Junior base metals miner Solaris Copper says Freeport McMoRan (FCX -1%) has agreed to a deal that would give FCX as much as 80% in the Vancouver company’s early stage Ricardo property in Chile.
Solaris says the option agreement provides for a three-staged process by which FCX can earn as much as an 80% interest in the Ricardo property for $130M, consisting of $30M plus the delivery of a feasibility study for a mine at Ricardo.
The Ricardo property consists of ~14K hectares along the West Fissure fault in Chile near Codelco’s Chuquicamata mine, the world's largest open pit copper mine.
Kaiser Aluminum (KALU -9.1%) is sharply lower after missing Q3 earnings expectations, but Sidoti analyst Edward Marshall is out in defense of the company, maintaining a Buy rating and $130 price target.
The company's plans to improve operating leverage, a rising price environment and equipment upgrade will ensure KALU "is well positioned to benefit from the ensuing demand in aerospace, automotive and general engineering," Marshall writes.
Marshall says KALU's Q3 aerospace shipments beat his estimate by 8.7%, rising 17.4% Y/Y, but aerospace value-added revenue per pound of $1.79 was the lowest since 2014.
Marshall forecasts KALU's 2020 EPS of $8.09, or 7.8% annual growth on 4.5% VAR growth to $918M, with an EBITDA margin of 27.4%.
Alcoa (AA +7.4%) surges to its biggest gain in more than a year after the company's Q3 earnings nearly doubled expectations and announcing a $200M share buyback.
The buyback comes even as Alcoa trims its demand forecast for the global aluminum market, driven by a potential slowdown in Chinese consumption, prompting Jefferies analyst Chris LaFemina to say the commodity fundamentals for the company are "not great."
“While we applaud the share buyback and give the company credit for the improvements in its capital structure, we do not expect Alcoa to benefit from higher prices for its commodities,” LaFemina says.
Allegheny Technologies Incorporated (ATI -1%) has signed an agreement to provide carbon steel hot-rolling conversion services for NLMK USA at ATI’s Hot-Rolling and Processing Facility located in Brackenridge, PA.
The slab shipments to ATI will begin immediately and increase to anticipated production levels in the Q119.
This agreement covers conversion services through Dec. 2019.
NUE says steel mill shipments rose 7% Y/Y in Q3 and sales to external customers gained 6%, while average prices per ton jumped 23% Y/Y and 7% from Q2, when the 25% tariff on imported competition was kicking in.
However, NUE expects Q4 earnings to decrease across all three operating segments, due primarily to typical seasonality, although it forecasts Q4 to be another strong quarter with higher earnings than in the year-ago quarter.
Iamgold (NYSE:IAG) +1% pre-market after saying it will invest in Emergent Technology Holdings, a financial technology company that uses blockchain to track the provenance of responsibly sourced gold.
Financial details are not provided, but IAG joins fellow gold miner Yamana Gold and other partners, including Sprott and Valcambi, in investing in EmTech.
EmTech's Responsible Gold supply chain application is the only blockchain solution that automates the tracking of responsibly sourced gold from origin to vault, IAG says; the gold is digitized into G-Coin tokens, which are digital certificates of title to responsibly sourced gold.
Steel Dynamics (NASDAQ:STLD) +3.7% pre-market after reporting stronger than expected Q3 earnings and a 32% Y/Y revenue increase to $3.22B.
STLD had guided EPS slightly lower to $1.64-$1.68 in mid-September even as it indicated strong underlying demand in domestic end markets.
STLD says Q3 income from operations of $532M, cash flow from operations of $420M and adjusted EBITDA of $626M were record highs for the company, lifted by record steel shipments, average steel selling price improvement and resulting metal spread expansion across its steel operations.
"We remain confident that macroeconomic and market conditions are in place to benefit domestic steel production in 2019," CEO Mark Millett says.
Kaiser Aluminum (NASDAQ:KALU) -8.6% after-hours as it misses Q3 earnings estimates by a wide mark while revenues rose 18% Y/Y to slightly beat expectations.
KALU says Q3 results reflected higher aerospace shipments as supply chain destocking continues to moderate and from the full realization of price increases implemented in Q2.
KALU says tariffs have hurt short-term results but believes the long-term impact will be "neutral to slightly positive" should the tariffs remain in place.
For FY 2018, KALU continues to anticipate mid-single-digit growth in shipments and value added revenue with adjusted EBITDA margin in the mid-20% range, with continued underlying demand strength in Q4.
