Good News for Newmont, Caterpillar and Steel Producers

Morning Miners!

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

Cheers,

Colonel Possum

Barrick Beats Expectations, Cortez Hills on Schedule

Morning Miners!

It is 6:30 am and a good day for Barrick. As promised, this report will highlight their earnings report and live Webcast. You can access both by clicking the Barrick link in the "Miner's Corner" to your right.

Barrick beat Wall Street expectations for the first quarter of this year reporting $0.42 earnings per share (EPS) versus a predicted $0.36. The ole Colonel thinks that’s pretty darn good on a morning when the government reported a whooping 6.1% contraction in our Gross Domestic Product (GDP) for the same quarter!

[Correction (5/1/2009): The ole Colonel in the heat of battle mistook $0.42 net income for earnings. The reported earnings per share was $0.34, slightly below the mean analyst projection. Not to worry, the response to Barrick's earnings report was still very positive, Credit Suisse set a 12-month target price at $40 with a sector outperform rating on 4/30/2009.]

The good news was rewarded by a 2% pop in stock price (ABX) in early trading.

In Nevada, Cortez Hills remains on schedule for first production in Q1 2010 assuming the satisfactory resolution of the pending litigation regarding the project and is in line with its capital budget of $500 million. The Cortez property is expected to materially benefit 2010 production, becoming another one million ounce producer for Barrick at total cash costs of $350-$400 per ounce in its first full five years once Cortez Hills comes on line.

Here's a quick summary of their overall performance:

Gold production (thousands of ounces) 1,755 (2008) 1,743 (2009)
Gold sold (thousands of ounces) 1,714 (2008) 1,729 (2009)
Average realized gold price (per oz.) $912 (2008) $925 (2009)
Total production costs (per oz.) $595 (2008) $501 (2009)

Yearly 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 scheduled in the first quarter.

The Webcast mentioned the importance of gold investor participation in Exchange Traded Funds (ETF), a common theme of the Eureka Miner's Report. How about a Colonel Yee-ha for Barrick!

Here's a daily reminder of the first quarter conference calls for the big mines in our area:

Barrick (ABX) This report
Newmont (NEM) Tomorrow, Thursday, 4/30 10:00am (ET)
General Moly (GMO) not scheduled

Enough talk, let's walk the walk:

Oil jumped $1.05 in early trading to $50.97(June contract). The dollar ("Dixie" or .DXY) has pulled back 0.78% to 84.507. The commodity index (.CRB) is up 1.03% to 219.45.

Gold is up $3.4 to $897.0 (June contract); Silver is up $.209 to $12.635; Copper is up $.595 to $1.9760 (most-active, July contract); Molybdenum is still asleep below $8.

The DOW is up a healthy 140 points to 8,157.29; the S&P 500, up 16.02 points to 871.18 testing a critical resistance level of 870. Miners are rocking the clock, buckaroos:

Barrick (ABX) $29.64 up 2.31%
Newmont (NEM) $40.54 up 1.30%
General Moly (GMO) $1.45 up 2.84%
Freeport McMoran (FCX) $40.29 up 5.28% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed (a "tell" for General Moly):

Nucor (NUE) $38.53 up 2.75% - domestic steel manufacturing
ArcelorMittal (MT) $23.40 down 2.74% - global steel producer

Cheers,

Colonel Possum

Don't Panic...Yet!

Morning Miners!

It is 6:47am, the coffee is hot and if you are the world it might be a good day to call in sick. The ole Colonel is more worried about getting a carburetor kit for my 1973 F-250 than the swine flu. Apparently I'm in the minority, world markets reeled on concerns about the spreading swine virus and the possible need for even more capitalization in major U.S. banks. I heard a mid level government official on CNBC say, "Don't panic...yet!" Boy, that should make everyone feel better.

In the meantime Singapore traders hammered oil futures below the $50 benchmark as the Mexican flu took a trip to Asia. Gold dropped $20 in early trading on the NYMEX, commodity-sensitive currencies are getting clobbered and the dollar and Japanese yen are the flight to safety du jour. Surprisingly, the DOW and S&P are looking pretty resilient after an initial drop at the open.

Nonetheless, analysts are rushing to cover prior optimism about an early global recovery:

"The commodity revival over the last three months is fundamentally a dead cat bounce," said Charles Dumas, director at consultancy Lombard Street Research in London. (WSJ, 4/28/2009)

Phooey. I'm going down to the Eureka Supply to check on that carburetor kit, let's wait until the dust settles from this stampede before we draw too many conclusions.



