Friday, December 19, 2014
- S&W Seed (NASDAQ:SANW) agrees to acquire of all of DuPont Pioneer's (NYSE:DD) alfalfa production and research facility assets, as well as all non-GMO alfalfa germplasm, for up to $42M.
- S&W also agrees to be DuPont Pioneer's sole supplier of alfalfa seed through 2024.
- S&W expects the alfalfa business to contribute $26M of incremental annual revenues in FY 2015 and $40M in FY 2016.
- Paragon Shipping (PRGN +10.2%) shares are substantially undervalued and could double next year, Maxim Group analysts say in naming PRGN as the top pick among dry bulk shippers for 2015.
- The firm notes that supply/demand balance in the Panamax fleet should be bolstered by increased coal shipments and exports of U.S. grain to China.
- Based on its estimated balance sheet and fleet for 2015, Maxim calculates a forward NAV of $8.12, implying that PRGN trades at ~0.29x estimates.; the firm's $6 price target implies a 0.74x multiple of the estimated NAV.
- Potash (POT +1.9%) is upgraded to Buy from Neutral with a $40 price target, up from $38, at UBS, citing the company's strong dividend and improving free cash flow.
- UBS says the planned closure of Mosaic's Carlsbad operations in Jan. 2015 and the current flood at Uralkali's Solikamsk-2 mine could remove 2.4M -3.4M metric tons of combined capacity from the market and provides an opportunity for POT to gain more volumes, which also could lead to higher pricing.
- POT’s dividend yields ~4%, and UBS believes it provides downside protection given that the dividend can be funded even if potash prices remain flat; the firm thinks that over time POT may be able to return excess cash to shareholders through an increased dividend or further share repurchases.
- Other potash producers are higher: MOS +2%, AGU +0.4%, IPI +2.6%.
- WTI crude oil has nearly recouped the week's losses today, up 4.5% to $56.80 per barrel. The move, however, doesn't even register on a daily chart.
- Next year? Former WSJ energy reporter Ben Casselman takes to the FiveThirtyEight blog to remind that when he picked up the oil & gas beat in 2008, there was only one thing the experts agreed on: "U.S. oil production was in permanent, terminal decline ... No one has any idea what oil prices will do.”
- ETFs: USO, OIL, UCO, SCO, BNO, UGA, DTO, DBO, CRUD, UWTI, USL, DWTI, UHN, DNO, SZO, OLO, OLEM, TWTI
- Kinross Gold (KGC -1.7%) is downgraded to Neutral from Buy with a $3 price target, down from $3.25, at UBS, citing KGC's 10% share appreciation in recent days.
- The firm also believes - assuming relatively stable commodity prices - further appreciation in KGC may be limited as some investors could re-assess emerging market risks given ongoing macroeconomic developments.
Thursday, December 18, 2014
- Solazyme (NASDAQ:SZYM) says it has taken steps to lower operating expenses, including a workforce reduction and other cost-cutting measures, and anticipates a reduction in annualized cash operating expenses of at least $18M in 2015, according to an SEC filing.
- SZYM expects to record a charge of $3M-$5M in Q4 2014 as a result of the plan.
- Peru's government approves the environmental study for Southern Copper's (SCCO +2.8%) $1.2B expansion of its Toquepala mine, a project expected to raise the miner's copper output by 100K metric tons/year.
- Construction on the expansion, which will add a new concentrator at the mine and boost its tailings storage capacity, is scheduled to wrap up in two years.
- Worthington Industries (WOR -11.2%) plunges to 52-week lows after reporting higher FQ2 earnings and sales but misses expectations due to higher manufacturing costs and a product miss.
- Gross margins declined $3M Y/Y as higher manufacturing expenses across all business segments combined with the unfavorable impact of inventory holding losses in steel processing more than offset the impact of higher volume.
- Oil and gas equipment and engineered cab operations suffered elevated manufacturing costs, and the oil and gas equipment business facility had a product miss on the commercial side, WOR says, adding that they are "isolated issues."
- In its Q2 earnings conference call, WOR said it is not seeing any demand decrease in oil and gas equipment due to declining oil prices.
- Barrick Gold (NYSE:ABX) confirms it is suspending operations at the Lumwana copper mine in Zambia after the country passed legislation to more than triple the royalty rate on open-pit mining operations.
- "Despite the progress we have made to reduce costs and improve efficiency at the mine, the economics of an operation such as Lumwana cannot support a 20% gross royalty, particularly in the current copper price environment,” ABX says.
- ABX says it will record an unspecified impairment charge related to Lumwana in Q4; it says the operation’s current net carrying value is ~$1B.
- Earlier: Barrick Gold likely to suspend Zambian mine
- Steel Dynamics (NASDAQ:STLD) sees Q4 EPS of $0.38-$0.42, below $0.44 analyst consensus estimate, citing acquisition costs and fallen raw material prices.
- STLD says it expects to boost production by ~40%, to 11M tons, giving it a better position and product mix in higher-growth markets in the southern U.S. and Mexico.
- Metals recycling was the hardest hit segment, with a projected Q4 loss vs. a $13M operating profit in Q3; shipments and margins are expected to fall nearly 10% Q/Q.
- STLD +0.9% premarket.
- Olam's $1.3B deal to buy rival Archer Daniels Midland's cocoa processing business may reduce liquidity in the cocoa bean trade, raising concerns about volatile prices and a potential shake-up of customer relationships.
- Olam buys around 500K tonnes of cocoa annually, and it said it will increase its processing capacity to more than 700K tonnes, or 16% of world supply, with this deal.