Chile's government says it will seek international arbitration over what it calls a failure of lithium miner Albemarle (NYSE:ALB) to adhere to the terms of a 2016 contract.
State development agency Corfo claims ALB failed to make a serious offer for as much as 25% of its annual production capacity to be provided at a discounted rate to companies seeking to produce battery materials within Chile, and now says it will refer the dispute to the Paris-based International Chamber of Commerce.
Alcoa (NYSE:AA) +3.3% after-hours following an easy Q3 earnings beat and announcing a $200M stock buyback.
Alcoa reported Q3 adjusted EBITDA of $795M, down 12% from $904M in Q2, primarily due to lower aluminum prices, and raises the lower end of guidance for FY 2018 adjusted EBITDA by $100M to $3.1B-$3.2B to reflect recent market prices, including regional premiums, costs of raw materials, energy and expected operational performance.
Q3 unadjusted EPS includes a $160M charge due mostly to a non-cash charge from the transfer of its U.S. pension and post-employment benefits obligations.
Alcoa continues to project a full-year global deficit for both aluminum and alumina and a surplus for bauxite; in aluminum, it expects a global deficit of 1M-1.4M metric tons, with global aluminum demand growth of 3.75%-4.75%, while in alumina, the company projects a higher global deficit of 400K-1.2M metric tons.
"By reducing complexity, driving returns, and strengthening the balance sheet, we've made Alcoa a much stronger company even as commodity markets remain volatile," Alcoa says.
Hudbay Minerals (HBM -2.3%) shareholder Waterton Mining has increased its active stake to 7% from 4.8% and is seeking a meeting with the company to discuss replacing members of its board, Bloomberg reports.
The P-E firm has expressed its concerns to HBM Chairman Alan Hibben, telling him it sought assurances that the miner would not pursue acquisitions or joint ventures without consulting shareholders and that it would reserve the right to do anything it deemed necessary to improve the company’s performance, according to the report.
HBM shares have slumped ~45% YTD amid a slide in copper and zinc prices.
Despite the government's plan to introduce new mining duties, replace a value added tax with sales tax and increase royalties to help bring down rising debt, “we are confident that mining companies will be able to meet their operational costs,” fin min Margaret Mwanakatwe tells parliament in comments viewed as a sign that the government will not reverse its proposals.
Operations at the Asanko Gold Mine are ahead of plan, positioning the 50-50 joint venture in Ghana between Asanko Gold (AKG -3.1%) and Gold Fields (GFI -2.4%) to meet its full year production guidance of 200K-220K oz.
The companies say the mine's Q3 production reached a record 61.6K oz., up 15% Q/Q and tracking the higher end of H2 guidance of 110K-120K oz.
Q3 mining operations were helped by the resumption of steady state operations at the Nkran pit, with 1.1M metric tons of ore mined at a grade of 1.5 g/t.
AKG, the operator of the JV, currently is working on bringing the fourth pit into production.
Crude oil prices tumble to their lowest level in nearly a month, with U.S. WTI edging below $70/bbl for the first time since Sept. 21 after domestic crude stockpiles rose last week by a larger than expected 6.5M barrels: WTI -2.8% to $69.91/bbl, Brent -1.8% to $79.93/bbl.
It was the fourth straight weekly increase in U.S. crude supplies, with recent production levels hit by hurricane-related shutdowns in the Gulf of Mexico.
The declines come amid tension between the U.S. and Saudi Arabia following the apparent murder of a Saudi journalist at the kingdom’s consulate in Turkey, as well as growing concerns about the outlook for global growth.
ArcelorMittal (MT -0.6%) says it will pay ~$1B, or 74.69B rupees, to creditors of two Indian companies in which it previously held stakes, in order to make its acquisition offer valid for Essar Steel.
MT says it will clear overdue debt of steel company Uttam Galva Steels and oil and gas pipeline construction services provider KSS Petron, two companies in which MT held stakes until earlier this year.
The move comes after India’s top court said MT’s bid for Essar Steel would become valid only if the acquirer cleared outstanding debt of Uttam Galva Steels and KSS Petron.
Separately, MT says its steel plant at Aviles, Spain suffered a serious fire in the coking batteries Tuesday night, leading to a full evacuation of the unit; further details of the extent of the damage or its impact on production at the site are not known.
Anglo American (OTCQX:AAUKF, OTCPK:AAUKY) likely will restart operations at its Minas Rio iron ore mine in Brazil in November or December but a planned full ramp-up could be delayed until 2021, the miner’s head of Brazil operations tells Reuters.