Here's a daily reminder of the first quarter conference calls for the big mines in our area:

Barrick (ABX) Tomorrow, 4/29 before market open
Newmont (NEM) Thursday, 4/30 10:00am (ET)
General Moly (GMO) not scheduled

Enough talk, let's walk the walk:

Oil dropped $1.02 in early trading to $49.12(June contract). The dollar ("Dixie" or .DXY) has pulled back a little to 85.446. The commodity index (.CRB) is down 0.31% to 217.52 (gee, things are getting better already!).

Gold is down $19.1 to $889.1 (June contract); Silver is down $.555 to $12.400; Copper is down $.595 to $1.9260 (most-active, July contract); Molybdenum is still asleep below $8.

The DOW is up 14.81 points to 8039.81; the S&P 500, up 1.32 points to 858.83 (hmm...someones feeling better). Miners are down a bit:

Barrick (ABX) $29.25 down 0.86%
Newmont (NEM) $40.61 down 1.07%
General Moly (GMO) $1.42 down 0.04%
Freeport McMoran (FCX) $39.17 down 0.51% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are mixed (a "tell" for General Moly):

Nucor (NUE) $38.99 up 0.04% - domestic steel manufacturing
ArcelorMittal (MT) $24.64 down 0.70% - global steel producer

Cheers,

Colonel Possum

Lower Propane Bills and More Gold in China

Morning Miners!

It is 6:00am and our new coffee pot will be brew-ready in a minute! We have two new pieces in the jigsaw puzzle of global recovery to talk about: lower propane bills in Eureka and more gold in China. Our jigsaw is far from complete, but more pieces appear on the table every day. The recent rally in stocks may be approaching an end as concerns about swine flu emerge. For mining interests, copper dropping below the 2-buck benchmark and a Financial Times reporting that ArcelorMittal (MT) is contemplating permanent cuts in steel output are troubling new developments.

Nuts! Let's talk about some good news, your propane bill should be easier on you than last year! The ole Colonel watches five commodities in considerable detail: gold, silver, copper, oil and natural gas (see my charts at the bottom of this blog). I noticed last week that natural gas was hitting 6 1/2-year lows and wondered if propane prices were doing the same. Propane is a derivative product of oil and gas production and indeed follows the latter pretty closely in wholesale price:

2008 PROPANE peak price $1.95/gal (6/08)
2008 PROPANE May contract $1.85/gal
2009 PROPANE May contract $0.64/gal

I filled my propane tank on Christmas Eve for $3/gal (retail, single fill) and one of my faithful readers reports his yearly contract price is $2.50 (July/August renewal). If wholesale prices have fallen 67% from their 2008 peak and 65% on the May contract, I'm going to assume things should get a lot cheaper soon. Propane distributors probably hedge their fuel contracts like airlines so it is difficult to predict actual savings for Eureka. Let the ole Colonel know what you experience.

Our second item today brings us back to China. The Report learned this weekend that China has considerably more gold reserves than originally thought:

"State-run news agency Xinhua quoted Hu Xiaolian, the head of China's foreign-exchange agency, as saying that China's gold reserves had risen by 454 metric tons since 2003 to 1,054 tons, the first public acknowledgment in years that its reserves had changed. Official Chinese data at the end of March had shown the country's gold reserves at 600 tons." (WSJ, 4/25/09)

This puts China on par with present investor holdings in the gold ETF, GLD (1,105 metric tons as of 4/22) and number seven in the gold reserve list (the United states is still number one at 8,133 tons). So now, the awaking dragon is not only the world's largest gold producing country but has also been putting it away on the sly. The good news is that China demand supports gold prices and may offset the potential volatility of large investor holdings. Phew, lot's to think about buckaroos!

Here's a daily reminder of the first quarter conference calls for the big mines in our area:

Barrick (ABX) Wednesday, 4/29 before market open
Newmont (NEM) Thursday, 4/30 10:00am (ET)
General Moly (GMO) not scheduled

Enough talk, let's walk the walk:

Oil dove $2.76 in early trading to $51.19(June contract). The dollar ("Dixie" or .DXY) is up .54% to 85.253. The commodity index (.CRB) is down a big 2.87% to 219.99.

Gold fell back $5.5 to $908.6 (June contract); Silver is up $.070 to $12.990; Copper is down $.710 to $1.9795; Molybdenum is still asleep below $8.

The DOW is down 17 points to 8059.32; the S&P 500, down 4 points to 862.06. Miners are looking so-so:

Barrick (ABX) $30.365 down 0.44%
Newmont (NEM) $41.56 up 0.27%
General Moly (GMO) $1.48 down 0.12%
Freeport McMoran (FCX) $39.78 down 1.15% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are down today (a "tell" for General Moly):

Nucor (NUE) 39.54 down 1.00% - domestic steel manufacturing
ArcelorMittal (MT) 25.88 down 1.35% - global steel producer

Cheers,

Colonel Possum

Canary or Eagle in the Mineshaft?

