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Our highest priority is the safety, health and wellbeing of our workforce and communities. We have taken action to reduce the spread of COVID-19.
- Our financial position is strong. Underpinned by our low-cost operations, our business is resilient and expected to continue to generate solid cash flow.
- Record production was achieved at Western Australia Iron Ore (WAIO) and Caval Ridge, while record average concentrator throughput was delivered at Escondida and record ore was stacked at Spence.
- Production guidance for the 2020 financial year remains unchanged for petroleum, iron ore and metallurgical coal. Copper guidance for our operated assets is broadly unchanged and Antamina guidance is under review following temporary suspension of operations due to COVID-19. Energy coal production guidance is under review with Cerrejón placed on temporary care and maintenance due to COVID-19.
- Our major projects under development in petroleum and iron ore are tracking to plan. As a result of measures put in place to reduce the spread of COVID-19, the Spence Growth Option schedule and timing for completion of the shafts at Jansen are under review.
- We have flexibility in our capital and exploration expenditure. We are reviewing our guidance for the 2021 financial year and it will be lower than the current guidance of around US$8 billion. We will provide updated guidance with our full year results.
Iron ore – Total iron ore production increased by three per cent to 181 Mt (205 Mt on a 100 per cent basis). Guidance for the 2020 financial year remains unchanged at between 242 and 253 Mt (273 and 286 Mt on a 100 per cent basis).
Western Australia Iron Ore (WAIO) achieved record production, with higher volumes reflecting record production at Jimblebar and the impact of the train derailment in the previous period. Weather impacts from Tropical Cyclone Blake and Tropical Cyclone Damien were offset by strong performance across the supply chain, including improved car dumper reliability, with completion of a major car dumper maintenance campaign in October 2019, implementation of improved maintenance strategies, and delivery of consistent performance across our mine operations. This strong performance has resulted in healthy stock levels across our mines.
Consistent with our revised mine plan, Jimblebar fines Fe grade has improved during the March 2020 quarter, with the typical specification expected to return to above 60 per cent in the June 2020 quarter.
WAIO continues to focus on operating safely and has incorporated a series of preventative measures to help reduce the spread of COVID-19. We have reduced the number of workers on our sites, with those not critical to operations working from home. To meet border controls introduced by the Western Australian Government, over 900 employees and contractors in business critical roles have been temporarily relocated to Western Australia, including the majority of specialist roles who are based interstate, such as train drivers and train load out operators.
Mining and processing operations at Samarco remain suspended following the failure of the Fundão tailings dam and Santarém water dam on 5 November 2015. Approval of the Corrective Operating Licence (LOC) for Samarco’s operating activities at its Germano Complex was received in October 2019. As a result of precautions taken for COVID-19, operation readiness activities for restart have been slowed, with only critical activities being undertaken. Restart can occur when the filtration system is complete and Samarco has met all necessary safety requirements, and will be subject to final approval by Samarco’s shareholders.
The South Flank project is tracking well and remains on schedule for first production in the 2021 calendar year. As at the end of March 2020, approximately 80 per cent of the contracts awarded are being performed in Australia, of which 95 per cent is within Western Australia. Some interstate employees have relocated to Western Australia to help with the project delivery. Consistent with our operations, the South Flank project continues to implement increased measures to conduct safe operations in compliance with strict health and travel guidelines put in place to help reduce the spread of COVID-19.
Persimmon Homes plc PSN proclaims that strong results for the half year to the 30th June reflect the continued successful delivery of the Group’s long term strategy. Profit before tax and basic earnings per share both rose by 13%, group revenue by 5% and new home sales by 4%. Forward sales are 6% ahead of last year and expectations are that results for the second half year will also be strong.
BHP Billiton plc BLT is paying a record final dividend of 63 cents per share, making a total payout for the year 118 cents, a rise of 42%, for the year to the 30th June, reflecting. a strong operating performance and well ahead of the minimum permitted payout.. Attributable profit and basic earnings per share both fell by 37% after taking into account exceptional items but on an underlying basis the figures showed rises of 33% each.
Wood Group (John) plc WG enjoyed strong organic growth during its first half to the end of June, with revenue rising by 13.4% and the operating profit rising from $72m to $125. However last years first half profit of $6m. was turned into a loss of $52m due to amortisation charges of $125m and exceptional costs of $101m. Basic earnings per share fell from 1.1c per share to a negative 7.9 cents per share.The interim dividend is to be increased by 2% to 11.3 cents per share. A stronger second half is expected due to project phasing and market recovery.