Anglo halted production at the mine after two leaks in March in a pipeline that channels slurry more than 300 miles from the mine in Minas Gerais state to a port in Rio de Janeiro state.
The company won two key permits to ramp up production in January, but Brazil chief executive Ruben Fernandes now expects to receive the key operating license in May 2019, meaning production likely would not hit its 26.5M metric tons/year target until 2021.
Fernandes also reiterates Anglo’s prior estimate of a $300M-$400M impact on earnings from the spills this year.
Indonesian miner Inalum is looking to finalize its $3.85B deal for majority control of Freeport McMoRan's (NYSE:FCX) local unit in December, Inalum's CEO says, which would end more than nine years of wrangling between FCX and Indonesia's government over ownership rights to the giant Grasberg copper mine.
But the planned transactions are still subject to the issue of environmental recommendations and a special mining permit by the government, Inalum CEO Budi Gunadi Sadikin tells India's parliament.
A 2017 government audit estimated FCX’s decades-long operations at Grasberg had caused $13.25B in environmental damage; in a follow-up this April, India's environment minister issued two decrees that gave FCX six months to overhaul the management of tailings from the mine.
Vale (NYSE:VALE) CEO Fabio Schvartsman says the Samarco joint mining venture with BHP Billiton (NYSE:BHP) could resume production at a third of its capacity at the beginning of 2020.
In August, a BHP representative said the company saw little chance of Samarco resuming operations next year, although it was expected to receive all the required licenses, but Schvartsman now says "all indications are that there will be no problems and that, by the beginning of 2020, all issues will be overcome and it will be possible to resume operations."
Samarco halted operations in late 2015 after a tailings dam collapsed, killing 19 people and causing one of Brazil's worst-ever environmental disasters.
BHP says its FQ1 iron ore production rose 8% Y/Y to 69M metric tons from 64M tons a year ago on strong Chinese demand for high-grade ore, and maintains its FY 2019 guidance of 273M-283M metric tons of iron ore.
But copper production for the quarter was flat at 409K metric tons, and the miner cuts its full-year copper output target to 1.62M-1.71M metric tons from a previous range of 1.67M-1.77M tons, citing reduced production at its Spence mine in Chile and its Olympic Dam mine in Australia.
The Olympic Dam mine was closed for repairs and is expected to resume operations by the end of this month, while Spence continues at partial capacity following a fire in September and operations are expected to reach full capacity in December.
BHP says nickel production fell 8% Y/Y after operations at its Kalgoorlie smelter in Australia were suspended following a fire in September; the smelter is expected to ramp back up to full production next month and the company maintains its nickel production outlook for the year.
The new contract between U.S. Steel (NYSE:X) and the United Steelworkers union proposes to increase wages by 14% over a four-year period, which would be the biggest pay increase for the workers in at least six years, Reuters reports, citing three sources familiar with details of the negotiations.
The new contract reportedly also proposes a lump sum bonus and a share in the company’s profits, and workers will retain healthcare benefits from the last contract, which did not require them to pay a premium.
Negotiations on a new contract began in July, with the union asking the company to share the windfall gains resulting from rising steel prices.
Hudson Technologies (HDSN -30.9%) plunges to a 52-week low after agreeing to extend to Nov. 14 the delivery deadline to provide its term loan lenders with a certificate setting forth the total leverage ratio as of Sept. 30.
HDSN says it has not been in a position to file its 10-Q report for the June quarter but believes it will be able to file by Nov. 14.
HDSN also says it has submitted a listing compliance plan in response to the Aug. 15 deficiency letter it received from Nasdaq.
Livermore sent a letter to Detour saying the board has failed its shareholders on “numerous governance and operational matters" and seeks "wholesale change" on the board's composition; the U.S. hedge fund has not revealed the size of its stake in Detour.
The move comes after John Paulson's hedge fund nominated replacements for Detour’s entire board and demanded the company run a formal process to evaluate alternatives.
Vale owns the world's biggest undeveloped nickel deposit in Indonesia but would wait for a price recovery before using nickel reserves, and its previous reduction in nickel production was a “conscious” decision, the CEO says.
Coeur Mining (NYSE:CDE) agrees to acquire Nevada assets adjacent to its Rochester open-pit, heap leach mine in Nevada from Alio Gold (NYSEMKT:ALO) for $19M in shares.
CDE says the principal asset is the Lincoln Hill project, a high-grade, open-pit gold-silver development project located approximately four miles west of Rochester: Lincoln Hill has a historical measured and indicated resource totaling 364K oz. of gold and 10.2M oz. of silver.