Morning Miners!

It is 6:36am and my coffee pot is going to be reassigned to wheel chuck duty. If it doesn't snow too bad this weekend, you might see the ole Colonel in WalMart shopping for a new one.

In the past few weeks, we've been using industrial metals as our canary in the global recovery mineshaft. Copper has soared like an eagle and nickel hasn't done too badly either. After nearly five months of plummeting demand there is some evidence that supply and demand are beginning to match for these two. This report covered the Freeport McMoran's conference call this week. They are the largest copper producer in the U.S. and expect copper prices to rise compared to the first three months of this year. Are major countries like China merely restocking or is new demand rising like a Phoenix from the ashes of recession?

OK, enough bird analogies. Copper stalled this week and headed below 2-bucks for a bit yesterday but made it back over this important benchmark in early trading. No clear answer to our question yet. Steel performance (important for General Moly) is even less clear. One of the stocks we track daily is Nucor (NUE) since they are an important domestic steelmaker. They reported their earnings yesterday:

"The demand for steel is virtually nonexistent," says Dan DiMicco, CEO of steelmaker Nucor Corp., which reported a $189.6 million loss and said it expected a wider loss in the second quarter. (WSJ, 4/24/09)

When is bad news good? If the first quarter of this year was the worst for steel, that would be good. If things continue to slide, the answer is murky at best:

"Steelmakers were hoping the first quarter would be its worst, in terms of losses, for 2009. Early signs that the housing market would pick up, that stimulus spending for projects such as bridges would boost consumption, and that an auto bailout would shore up a key steel customer were taken as clues that the steel market was headed for a turnaround." (WSJ, 4/24/09)

Hmm...that's a lot of hoping buckaroos! According to the Wall Street Journal, global crude-steel production fell in March in every major market, including China, which had increased production earlier in the year. The biggest drop was felt in North America, where production fell 52%, while Europe production fell 44%. The ole Colonel will keep his eyes open on this one, you can understand why General Moly is in the "pause" mode.

Let's wrap up with a look at gold. The safe haven aspect of gold has pushed it back over $900 and the rally appears to continue in early trading. Will the Colonel win his beer bet after all? ($929 before $844, on or before 5/15, see the Colonel's "Beer Derby" in the right column of this blog). There is also evidence that gold demand in Asia is picking up some. Real demand is important to offset all the investor interest in gold (holdings in the SPDR Gold Shares ETF stood at 1,105.98 metric tons as of Wednesday, not far from the recent record of 1,127.68). Remember how fickle investors can be (e.g. oil bubble last July); if they cut and run, the ensuing gold price decline could be scary.

Here's a daily reminder of the first quarter conference calls for the big mines in our area:

Barrick (ABX) 4/29 before market open
Newmont (NEM) 4/30 10:00am (ET)
General Moly (GMO) not scheduled

Enough talk, let's walk the walk:

Oil jumped to $51.19(June contract)this morning breaking a key technical level of $50.50, look for oil to head higher. A new Colonel prediction for the beer derby:

"Oil sees $54 before $47 on or before 5/8/09"

The dollar ("Dixie" or .DXY) is down down 0.79% to 84.612. The commodity index (.CRB) is up a healthy 2.33% to 221.87.

Gold continues its rally above $900, up $3.7 to $910.3 (June contract); Silver follows along, up $.105 to $12.860; Copper is back over 2-bucks at $2.0390; Molybdenum is asleep below $8.

The DOW is up 87 points to 8043.95; the S&P 500, up 9 points to 860.95. Miners are looking pretty good:

Barrick (ABX) $30.25 up 0.83%
Newmont (NEM) $39.93 up 1.20%
General Moly (GMO) $1.51 down 0.05%
Freeport McMoran (FCX) $40.63 is up 1.47% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are strong today (good news for General Moly):

Nucor (NUE) 41.00 up 2.50% - domestic steel manufacturing
ArcelorMittal (MT) 27.0695 up 2.81% - global steel producer

Cheers,

Colonel Possum

Reading the Global Tea Leaves for Eureka

Morning Miners:

It is 6:02am, a little earlier than usual but I need to take my truck in for a checkup and then drop by to give Connie and Christine a hey-howdy at the Eureka Supply. While we're waiting for the coffee to brew, I thought it might be useful to look at some of the ground we've covered over the last few weeks. Markets discount bad news and are for the most part, forward looking. Since mining is a large part of our local economy, we've been looking at commodity, equity and currency markets to try and figure out what's on the horizon for Eureka County. If this search has got you scratching your head with a lot of conflicting information, you've got some company:

"The market's becoming very polarized," said BBY senior trader Peter Copeland in Australia. "There are entrenched bears that think this (rally) is all just smoke and mirrors, and there are bulls who think the bears are wedded to their view in the face of recovery signs." (WSJ, 4/22/09)

The ole Colonel listens to Aussies because they are sitting an a huge hunk of natural resources like ourselves and our neighbors to the north. What happens to the global economy affects them, Eurekans and Canadians in much the same way. Commodity-sensitive economies rely on a healthy and growing global demand and lately it has been a pretty sick puppy. I plan to help you put all this together with upcoming reports.

