Thursday, April 30, 2009
Good News for Newmont, Caterpillar and Steel Producers
It is 6:58 am and a good news day for Newmont, Caterpillar and steel producers. Let's see if the ole Colonel can melt all this down into something useful for a quick morning read.
Let's throw Newmont into the crucible first with their the first quarter of 2009 results. This morning they reported equity gold sales of 1.27 million ounces at costs applicable to sales of $435 per ounce with an average realized gold price of $906 per ounce. Richard O'Brien, President and Chief Executive Officer said:
"Our operations provided solid results that were in-line with our expectations and this performance sets us up well to deliver on our operating plans for the full year in 2009. Project execution is also going well and is a clear focus for the balance of the year. Completing our Boddington project by mid-year and successfully ramping up to commercial production is a clear driver of our 2009 performance."
Boddington is a project in Australia with a start-up expected in mid-2009 and an anticipated 12-month ramp-up schedule.
Net cash provided from continuing operations is $387 million ($0.82 per share) and net income was $189 million ($0.40 per share) for the first quarter, compared to $365 million ($0.81 per share) in the prior year quarter, primarily due to lower realized gold and copper prices.
Closer to home, Newmont reported;
"Nevada sold 518,000 equity ounces of gold at costs applicable to sales of $509 per ounce during the first quarter. Equity gold sales were higher than expected primarily due to higher throughput at Mill 6 and the Sage Autoclave and higher underground production from Leeville, Chukar and Carlin East, partially offset by lower production at Midas due to the temporary suspension of mining following a ground failure which curtailed production in March but has since resumed as of the end of April 2009...the Company continues to expect 2009 equity gold sales from Nevada of between 1.8 and 2.0 million ounces at costs applicable to sales of between $535 and $575 per ounce."
Fine and dandy. The remainder of our good news comes from better than expected results from China's recent stimulus plan. Caterpillar Inc. Chief Executive James W. Owens says the company's excavator sales in China have returned to record levels in recent months, bouncing back from plummeting sales over the winter. As reported in the Wall Street Journal (4/30/09), he believes China continues to have a great need for infrastructure and that projects there could start much more quickly than could similar projects in the U.S. "It's something like nine months [in the U.S.] versus nine weeks" in China.
China also appears to be one of the few bright spots for the steel industry. Although U.S. steel companies are suffering because of the problems in the auto and construction industries, Lakshmi Mittal, CEO of Arcelor Mittal, the world's largest steelmaker, said on Wednesday that China's stimulus package is finally starting to increase demand for steel. Rising demand in China helps all steelmakers, whether or not they have plants in China, because it keeps excess Chinese steel from flooding the market and depressing prices (WSJ, 4/30/09).
Enough talk, let's walk the walk:
Oil fell $0.22 in early trading to $50.75(June contract). The dollar ("Dixie" or .DXY) is flat at 0.11% at 84.739. The commodity index (.CRB) is down 0.31% to 220.49.
Gold is in retreat $15.7 to $884.8 (June contract); Silver is down $.400 to $12.375; Copper has found its legs with the China news, up $.390 to $204.4 (July contract); Molybdenum is still snoring below $8.
The DOW is up a healthy 105 points to 8,291.10; the S&P 500, up 12.66 points to 886.30 passing smartly the critical resistance level of 870. Gold miners are feeling the slide in gold, other miners are happy campers:
Barrick (ABX) $29.42 down 0.68%
Newmont (NEM) $39.28 down 3.51%
General Moly (GMO) $1.49 up 4.20%
Freeport McMoran (FCX) $43.115 up 5.26% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are zooming (a "tell" for General Moly):
Nucor (NUE) $40.48 up 4.82% - domestic steel manufacturing
ArcelorMittal (MT) $23.97 up 4.49% - global steel producer