CDE says the projects will more than double its land position at Rochester from ~16,300 acres to more than 40,300 acres.
Rio Tinto-owned (NYSE:RIO) Turquoise Hill, which holds Oyu Tolgoi in a partnership with the Mongolian government, says sustainable production would be achieved by the end of Q3 2021 rather than in Q1 2021, citing challenging ground conditions and delays in the completion of Shaft 2.
Meanwhile, TRQ says Oyu Tolgoi likely will meet the upper end of its FY 2018 production guidance of 140K-155K metric tons of copper in concentrate and 240K-280K oz. of gold.
Under the deal, which analysts say is a big vote of confidence in the quality of the Solgold project, BHP will pay SolGold £45M ($59.2M) for 100M new shares in the company, taking its interest to 11.2% from 6.1%; Newcrest Mining (OTCPK:NCMGF) is the top shareholder in SolGold with a 14.5% stake.
“It’s not of financial consequence for them [BHP], but it’s one of the things you need to do to get your foot on future deposits,” Morningstar analyst Mathew Hodge says of the deal.
Rio Tinto (NYSE:RIO) says its Q3 iron ore shipments fell ~5% Y/Y and 7% Q/Q to 81.9M metric tons, hurt by planned maintenance and safety pauses across all operations following an August fatality at the Paraburdoo iron ore mine.
Rio says Q3 bauxite production of 12.7M metric tons fell 1% Y/Y, with strong production at Weipa offset by lower production at the non-managed Sangaredi and Porto Trombetas mines, and aluminum production of 900K tons also was 1% lower Y/Y, due primarily to ongoing labor disruptions at the non-managed Becancour smelter in Canada.
Mined copper production of 159.7K metric tons was 32% higher Y/Y, mostly reflecting increased production from Rio Tinto Kennecott due to higher grades.
As previously announced, Rio expects raw material cost headwinds to have a $400M negative impact on EBITDA in FY 2018 compared with 2017.
Bullish weather forecasts again led to a sharp rally in core winter natural gas contracts to start the week, boosting November natural gas prices by more than $0.08 to $3.242/MMBtu, and spot gas jumped $0.17 to $3.135/MMBtu as early-season cold drove up demand across much of the U.S.
With unseasonably low temperatures expected to persist through the end of October, NatGasWeather expects the coming weather pattern to further raise storage inventory deficits vs. the five-year average to more than 650B cf and likely toward 700B cf.
The background state will remain bullish for quite some time until record production finally shows signs of improving deficits, “something that’s not expected to happen until after October due to the coming colder-than-normal pattern," the forecaster says.
Gas-oriented energy companies were strong gainers in today's trade: CHK +3.4%, RRC +5.3%, SWN +4.9%, COG +2.2%, GPOR +2.6%, EQT +3.4%, EQM +1.5%.
The United Steelworkers union says it reached a tentative labor agreement with U.S. Steel (NYSE:X), likely thwarting a possible strike of 14K employees at the company's domestic flat-rolled and iron ore mining facilities as well as tubular operations.
The workers had asked for better pay and benefits packages than the company initially proposed after three years of wage freezes.
The deal culminates six weeks of heated negotiations after the previous contract expired Sept. 1, at which time both sides agreed to extend talks.
U.S. Steel and ArcelorMittal (NYSE:MT), which also is in the middle of labor talks with the USW, together account for 40% of U.S. production capacity of flat-rolled steel used across the industrial sector.
"We have a bullish outlook through the end of the year and into next year," says HSBC precious metals analyst Jim Steel. "Our average is $1,274/oz. this year, which means we'd continue to have a drive up into the end of the year."
Last week's stock market selloff has been a factor in gold's rise, as well as the drop in the 10-year yield from a recent 3.25% back to 3.15%, says Bart Melek, head of commodities strategy at TD Securities, but the risk-off move may have given way to another catalyst: "Now there's a view the Fed might not be as aggressive" in raising rates, he says.
Meanwhile, last week’s positive reversal for gold left much of the market wrong-footed, helping accelerate the move, according to Saxo Bank's Ole Hansen.
Gold mining stocks are broadly higher: ABX +2.4%, NEM +2.2%, GOLD +2.7%, AEM +2.3%, GG +0.9%, FNV +1.4%.
Lacaze says the company is evaluating options in case a negative environmental review forced the closing of its A$1B plant in Kuantan.
FT also says Malaysian MP Fuziah Salleh said she resigned her chairmanship from the committee reviewing the Lynas plant, but it is unclear if Malaysia’s energy minister has accepted the resignation or if a replacement has been named.