Angling Direct plc ANG trading in the six months to the 31st July was extremely positive and ahead of management expectations, with a rise of 56%. On a like for like basis sales rose by 4.2%
Tracsis TRCS Group trading for the year to the 31st July has been strong with revenues ahead of market expectations at c. £40m compared to last years £34.5. EBITDA and adjusted profit are also expected to be ahead of market expectations and also ahead of the previous year.
Reckitt Benckiser RB Rarely has a board been so isolated from reality that it shows not the slightest comprehension of the fear which its own chosen headlines for its third quarter update, could instill in shareholders. Those headlines speak of a continuing challenging environment and then worse still, an admission that the company needs reorganising for growth. So what exactly have the directors and senior management been doing recently to earn their remuneration. How can they have let things get so out of hand that they are forced to admit that the company is so badly organised it is incapable of growth.
Net revenue both for the quarter and for the year to date both fell by 1%. The best it could manage was growth in only one category out of four and that was a lowly 1% in hygiene, It was a soft quarter bemoans the CEO whose best expectations are for a flat like for like target for the full year, whilst at the same time claiming to be excited about the prospects for the company.
BHP Billiton BHP updates that its first quarter performance leaves it on track for 7% volume growth in the current financial year but the figures are somewhat patchy. Petroleum and gas production declined compared to the same quarter last year, as did iron ore and coal. Copper was the only bright spot with a rise of 14%. However there are four major projects under development one of which involves investment of $2.5 billion.
Softcat SCT announces another very strong year with double digit growth in both gross and operating profit. Revenue for the year to 31st July rose by 23.8% and operating profit by 18.9%. The final dividend is to be increased by 69.4% and a special dividend of 13.5p per share, down 15% on last year, is also to be paid, making a total dividend increase for the year of 15%. The company has now produced 48 consecutive quarters of top and bottom line year on years growth.
Eckoh ECK has been trading strongly in the UK during the half year to the 30th September, whilst in the US where it only entered the market in 2014 it also appears to be going from strength to strength, having won a total of 30 contracts since then. Good progress is being made in converting its contracts pipeline into orders and new contracts awarded in the first half, have equaled those awarded in the whole of the last financial. year
BHP Billiton BHP benefited in 2017 from a substantial reduction in exceptional losses which fell from $6.4b in 2016 to $842m. as the Samarco dam failure in Brazil weighed less heavily on the company. The year to the 30th June turned out to be a very strong financial year with free cash flow at $12.b., the second highest on record and net debt down by 37%. On an underlying basis, EBITDA rise by 64%, basic earnings per share by 455% and attributable profit multiplied from $1.2b to $6.7b. Having laid the foundations over the past five years to improve return on capital and grow shareholder value, the momentum will continue into 2018 with volume growth of 7% expected, as well as further productivity gains.
Accordingly shareholders receive their reward with dividends for the year increased by 177% to a total of 83 cents per share.
Wood Group (John) plc WG had a mix of both robust and weaker performances across its businesses in the 6 months to the 30th June. Total revenue declined by 11% but profit was down by 86% and basic earnings per share by 89.0%. The interim dividend is increased cautiously by 3%.
Empresario Group EMR produced a record first half performance with revenue rising by 50% at constant exchange rates and adjusted profit before tax up by 24% or 12% at constant exchange rates. The company has successfully integrated its two acquisitions into the business and see them both offering further opportunities for growth.
Sareum Holdings SAR expects that profit for the year to 30th June and cash at the bank will be ahead of market expectation.
Proactis Holdings plc PHD expects to see a 31% rise in revenue for the year to 31st July, with EBITDA up 43% and profit before tax rising from 3.1m to 5.3m
Quantum Pharma plc QP Revenue for the half year to the 31st July rose by 13% following a strong performance from Niche Pharmaceuticals. Adjusted EBITDA rose by 23% and statutory operating prfit by 74% whilst net debt halved to 11.9m.
Alan Green, CEO of Brand Communications is interviewed by Mike Ingram in the TipTV VIP area at the Master Investor show. Pointing to an impressive recovery in mining stocks in last couple of months, Green said rally in heavyweight stocks like Anglo American (AAL), Rio Tinto (RIO), and BHP Billiton (BLT) were also igniting small miners. Regarding Brexit, Green said markets could continue to rise regardless of the vote and added that he does not see a major sell-off even if Britons vote in favor of Brexit.
