analysts, on average, have forecast earnings of $0.65/share for Q2.
Tons shipped to outside customers rose 8% Y/Y in Q1, and the average sales price was up 3%, but average scrap and scrap substitute costs rose 5%.
What's up here? A sizable opening pop in the market averages behind big moves from Apple and Facebook is quickly fading, and gold - which earlier this morning touched multi-month lows - is being bid higher.
The DJIA is now off 0.2%, the S&P 500 is down 0.1%, and the Nasdaq - up more than 1% earlier - is down 0.3%.
Freeport McMoRan (FCX) +2% premarket after Q1 earnings fell 21% Y/Y, hurt by lower copper prices and higher costs, but results topped analyst expectations.
FCX previously had raised its copper production despite weaker demand and lower prices, but output fell 3.3% during Q1 to 948M lbs., with average realized price/lb. falling to $3.14 from $3.51 a year earlier, partly due to the conflict with Indonesia's government that has halted its copper concentrate exports from the country.
Total gold production also declined, falling 1.7% to 231K oz., with average realized price/oz. falling to $1,300 from $1,606.
Gross margin narrowed to 25.7% from 33.5% as input costs rose 21% to $3.7B; capital spending totaled $1.61B, double the year-ago period, and FCX continues to expect $7B in capital spending for the year, up from $5.3B last year.
FCX's oil and gas unit sold 16.1M boe, beating its forecast of 15.3M, primarily reflecting higher Eagle Ford production volumes.
Potash Corp. (POT) +1.8% premarket after Q1 earnings and revenue beat analyst expectations and the company raises its sales outlook for the year.
Q1's realized potash price was $250/metric ton, far below $363 from the same period last year, but low prices are helping to boost purchases, as sales volume rose to 2.3M metric tons vs. 2.2M a year ago.
POT now expects to sell 8.3M-8.7M metric tons of potash this year, up slightly from earlier guidance of 8.2M-8.6M and far better than 2013 (8.1M) or 2012 (7.2M).
Issues downside Q2 guidance, seeing EPS of $0.40-$0.45 vs. analyst consensus estimate $0.49; raises bottom end of FY 2014 EPS outlook to $1.50-$1.80 vs. prior guidance of $1.40-$1.80 and $1.67 consensus.
Sees "steady improvements" taking hold in the potash industry, and maintains its FY 2014 global potash shipments outlook of 55M-57M metric tons vs. 53.5m tons shipped in 2013.
Reports weaker Q1 results from its nitrogen and phosphate units due to lower prices; phosphate production also was disrupted by bad weather.
Liveris said Dow had learned lessons from Loeb’s criticism, such as the need to be more transparent about its business, but still rejected his call for a breakup, saying he lacked the management’s “sheer weight of knowledge” about how the company earns its profits.
The CEO also confirmed Dow is committed to a more active sale program than it proposed last year, and now plans to sell businesses worth $4.5B-$6B by the end of next year, including ~$800M of sales already announced.
Yamana Gold (AUY -0.6%) and Agnico Eagle (AEM +2%) are "clear winners" for acquiring Osisko Mining (OSKFF) because it is crucial for gold miners to secure low-risk production at this stage in the cycle, National Bank analyst Steve Parsons says.
It is increasingly difficult to find large gold deposits in mining friendly jurisdictions - such as Osisko's Canadian Malartic mine in Quebec - and companies need to look at obtaining those assets now or face declining production profiles in the future, Parsons says, adding that now is a good time for mid-tier miners to do business with senior producers who are busy cleaning up their balance sheets.
For AUY, Parsons says the addition of a low-cost, cornerstone asset should help the stock get re-rated towards its higher-multiple peers; for AEM, the deal is accretive on all metrics and adds another cornerstone asset to its already concentrated portfolio.
Agnico Eagle Mines (AEM +1.9%) is upgraded to Outperform from Sector Perform with a $43 price target at RBC Capital following the combined bid with Yamana for Osisko, which is expected to succeed as Goldcorp's (GG) final offer has now expired.