The firm lowers its rating on the sector to Market Weight from Overweight, saying capital spending by firms has “disappointed” investors, and downgrades Nucor (NUE -0.4%), Steel Dynamics (STLD -0.7%) and Cleveland-Cliffs (CLF -1.2%) to Neutral from Outperform.
The ongoing U.S. talks with Canada on tariffs related to steel and aluminum also could add to the oversupply of the commodity, Credit Suisse says, seeing odds favoring a deal by early 2019.
Glencore, which began operational management of Hail Creek from Aug. 1 after purchasing the mine from Rio Tinto, says it will launch a seven days on, seven days off worker rotation and reconfigure mining methods it uses at Hail Creek; it expects the process to be phased in over the next 18 months.
In 2017, the mine produced 9.4M metric tons of hard coking and thermal coal for export.
Crude oil prices rise only modestly amid rapidly escalating tensions between the U.S. and Saudi Arabia over the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi at the Saudi consulate in Istanbul; U.S. WTI +0.3% to $71.58/bbl, Brent +0.3% to $80.68/bbl.
Pres. Trump says Saudi King Salman denies knowing what happened to Khashoggi; Trump says he is sending Sec. of State Pompeo to meet the king.
Turkish authorities say they reached an agreement with Saudi Arabia to search the kingdom’s consulate in Istanbul for Khashoggi, a sign that the countries are seeking to avoid direct confrontation over the incident.
Goldman Sachs reiterates its long call on crude oil, as the "potential magnitude of supply shortfalls from Iran in the short term or Saudi potentially outweighs for now a backdrop of weaker fundamentals and increased macro uncertainty."
Despite a Saudi threat of higher crude prices if the U.S. pushes too far, most analysts believe it is difficult to imagine Saudi Arabia taking action that would hit world oil supply.
Also, crude markets are supported by data that shows South Korea did not import any oil from Iran in September for the first time in six years, before U.S. sanctions against Iran take effect in November.
Sibanye-Stillwater (NYSE:SBGL) +6.8% pre-market and surging as much as 20% on the Johannesburg Stock Exchange, a development the company says is reflective of its “better outlook."
“We are recovering from the significant negativity from the first quarter and the market is starting to reflect the better outlook,” says SBGL's head of investor relations.
Traders say the improvement is part of a wider appreciation in South African gold shares and not related to a short squeeze; other South African miners also are higher pre-market: HMY +4.9%, AU +3.9%, GFI +2.5%.
SBGL has surged 16% since Thursday, when Goldman Sachs said the stock was "materially undervalued."
Morgan Stanley says it also favors SBGL because the stock “trades at a material discount to its sum of the parts and where valuation is ignoring sources of optionality,” and AU's premium relative to South African peers is “warranted” because of its diversification and lower cost of production.
Vale (NYSE:VALE) says Q3 iron ore production reached a company record 104.9M metric tons, up 10.3% Y/Y, and reiterates FY 2018 production guidance of 390M metric tons.
Iron ore production at the S11D and Carajás projects jumped nearly 20% Y/Y to a record 53.9M metric tons, accounting for most of the increase.
Vale also says sales for iron ore and pellets hit a new record of 98.2M metric tons, with ore sales totaling a new high of 84M metric tons and pellet production reaching 13.9M metric tons; premium products made up 79% of total sales in Q3 vs. 77% in Q2.
Vale maintains its guidance for iron ore production of ~390M tons in 2018 and 400M tons from 2019 onwards.
Q3 nickel production fell 23.4% to 55.7K metric tons, while sales dropped 19.6% to 57.3K tons.
First Majestic Silver (NYSE:AG) +2.3% pre-market after announcing record quarterly production of 6.7M silver equiv. oz. in Q3, consisting of 3.5M oz. of silver, 35.2K oz. of gold, 4.4 M lbs. of lead and 1.2M lbs. of zinc.
YTD silver production totaled 8.4M oz., or 15.8M silver equiv. oz., in-line with full-year production guidance of 12M-13.2M silver oz. or 20.5M-22.6M silver equiv. oz.
AG attributes the record quarter primarily to a full quarter of production from the San Dimas operation, along with respective 19% and 35% increases in consolidated silver and gold grades, with five of its six mines recording higher production levels as a result of the grade improvements.
AG also says it is implementing a 20% cost reduction program across all areas due to prolonged silver price weakness.
Chile’s environmental court orders Barrick Gold (NYSE:ABX) to definitively close the Chilean side of its stalled Pascua-Lama gold mine, a final procedural step in the long-running saga over the project that straddles the Chile-Argentina border.