On Wednesday, after a one day leap of 4%, iron ore rose to a 10 month high of $64.30 per tonne making a rise of 50% since the beginning of the year and nearly 75% since the mid December lows.
Coking coal is not a glamour commodity by any means but on Wednesday that too reached a year’s high of $95 per tonne whilst steel making coal was up by 30% from its December lows.
Rio Tinto RIO said that the rally in commodities was not sustainable but as we reported on Wednesday RIO’s first quarter growth reached double digit figures with copper up by 27% on the previous quarter. At the same time BHP Billiton BHP cut its iron ore production target for the first time in fifteen years.
Even silver, which has for a number of years steadfastly refused to perform its expected role as a tracker of gold , has suddenly shot up to become the best performing commodity of 2016, helped by huge demand from hedge funds and Chinese investors. In only eleven days this month the price of silver jumped by by 14%. Hedge funds bullish positions on silver are now at their highest since 2006. The last time they were so bullish on gold was in 2011 when the price of gold had reached the dizzy heights of $1900 per oz.
The test is not how prices are suddenly emerging from the abyss and soaring onwards and upwards. Speculation can do all sorts of wondrous things but the real test is whether investment in new projects is following suit and it is. Capital expenditure on new mines has nearly doubled in five months, rising by $50 billion to $108 billion of which a huge $65 billion went on gold and copper mines.
Even rare earths have joined in the party. China produces 85% of the world’s rare earths and has now concentrated its previously fragmented rare earths industry into 5 enormous new companies. In the first 3 months of this year shipments of rare earth oxides from China rose by over 100%, with March being the second best month on record.
An almost infallible measure of the health of the world’s mining industry is Caterpillar CAT. Again as we reported last month, Caterpillars sales figures were forecasting a global collapse in mining production and mining activity. In only a few weeks the turn round has been so dramatic that Caterpillar has had to rush out updated figures showing that the rate of decline in machine sales had fallen sharply in all of its markets and that for March they were down by only 13% compared to March last year, whilst the figures for January and February had been down by 21% and 15% respectively. Hedge funds and speculators do not buy mining machinery. Only miners do that.
An array of Indices and Stocks were covered by Zak Mir, Technical Analyst for Zak’s Traders Cafe, and Alan Green, CEO of Band Communications, on the Tip TV Finance Show. Topics Covered: FTSE 100, DAX, BLT, AAL, CPI, IMT, BATS, DGE, JDW, GKP, MOIL
Alan Green discusses Scholium Group (SCHO), BHP Billiton (BHP) and Royal Dutch Shell (RDSB) with Justin Waite on the ADVFN podcast. Click here for the podcast – the interview with Alan starts approx 1.5 minutes in.
This year copper has fallen a further 17%. Last week it traded at $2.30 per lb. having fallen 5% in just two weeks. Poor German manufacturing data led to a fall of 3.1% in one day alone
.But things are changing. Chinas manufacturing index has risen off its August lows. This year supply and demand for copper are expected to be back in balance whilst in 2016 there is expected to be a deficit of 130,000 tonnes, growing over the next 12 years to an expected annual shortage of 10m. tonnes.
Gold fell by 6% in five days, back below the magic $1100 per oz, after Janet Yellen said there was a distinct possibility that US interest rates would rise in December. The dollar has already risen 11.3% this year. Obviously Yellen has not a clue about the damage which vague statements and talk of possibilities can do when they are issued by the Fed.
The result is that hedge funds are now ready to sell 430 tonnes of gold and the share of Goldcorp, the worlds largest gold miner have fallen to $11.65, the lowest since 2004.
Steel prices in China dropped to near record lows, down 7.6% in a month. China forges 46% of the worlds steel and consumes more than 75% of the worlds sea borne iron ore trade. Except for a tiny, tiny fall so far this year, which is expected to have righted itself by the end of the year, Chinese iron ore consumption has risen six fold since 2000. It has not fallen once in any year since 2000.
So why the panic ?
The three big Australian ore miners are doing enormous damage – but only to themselves, although they are too thick to realise it. They raised output and cut prices in the middle of a so called slump and and also cut costs, hoping they would bankrupt the competition but the cost cutting was not enough to make up for the price cuts and to make matters worse the competition joined them with increased output and lower prices.
Why the panic ? Ask Vale, Rio Tinto, BHP Billiton and Janet Yellen – they seem to be experts at creating it.
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