MaxMarioni
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On the topic of Mining

Posted by MaxMarioni on 25 June 2017, 9:58 AM

Glencore Seeks Rio Tinto's Mines

Other Insights on Related Shares: GLEN.L, RIO.L

In continued negotiations for a deal that would see considerable upheaval in the global mining market, Glencore (GLEN:LN), the biggest coal miner in the Australasian region, has upped the ante in its pursuit of Rio Tinto's (RIO:LN) Hunter Valley mines. The Swiss commodity trading colossus has tabled an offer in the region of $225 million in excess of another offer, by Chinese firm Yanzhou Coal mining, which was already unofficially accepted by Rio Tinto's board. In addition to the raised bid, Glencore offered new incentives, such as a large deposit and hedges against regulatory delays, as well as clarifying issues concerning funding. (Read more)

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Other Insights on Related Shares: RIO.L

What a difference a year makes for the critical evaluation of a stock's performance. Last year, Rio Tinto, the second biggest mining company in the world by market share, had reported a loss totalling US $866 million in its 2015 annual results. The stock nose-dived on the back of cutbacks on its dividend and concerns on its levels of debt. The Anglo-American mining giant seems to have really turned a corner now. In the words of the company's Chief Executive, J-S. Jacques: [Rio Tinto]'s results show we have kept our commitment to maximise cash and productivity from our world-class assets, delivering $3.6 billion in shareholder returns while maintaining a robust balance sheet. […] We enter 2017 in good shape.” (Read more)

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Glencore is the leader of a consortium that, together with Qatar's global sovereign fund, Qia, bought a 19.5% stake in Rosneft, the Russian oil company. Rosneft is one of the leading Russian blue chip companies, and the flotation is part of a process to partially privatise the oil company, in a bid to reduce the debt level of the Russian state, hit by the twin storms of falling oil prices amid economic sanctions imposed following events in Crimea and Eastern Ukraine. News of the deal, worth 10.5 million Euros, was welcomed by investors, and sent the Russian stock price shooting up by over 5% on the Moscow stock exchange. (Read more)

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Gold fever is declining. Other raw materials such as industrial metals however, are rallying, suggesting that the long downward cycle that has hit the industry is coming to an end. Goldman Sachs is convinced of this: for the first time in four years, it is urging investors to put their money into commodities. Just look at miners' reversals in performance: AngloAmerican has quietly abandoned its asset disposal plan which was announced only this February, showing that the goal of reducing debt is already on the way to being achieved. In the last months, raw material prices have strengthened, often with double-digit if not triple-digit rises. In the US, following Donald Trump's election to the White House, stocks belonging to the natural resources sectors were the ones who saw the biggest increase amid the post-election rally, with an 11% rise for the Eurostoxx sub-index against 8.3% for the Dow Jones. Since the January lows, Anglo and the other four big mining titles (BHP Billiton, Rio Tinto, Vale and Glencore) have more than doubled their market capitalisation. Also Glencore has stated they will restart dividend payments in 2017. In fact, Anglo and Glencore may soon regain their status as income stocks. But investors looking for a reliable, rising dividend income will remember how easily these payouts were cut. Back in January, it was been a surprise gold rally whichbrought the attention ofinvestors to commodities. But the precious metal, after a brief rally that immediately followed Trump's shock election victory seems to have fallen out of favor. With the Federal Reserve now ready to raise the cost of money, the dollar reaching its highest level in 13 years, and Wall Street churning out new records every week, bullion has lost its appeal among investors.Gold ETFs - which had grown to record-breaking pace in early 2016, are falling without interruption. If gold is losing its shine, its rise during the year to date is still 12%. But the less noble metals are shining brighter: almost all non-ferrous are up by over 20% in 2016, with zinc, nickel, aluminum and tin rising to multi-year highs on the London Metal Exchange. Even copper eventually joined the rally, overtaking the 6 thousand dollars per ton. Even more spectacular is the performance of other industrial commodities, especially those used in the steel industry, such as coke coal, which appreciated by over 300% this year, and iron ore, which has gained more than 60%, reaching the highest since two years.   (Read more)

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Other Insights on Related Shares: FRES.L

In this period of Brexit-induced instability, examples of companies with good investment potential in the current climate are few and far between. One such example which defies the trend is Fresnillo PLC: once again a mining stock, it has been the top performer on the FTSE 100 so far this year: it has gained over 180% since January. It has lost a bit of its value (2.40%) since its peak last week, however the overall upwards trend is unmistakable, as the compelling graph below shows. The relative decline since its peak was unavoidable given its record valuation and may also result in a lower price for the stock, making it more appealing to investors. With it however comes a record P/E share, 252.6. The stock has a market capitalisation of £13.780 billion. (Read more)

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Topics: metals, mining
Other Insights on Related Shares: AAL.L

Anglo-American (AAL.L.), the diamond and precious metals miner, seems to have turned a corner, according to recent market indications, and has become again an attractive investment prospect. The mining giant, which among other ventures is the owner of the De Beers diamond conglomerate, had a torrid 2015. Having fallen victim to the worldwide fall in commodity prices, especially in iron ore, it reported a loss of 55% in Earnings Before Interest and Tax (EBIT), sliding from the $2.2 billion it reported in 2014 to $0.8 billion last year. Anglo-American was also in the midst of a restructuring aimed at reducing operating expenses and net debt which also impacted its top line figure. Its shares plummeted as a result. (Read more)

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Other Insights on Related Shares: RIO.L

Rio Tinto, the second biggest mining company in the world by market share, has reported a loss in profits in its 2015 annual results. Underlying net earnings came in at US $4,540 million, a considerable drop of US$4765 from the total 2014 figures, with net losses totalling US $866 million. The Anglo-Australian company conceded that reduced prices on the raw materials it provides played a major effect on the results, reducing earnings by over 80%. This was partially offset, however, by US$ 2,007 millions gains due to favourable foreign exchange conditions. (Read more)

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