The project was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5B.
Today's court ruling confirms January's closure order by Chile's environmental regulator that also fined ABX $11.5M.
“If there are opportunities in West Africa that don’t perhaps fit the new Barrick model, in terms of the size of project, or other things, then we’d be keen to look,” Johnson tells Reuters.
BTG would be particularly interested in projects it can develop to produce 200K oz./year of gold for at least 10 years, as opposed to already-built mines, and investments with a ~20% rate of return at gold prices of $1,200-$1,250/oz., Johnson says.
Detour says the settlement it proposed to Paulson on Oct. 9 would have resulted in nearly half of its board being refreshed in six weeks, with interim CEO Michael Kenyon stepping down before the next annual general meeting.
Paulson says it has made alternative proposals to Detour and will continue to press for a complete change of the board.
The hedge fund has called for Detour to explore strategic alternatives including a sale, and in July called for a special shareholders meeting and nominated eight new directors for appointment to Detour’s board.
CLF says the contract is retroactively effective from Oct. 1 and runs through Sept. 30, 2022; the deal covers ~1,800 USW-represented workers at CLF's Tilden and Empire mines in Michigan, and its United Taconite and Hibbing Taconite mines in Minnesota.
Contract details are not disclosed, but the new labor deal reportedly provides steelworkers with a signing bonus, wage increases in each year of the contract and pension improvements.
Gold Fields (GFI -0.7%) shareholders getting impatient over the failure to stem losses at the South Deep deposit in South Africa should not lose hope, CEO Nick Holland tells Bloomberg.
“There is a large resource base there, it’s well-drilled and we have spent a lot on infrastructure development costs. We are not far away, we just need more time," Holland says.
South Deep is the world’s second largest known body of gold-bearing ore but production targets have been repeatedly missed and GFI has spent more than 9B rand ($620M) into the mine in addition to the 22B rand it paid to buy the asset in 2006.
The next milestone will be the announcement of a new plan in February, and GFI likely will need about 18 months after that to assess whether it is working, Holland says.
Crude oil ticks higher, stabilizing after two days of steep declines, although weaker demand forecasts weigh on prices: U.S. WTI +0.6% at $71.39/bbl, Brent +0.1% at $80.33/bbl.
Both benchmarks, which remain poised for their first weekly decline in five weeks, plunged ~3% yesterday, and Brent briefly dropped below $80.
OPEC's monthly market report yesterday showed a rise in OPEC and Russian crude production in September, more than making up for reduced Iranian output ahead of U.S. sanctions, and cut its global oil demand growth forecast for this year and next, for the third month in a row.
This morning, the International Energy Agency shared that view, saying global oil demand will grow more slowly than initially expected in 2018 and 2019, citing "a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data."
"The bearish alarm bells are ringing for next year's oil balance as market players brace for the return of a supply surplus," says Stephen Brennock of oil broker PVM.
BTG says results were driven by strong performance at the Fekola mine in Mali, which has ramped up to full production, the Masbate mine in the Philippines and the Otjikoto mine in Namibia.
BTG says the Fekola mine continued to outperform the mine plan, producing 107K oz. in the quarter.
Q3 gold production at the Masbate mine totaled 57.5K oz., the second highest quarterly production ever for the mine and prompting the company to raise the mine's full-year production guidance to 200K-210K oz. from its earlier outlook of 180K-190K oz.
Peabody Energy (NYSE:BTU) says it plans to permanently seal the area where high methane levels have been concentrated following a fire in parts of its North Goonyella mine in Australia that has burned since last month.
BTU says three of the mine’s five openings remain temporarily sealed to reduce air flow into the mine.
BTU says it expects the fire to have financial impacts on future periods and will provide an account in its Q3 earnings report.
“The market for met coal was already pretty tight. North Goonyella was producing decent volume so it’s certainly going to have an impact on the market,” says a Melbourne-based UBS analyst.
Earlier: Peabody Energy declares force majeure on North Goonyella coal (Oct. 9)
“There is nothing more than can or should be done," the CEO tells FT. “Our stock is still very under appreciated. There is still a lot to be recognized by the market.”
Vale has been a major beneficiary of China’s efforts to reduce excess capacity in its sprawling steel industry and clean up its environment, which has raised demand for the company’s high grade, low impurity iron ore.
“This is a very good moment for our iron ore business. The best we have had for many, many years,” Schvartsman says.
One of the biggest challenges in Vale’s nickel business is its Goro project in New Caledonia; Vale has been seeking a partner to help share the cost of building a new $500M storage area for waste material at the mine but so far without success.
