Thursday, July 30, 2009
Strong Barrick Report, General Moly Jumps 10%
It was 6:06 AM, I grabbed a cup of coffee and read Barrick's Second Quarter News Release. Now I'm back after the market open and what a difference a day makes! After crashing Chinese markets and plummeting oil prices yesterday, it is nice to be in a town that has good resiliency in a recession. Barrick issued a strong report and General Moly jumped 10% by 6:44 AM. The Chinese markets have recovered too, quelling fears that the global recovery had downshifted to the slow lane.
In the words of Aaron Regent, Barrick’s President and CEO:
"Our portfolio of operations performed strongly in Q2, exceeding plan, and positioning us well to meet our production and cost targets for the year. The go-ahead decision on Pascua-Lama during the quarter marks an important milestone for Barrick and our strategy of developing long life, low cost mines. Pascua-Lama is expected to be one of the industry's lowest cost gold operations and joins the
world-class Cortez Hills and Pueblo Viejo projects in construction. Execution on this new generation of projects, combined with a favorable gold price outlook and our focus on cost management provides the foundation from which Barrick willcontinue to deliver shareholder value."
Now it doesn't get much better than that buckaroos. Let's look at the numbers. Barrick reported a net income of $492 million ($0.56 per share) compared to $485 million in Q2 2008. How many companies can say they are doing better than last year? For instance Exxon Mobil Corp, who also reported this morning, watched their second-quarter profit tumble a bigger-than-expected 66% amid weak demand, falling margins and slumping prices. Aren't you glad you live in a gold town and not an oil town?
While global gold production is in decline, Barrick can brag, "Production is expected to increase to approximately 7.7-8.1 million ounces in 2010 at lower total cash costs with the start-up of Cortez Hills." Go Nevada!
And just to make a lot of faltering U.S. corporations feel really bad, "Barrick continues to maintain a strong financial position with quarter-end cash of $2.0 billion, an undrawn credit facility of $1.5 billion and robust cash flow." I bet General Motors would like to say that someday!
Enough gloating, let's walk the walk:
Oil is back up $1.71 to $65.06 in early trading (September contract); Gold is up $4.4 to $931.6 (August contract); Silver is cranking up 0.142 to $13.400(September contract); Copper is up $0..0480 to $2.5255 (September contract); Molybdenum is snoozing comfortably at $15.
The DOW is up 160.60 points to 9231.32; the S&P 500, up 20.20 points to 995.35. The miners are giddy today:
Barrick (ABX) $33.87 up 3.07%%
Newmont (NEM) $40.20 up 2.11%
General Moly (Eureka Moly, LLC) (GMO) $2.68 8.5%
Freeport McMoran (FCX) $57.60 up 3.77% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are tip-toeing through the tulips (a "tell" for General Moly):
Nucor (NUE) $44.33 up 2.59% - domestic steel manufacturing
ArcelorMittal (MT) $35.64 up 4.00% - global steel producer
POSCO (PKX) $98.00 up 5.46%- South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is up a whopping 3.22% to $1,065,851.89