- This could force users supplied by Olam to look elsewhere for many of their beans, putting a strain on prices.
- Related stocks: MDLZ, HSY, OTCPK:NSRGY, OTC:BYCBF
- ETFs: NIB, CHOC
- Previously: ADM to sell global cocoa business to Olam International for $1.3B (Dec. 15 2014)
Wednesday, December 17, 2014
- A U.S. District Court today rejected Vale’s (NYSE:VALE) request to dismiss a lawsuit alleging it conspired with Israeli billionaire Benjamin Steinmetz to take a West African mine away from rival Rio Tinto (NYSE:RIO).
- The judge also dismissed Vale’s argument that the suit should be brought in an English court, saying Rio’s choice of a U.S. court is justified based on the plaintiff’s likelihood of obtaining jurisdiction over all of the defendants.
- The civil lawsuit, filed in April, alleges that Vale and its former partner Steinmetz worked together to take Rio’s rights to the Simandou iron ore deposit through corruption.
- Barrick Gold (NYSE:ABX) probably will take steps - perhaps as soon as tomorrow - to stop production at its Zambian operation after the country increased mining royalties, Bloomberg reports.
- Zambia's parliament approved the government's 2015 budget proposals, which will replace corporate income tax on mines with increased royalties and increase the rates on open-pit mines such as ABX’s Lumwana to 20% from 6%.
- AK Steel (NYSE:AKS) +7% AH after saying it sees Q4 EPS of $0.05-$0.10, above analyst consensus estimate $0.04, despite incurring ~$31M in costs associated with a planned Ashland Works blast furnace outage.
- AKS says it expects shipments to jump 37% Q/Q to 2M tons in the current quarter from ~1.46M shipped in Q3, helped by acquisitions and strong demand from the auto industry.
- AKS also expects to benefit from lower iron ore, carbon scrap and energy costs in Q4 compared to Q3.
- AKS shares already had surged 6% in the regular trading session, as steel companies (NYSEARCA:SLX) finished broadly higher.
- A top Chinese government official says the country has approved Syngenta’s (NYSE:SYT) genetically modified Agrisure Viptera corn, one year after China began rejecting shipments of grain it said contained traces of the unapproved trait, according to U.S. Agriculture Secretary Tom Vilsack.
- Chinese Vice Premier Wang Yang said imports of the MIR 162 corn had been approved by China's Ministry of Agriculture, Vilsack says, adding that the ministry also approved imports of biotech soybeans developed by DuPont Pioneer (NYSE:DD) and Bayer CropScience (OTCPK:BAYZF, OTCPK:BAYRY).
- The import approvals do not represent a loosening of China's long regulatory review process for GMO crops, Vilsack says.
- The stock market has retraced its post FOMC gains as Janet Yellen walks the line between hawkishness and dovishness at her press conference, but remains nicely higher, with the major averages all up by 1% or more.
- The really wild swings today have been in crude oil, which sank as low at 54.50 this morning, soared above $59 this afternoon, but has plunged back into the red for the session at $56.20 per barrel. USO -0.1%
- ETFs: USO, OIL, UCO, SCO, BNO, UGA, DTO, DBO, CRUD, UWTI, USL, DWTI, UHN, DNO, SZO, OLO, OLEM, TWTI
- Previously: Yellen: Every meeting is "live" (Dec. 17, 2014)
- Previously: Yellen: There's been no policy change (Dec. 17, 2014)
- Sherritt International (OTCPK:SHERF +22.1%) shares rise the most in five years on speculation that the producer of nickel in Cuba would benefit from moves by the U.S. to end its isolation of the country.
- Relaxation of U.S. restrictions on Cuban exposure would open up Sherritt to potential increased U.S. shareholder ownership, TD analyst Greg Barnes says.
- Sherritt has a 50% stake in the Moa nickel and colablt joint venture in Cuba, and has a stake in Energas, a Cuban electricity joint venture.
- Teck Resources (TCK +10.2%) is upgraded to Buy from Hold with a C$20 price target at UBS, which believes its dividend can be funded at lower prices.
- UBS thinks TCK's Fort Hills oil sands project in Alberta should realize net backs of ~C$45/bbl vs. C$65/bbl previously, adding that while project economics deteriorate with lower oil prices, Fort Hills could benefit from other factors including a lower oil differential, lower diluent, and likely a lower Canadian dollar.
- To fund the dividend, cover capex, and pay debt, the firm estimates TCK needs to generate C$7.3B during 2015-17 and that TCK can generate ~C$6B in operating cash flow, indicating that, while it would have to draw on the revolving credit facility, TCK could maintain the dividend (if it choose to) given cash of $1.7B and undrawn credit of $3B as of Sept. 30.
- Separately, TCK also announces the first shipment of zinc and lead in concentrate from its restarted Pend Oreille operations in Washington state to its nearby Trail perations in B.C. for processing.
- Iamgold (IAG +4.9%) chairman and co-founder William Pugliese has sold ~40% of his shares in the company this year, Financial Post reports, continuing a long-term trend in which he has steadily unloaded his stake.
- Pugliese has been selling down his stake for several years: He has dumped 1.475M shares of the 3.7M he owned as of April 2014, after holding 5.1M shares in 2010 and 10.6M as of the 2004 proxy circular.
- The CEO sold 500M shares at $4.31 in August, another 500K shares a month later when the stock price was a full dollar lower, and sold 300K shares earlier this month at an even weaker price of $2.69; meanwhile, execs at Barrick Gold, Kinross Gold and Yamana Gold have been snapping up shares after their stock prices plunged to multi-year lows.