“We are studying different scenarios and will have a final decision by the end of the year,” says Schvartsman, declining to provide further details.
Corn and soybean futures jumped in Chicago trade today after the U.S. Department of Agriculture unexpectedly cut its production forecast, citing an anticipated lower corn harvest due to smaller than expected yields and a likely decrease in harvested soy acres in key states such as Illinois and Minnesota.
According to this month's USDA estimates, CBOT December corn settled $0.07 higher at $3.69/bushel, while November soybeans settled $0.06 higher at $8.59/bushel; also, December wheat came in $0.03 lower at $5.07/bushel.
Despite the cuts, the U.S. soybean crop is still projected as the biggest ever, while corn harvest is forecast to rank as the second biggest on record: Soybean production is pegged at 4.69B bushels with yields averaging a record 53.1 bushels/acre, and the corn crop is seen at 14.778B bushels with an average record yield of 180.7 bushels/acre.
In September, the USDA had forecast a corn crop of 14.827B bushels and a soybean crop of 4.693B bushels.
Chile’s Constitutional Court suspends a deal allowing the sale of a 25% stake in Sociedad Quimica y Minera (NYSE:SQM) to China’s Tianqi Lithium after agreeing to hear arguments in a lawsuit filed by SQM’s controlling shareholder.
The lawsuit, filed yesterday by SQM’s controlling shareholders, alleges Chile’s antitrust court failed to follow due process when it approved a settlement allowing Tianqi to buy the stake in SQM, the world’s second leading producer of lithium.
Tianqi says the Constitutional Court’s decision to review the appeal by SQM’s controlling shareholders is just a formality; the court says it will hear arguments in the case on Oct. 22.
The White House is proceeding with plans for President Trump and Chinese leader Xi Jinping to meet at the G-20 summit in Buenos Aires at the end of November, in a step that could help ease trade tensions between the two nations, the Wall Street Journal reports, citing officials from both countries.
One of the people on the U.S. team that's planning the summit meeting is Christopher Nixon Cox, grandson of former President Richard Nixon, whose trip to China in 1972 eventually resulted in diplomatic relations between China and the U.S.
November WTI crude finished -3% at $70.97/bbl, while Brent crude for December delivery ended -3.4% at $80.26/bbl, both posting their lowest settlements since Sept. 21.
The EIA reported U.S. crude inventories rose by 6M barrels last week, more than double analyst consensus expectations but well below the 9.7M-barrel rise reported yesterday by the American Petroleum Institute.
The energy markets are part of the risk-off posture across all asset classes, and given the larger than expected build in U.S. crude supplies and flat demand for gasoline, “we wouldn’t be surprised to see a deeper selloff as the week comes to an end,” says Tariq Zahir of Tyche Capital Advisors.
Mosaic (MOS +2.4%) is higher after Citigroup upgrades shares to Buy from Neutral with a $40 price target, raised from $36, as the firm sees the company helped by improving phosphate fundamentals, which could benefit further from potential environmental restrictions in China.
Citi's P.J. Juvekar says phosphate supply and demand are looking more favorable, and fertilizer prices were strong in Q3, adding that prices do not need to rise much to justify a Buy rating on MOS.
The firm also downgrades Sherwin-Williams (SHW -0.7%) to Neutral from Buy with a $435 price target, cut from $492, saying the company is unlikely to dodge raw material and end market woes outlined by peers PPG and H.B. Fuller.
U.S. policy uncertainty and recent declines in forward steel pricing have outweighed the bullish outlook for long-term global steel demand, but Seaport Global analyst Derek Hernandez thinks steel stocks (NYSEARCA:SLX) are due for a bounce.
Hernandez expects the Trump administration to continue to support the U.S. steel industry through Section 232 tariffs through at least 2020, despite investor concerns that an end to the tariffs are always only a tweet away; at worst, Trump would replace the tariffs with quotas in the event he agrees to drop them.
Seaport is bullish on the U.S. steel space overall, although Nucor (NUE -0.9%) is the top stock pick given its strong balance sheet, organic growth initiatives and potential for acquisitions; along with NUE, U.S. Steel (X +0.3%) and Steel Dynamics (STLD -2.4%) are started with Buy ratings, while AK Steel (AKS -1.3%) and Commercial Metals (CMC -1.9%) warrant only Neutral ratings.
Sibanye-Stillwater (SBGL +11%) is poised for further gains after the stock's recent rally, Goldman Sachs says, believing SBGL remains "materially undervalued, trading at a significant discount to [platinum group metal] peers and broadly in line with gold peers.”
