B08 Metal Ore Mining

Fortescue digs in for mighty cost challenge

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Original article by Tess Ingram
The Australian Financial Review – Page: 15 : 28-Jul-17

Fortescue Metals Group shipped 170 million tonnes of iron ore in 2016-17, and the pure-play miner anticipates similar volumes in 2017-18. Fortescue has reported an average C1 cash cost of $US12.82 per tonne for 2016-17, including $US12.16 a tonne in the June quarter, and it has targeted a cash cost of $US11 to $US12 per tonne for 2017-18. CEO Nev Power says Fortescue also aims to achieve productivity and efficiency gains, while he has flagged a further reduction in its debt.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, CITIGROUP PTY LTD, MERRILL LYNCH (AUSTRALIA) PTY LTD, RBC CAPITAL MARKETS

Copper prices tipped to reach boomtime high

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Original article by Matt Chambers
The Australian – Page: 20 : 27-Jul-17

The copper price has risen to its highest level in two years, at around $US2.84 a pound, due to factors such as supply constraints and China’s economic growth. Freeport-McMoRan CEO Richard Adkerson says rising demand for copper is likely to push the price of the metal above $US4/pound for the first time since 2011. He notes that a mooted large increase in global copper supply in 2016 did not eventuate, and he add that developing new copper mines is not viable at prices of $US2.50/pound or less.

CORPORATES
FREEPORT-McMORAN COPPER AND GOLD INCORPORATED, RIO TINTO LIMITED – ASX RIO, OZ MINERALS LIMITED – ASX OZL

UK to probe Rio’s Guinea bribe scandal

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Original article by Matt Chambers
The Australian – Page: 19 & 22 : 26-Jul-17

The Serious Fraud Office in the UK will undertake an investigation into a $US10.5m payment to a consultant in 2011 regarding Rio Tinto’s Simandou iron ore project in Guinea. The resources giant had notified anti-bribery agencies in the US, the UK and Australia about its concerns regarding the payment in late 2016. The SFO has asked for anyone with further information on the issue to come forward. The scandal resulted in the dismissal of two senior Rio Tinto executives.

CORPORATES
RIO TINTO LIMITED – ASX RIO, GREAT BRITAIN. SERIOUS FRAUD OFFICE, AUSTRALIAN FEDERAL POLICE, UNITED STATES. DEPT OF JUSTICE, UNITED STATES. SECURITIES AND EXCHANGE COMMISSION, ROLLS-ROYCE PLC

Lihir digs in to get Newcrest on target

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Original article by Paul Garvey
The Australian – Page: 20 : 25-Jul-17

Newcrest Mining’s gold production totalled 551,815 ounces in the June 2017 quarter, compared with 598,602 ­ounces in the March quarter. However, record quarterly output of 276,230 ounces at the Lihir mine in Papua New Guinea helped offset lost output at the Cadia mine in New South Wales. Full production at Cadia is expected to resume in the September quarter, following earthquake damage in April. Meanwhile, Newcrest has applied for 40 exploration tenements in Ecuador.

CORPORATES
NEWCREST MINING LIMITED – ASX NCM, SOLGOLD PLC, RBC CAPITAL MARKETS, GOLDMAN SACHS AUSTRALIA PTY LTD

Atlas looks to build buffer before returning to debt markets

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Original article by Paul Garvey
The Australian – Page: 19 : 24-Jul-17

Atlas Iron MD Cliff Lawrenson says the iron ore miner will not repay its outstanding Term Loan B debt of $A103m until it has a working capital buffer of around $A50m. He adds that a revolving credit facility is among the options being considered to provide the company with more balance sheet flexibility. Lawrenson believes that capital markets will rate Atlas Iron more highly once its Term Loan B debt has been paid off.

CORPORATES
ATLAS IRON LIMITED – ASX AGO

Historic native title ruling: Fortescue up for ‘astronomical’ sum

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Original article by Andrew Burrell
The Australian – Page: 1 & 6 : 21-Jul-17

Fortescue Metals­ Group has advised that a native title ruling is unlikely to affect production at its Solomon iron ore mine in Western Australia’s Pilbara region. The Federal Court has ruled that the Yindjibarndi people are entitled to exclusive native title rights over a large area of land in the state, including the site of the Solomon mine. The Yindjibarndi could potentially be entitled to compensation of around $A100m for royalties from the mine. Fortescue shares closed 3.5 per cent lower at $A5.19 in response to the judgment.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, YINDJIBARNDI ABORIGINAL CORPORATION, FEDERAL COURT OF AUSTRALIA, WIRLU-MURRA YINDJIBARNDI ABORIGINAL CORPORATION, RIO TINTO LIMITED – ASX RIO

BHP slip-up to provide more ammo for Elliott

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 21-Jul-17

BHP Billiton has restated its 2016 financial accounts after conceding that there were problems with the processes it had used to determine the impairment charges on US shale assets. Ross Illingworth, the executive director of Kingfisher Capital Partners, says the admission will strengthen Elliott Management’s case for a restructuring at BHP. Meanwhile, Elliott has likened BHP’s proposal to develop the Jansen potash project in Canada to its ill-fated foray into US shale.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, KINGFISHER CAPITAL PARNERS, ELLIOTT MANAGEMENT CORPORATION

Unseasonal iron ore rally boosts budget

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Original article by Peter Ker
The Australian Financial Review – Page: 10 : 21-Jul-17

The iron ore price peaked at a three-month high above $US70 a tonne on 20 July. The price of the steel input has risen by 31 per cent in just over a month, and it has averaged $US65.12 a tonne since the start of July. Paul Bloxham of HSBC estimates that this will increase the Australian Government’s revenue by about $US1.25bn in 2017-18. The May 2017 Budget had forecast that iron ore would average $US55 a tonne in 2017-18. Bloxham expects the iron ore price to fall to around $US50 a tonne by late 2017.

CORPORATES
HSBC AUSTRALIA HOLDINGS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, UBS HOLDINGS PTY LTD

Ore lift backs BHP ‘surprise’ on dividend

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Original article by Matt Chambers
The Australian – Page: 19 : 20-Jul-17

Citigroup expects BHP Billiton to post an underlying profit of $US6.76bn for 2016-17, compared with $US1.22bn previously. BHP’s activities report for the June 2017 quarter shows that it produced 268 million tonnes of iron ore in Western Australia during 2016-17, while copper output at the Olympic Dam mine in South Australia fell 16 per cent to 166,000 tonnes. Strike action at the Escondida copper mine in Chile resulted in annual output falling to 772,000 tonnes, but output of up to 1.23 million tonnes is expected in 2017-18.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, CITIGROUP PTY LTD, MINERA ESCONDIDA LIMITADA, RIO TINTO LIMITED – ASX RIO, UBS HOLDINGS PTY LTD, MORGANS FINANCIAL LIMITED

Activist Elliott targets BHP retail shareholders

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Original article by Leo Shanahan
The Australian – Page: 19 : 19-Jul-17

US-based hedged fund Elliott Management is seeking the support of BHP Billiton’s retail investors for its proposed restructuring strategy for the resources giant. Elliott has also launched a revised website pitched at institutional investors. The activist hedge fund has accused BHP’s management of being responsible for the loss of some $US40bn ($A51bn) of shareholder wealth due to poor decisions. Elliott’s proposed reforms include scrapping BHP’s dual listing structure.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, ELLIOTT MANAGEMENT CORPORATION, AUSTRALIA. DEPT OF THE TREASURY