The firm views the overall transaction as positive and accretive to EPS and cash flow/share, and sees recent share price weakness as creating an attractive entry point.
Dow Chemical (DOW) +2.3% premarket after Q1 earnings rose 65% Y/Y, beating estimates, on a slight revenue rise and a boost from lower costs.
DOW says adjusted EBITDA margin expanded more than 60 bps Y/Y to 16.6%, with increases in all operating segments except feedstocks and energy; margins grew despite a $300M-plus increase in purchased feedstocks and energy, due to continued emphasis on productivity and cost-control actions.
Sales in DOW's performance plastics segment gained 3%, largely due to price increases; excluding the impact of divestitures, the growth was 6%.
Air Products & Chemicals (APD) reports a 2.4% drop in FQ2 earnings, and lowers its earnings outlook for FQ3.
APD now sees FQ3 EPS of $1.42-$1.47 vs. $1.50 analyst consensus estimate, and lowers the top end of its FY 2014 EPS guidance to $5.70-$5.85 from prior guidance of $5.70-$5.90 vs. $5.78 consensus.
Sales rose 3.9% Y/Y to $2.58B while product costs rose 5.7%: sales in APD's merchant gases segment rose 3.7% to $1.04B, the tonnage gases segment - which provides gases to refineries and steelmaking industries - reported 3.9% higher revenue, and electronics and performance materials gained 7.8%.
CEO Greg Robinson says Lihir will be a focus for further cash savings and productivity improvements; Newcrest blamed much of its 11% drop in the prior quarter's gold production on maintenance work at sites including Lihir.
Separately, Newcrest confirms Robinson will be replaced by COO Sandeep Biswas in early July.
It's easy to blame the winter weather for any earnings disappointments this quarter, but don’t buy it when Cliffs Natural Resources (CLF) uses the excuse when it reports April 24, Wells Fargo analysts say.
Investors likely will focus on restructuring efforts, particularly progress in either selling or finding a partner for high cost Canadian operations, not an easy feat in a downturn; CLF also is evaluating an MLP structure for its U.S. operations, but the firm does not view an MLP conversion as a de-leveraging event.
Peter Munk, stepping down next week as chairman of Barrick Gold (ABX +1.7%), hails the potential benefits of a merger with Newmont Mining (NEM -0.4%), saying investors should welcome the cost cuts and lower political risk that a combination could deliver.
Munk tells FT there are “obviously synergies available” from a potential combination of ABX and NEM, pointing out that the two companies had many assets “cheek by jowl” in Nevada, the top U.S. gold producing state.
Such comments could be an indication the companies are keeping open the possibility of resuming high-level negotiations, although talks would be unlikely to happen before NEM's annual general meeting Wednesday or ABX's annual meeting next week.
Deutsche Bank analysts wonder if the merger report was “a trial balloon... a matter of posturing to allow market participants an opportunity to opine and stock prices time to reflect a merger scenario."
Celanese (CE +4.8%) opens higher after reporting Q1 earnings rose 38% Y/Y and easily beat analyst expectations, driven by improved margins across all businesses and continued productivity.
Says strong execution on productivity initiatives drove segment income margins to 17.7% for the quarter, vs. 16.8% in the year-ago quarter and 15.1% in the prior quarter.
Raises its 2014 earnings outlook, seeing 12%-14% EPS growth to $5.04-$5.13 vs. $4.96 analyst consensus; in January, CE had said company-specific initiatives along with some improvement in base business should result in earnings growth consistent with 2013.
AK Steel (AKS -3.4%) reports a wider Q1 loss on higher production costs due to an unplanned outage of the Ashland Works blast furnace and high energy costs caused by extremely cold winter weather.
Shipments fell 2.1% Y/Y to 1.26M tons, reflecting lower shipments of electrical steel and of carbon steel to the spot market, partially offset by higher automotive shipments; however, average selling prices rose 3% to $1,096/ton, primarily due to a richer shipment mix of value-added products.