If you look at the right column of this blog, there is a "Blog Archive" that covers many of the key market events for the months of March and April. You can access present and historical price data for molybdenum, gold and copper by clicking on the InfoMine chart icons in the same column. The "Miner's Corner" provides links to the homepage for the miners in Eureka county and surrounding areas. For new visitors to this site, "Discover Eureka" has links to the county homepage, the historical Opera House with an events calendar and local business and property interests. There is also a link to the National Weather Service for our area complete with satellite imagery.

The ole Colonel will soon report on the first quarter conference calls for the big mines in our area:

Barrick (ABX) 4/29 before market open
Newmont (NEM) 4/30 10:00am (ET)
General Moly (GMO) not scheduled

Everyday there is a summary of relevant market data. Today it will be a midday report.

Enough talk, let's walk the walk:

Oil is up a bit at $49.41 (June contract). If oil prices get above $50.50 look for them to go higher; if not, oil will probably head for $47. The dollar ("Dixie" or .DXY) is down down 0.78% to 85.623. The commodity index (.CRB) is up 0.23% to 219.50.

Gold gets a nice pop above $900, up $13.9 to $906.4 (June contract); Silver follows, up $.435 to $12.740; Copper drops below 2-bucks at $1.9905; Molybdenum still sits below $8.

The DOW is up 26 points to 7909.09; the S&P 500, up 2.18 points to 845.73. Gold miners are looking good:

Barrick (ABX) $29.72 up 4.65%
Newmont (NEM) $39.18 down 2.11%
General Moly (GMO) $1.56 down 1.27%
Freeport McMoran (FCX) $39.35 is down 2.72% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are down today (so-so news for General Moly):

Nucor (NUE) 40.63 up 3.34% - domestic steel manufacturing
ArcelorMittal (MT) 26.48 down 0.27% - global steel producer

Cheers,

Colonel Possum

World's Largest Moly Producer Reports

Morning Miners!

I'm listening to the earnings conference call from Freeport McMoran (FCX) as I write this morning's article. Although FCX has no active mining interests in Eureka County, they are an important bellwether company because their operations span copper, gold and they are presently the world's largest producer of molybdenum. The ole Colonel has included an FCX link to the "Miner's Corner" on the right side of this blog. You can find a link to their earnings report for the first quarter of 2009 on the FCX homepage.

Here is a brief summary comparing their year-to-year production and sales:

Copper production down 15.5% sales down 10.7%
Gold production down 53.8% sales down 48.6%
Moly production down 22.2% sales down 50.0%

FCX reports these declines in the face of global downturn but remains very positive about copper and moly when the recovery gets new legs. They didn't commit to a time frame but cited the importance of China for both copper and moly, a common theme of this report. If you have the time, checkout their presentation for an insightful account of what the future may hold for the metals that are so important to Eureka.

Here are some upcoming first quarter conference calls for the big mines in our area:

Barrick (ABX) 4/29 before market open
Newmont (NEM) 4/30 10:00am (ET)
General Moly (GMO) not scheduled

Enough talk, let's walk the walk:

Oil is pretty flat at $48.62 (June contract). The dollar ("Dixie" or .DXY) is down down 0.43% to 86.128. The commodity index (.CRB) is down 0.26% to 217.74.

Gold is continuing to move up slowly, up $3.7 to $886.4 (June contract); Silver stays above $12 at $12.24; Copper is steady at $2.084; Molybdenum still meanders below $8.

The DOW is up 52 points to 8020.85; the S&P 500, up 6.7 points to 856.79. Miners are mixed, FCX is up nicely which is a very good sign for the metals:

Barrick (ABX) $28.72 up 1.81%
Newmont (NEM) $38.77 down 0.26%
General Moly (GMO) $1.541 down 3.08%
Quadra (QUA.T) C$5.87 up 5.58%
Freeport McMoran (FCX) $39.17 is up 2.36% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks rock today (good news for General Moly):

Nucor (NUE) 44.52 up 3.39% - domestic steel manufacturing
ArcelorMittal (MT) 27.30 up 3.41% - global steel producer

Cheers,

Colonel Possum