Goldman thinks SBGL's discount to its PGM peers is unwarranted, citing the miner's improved balance sheet, a likely continued deleveraging as the company becomes cash positive next year, and a strong commodity mix.
“The only remaining near-term debt is local South African debt, which we we do not believe will be challenging to refinance given historical precedents for Sibanye and similar companies,” the firm says, adding that SBGL has completed most of its heavy capital spending after completing the expansion of the Blitz project at Stillwater.
Earlier: Gold spikes to $1,218 as dollar strength slips (Oct. 11)
Endeavour Silver (EXK +7.2%) says it expects FY 2018 production to fall ~5% short of its full-year guidance, due to delayed commercial production at its El Compas mine, lower grades at Bolañitos and lower mine output at Guanaceví.
EXK says Q3 silver production totaled 1.43M oz. and gold production was nearly 13K oz., resulting in 2.4M oz. silver equiv. production; respectively, totals were up 13%, down 5% and up 5% vs. the year-ago quarter.
EXK says higher silver equiv. production was due to significantly improved silver and gold grades at El Cubo being mined from the center of the Villalpando-Asuncion ore body.
"Now that the dollar and yields have eased back, gold is finding some solid support, especially given that the stock markets are selling off,” says Forex.com's Fawad Razaqzada. "The metal could extend its gains further should it finally crack that $1,205-$1,215 resistance range on a daily closing basis."
"Rising U.S. yields and general strength in the dollar have meant that investors have largely ignored gold. But people are seeing fairly good value at current levels on the back of some macro concerns," says ING analyst Warren Patterson.
In its monthly oil market report, OPEC says world oil demand this year will rise by slightly more than 1.54M bbl/day, 80K less than last month’s estimate, while 2019 oil demand is expected to rise by 1.36M bbl/day, 50K less than last month’s estimate.
OPEC Secretary-General Barkindo says the oil market is well supplied and projections for 2019 "clearly show a possible rebuilding of stocks," suggesting the group is in no rush to expand a June agreement that raises production.
Crude oil prices are lower following a spike in U.S. crude stockpiles reported by the American Petroleum Institute and ahead of the Energy Information Administration's release of official U.S. government inventory data at 11 a.m. ET; U.S. WTI -1.7% at $71.95/bbl, Brent -1.9% at $81.49/bbl.
Chile’s Supreme Court upholds an environmental order for Kinross Gold's (NYSE:KGC) Maricunga gold mine to close its water pumping wells, effectively ending a long-running dispute that sparked the miner’s retreat from the country.
Chile's environmental watchdog ordered a shutdown of the wells serving the mine in 2016, a ruling that was challenged by KGC in an environmental tribunal and then in the country's highest court, which now has backed the original order, citing "inadequate management of unforeseen environmental impacts on the Pantanillo-Ciénaga Redonda basin," which is located in northern Chile's Atacama Desert.
KGC suspended operations at Maricunga in late 2016; the mine accounted for 8% of the company's total gold production in 2015.
Rio Tinto (NYSE:RIO) warns of an additional $130M hit to Q3 profits from old contracts to supply alumina, on top of a $178M impact from the contracts in the first six months of the year.
Rio supplies 2.2M metric tons/year of alumina to customers at a percentage of benchmark aluminum prices, but unlike alumina, which has shot up in value this year following a string of outages and disruptions, aluminum on the London Metal Exchange has fallen in value, hurting Rio.
The company says a 10% rise in the alumina price would cut earnings by $100M, and every 10% drop in the aluminum price would cost it $60M.
Barrick Gold (NYSE:ABX) reaffirms its FY 2018 gold production forecast after announcing preliminary Q3 output of 1.15M oz., up 8% Q/Q, primarily due to improved throughput and grade at Barrick Nevada.
ABX expects to produce 4.5M-5M oz. of gold for the full year, including an anticipated 1.25M oz. in Q4, at an all-in sustaining cost of $765-$815/oz.
ABX also maintains its 2018 copper production forecast of 345M-410M lbs., at an all-in-sustaining cost of $2.55-$2.85/lb.
Preliminary Q3 copper production was 106M lbs., up 28% Q/Q, mostly due to higher production at the Lumwana mine in Zambia; all-in sustaining costs are expected to fall 10%-12% from the previous quarter.
ABX also sees its 2018 effective tax rate at 48%-50% - assuming a $1,200/oz. gold price for the rest of the year - up from a previous forecast of 44%-46%, because of lower than expected sales from lower-tax mines.