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Global Commodities Roundup: Market Talk

29 Jan 2017 11:19 pm

2319 GMT [Dow Jones] For Australia's Newcrest Mining Ltd. (NCM.AU), the production of more byproducts such as copper at its mines resulted in a "material beat" on quarterly costs, says RBC Capital Markets. Newcrest reported an all-in sustaining cost of US$751 an ounce, versus RBC's estimate of US$817. Still, there "are additional indications that operating costs (outside of copper credits) were slightly lower than our estimates, showing continued progress on cost-out programs," it says, adding that investors should feel more comfortable about the reliability of Newcrest's operations than in recent times. (rhiannon.hoyle@wsj.com; Twitter: @RhiannonHoyle)

2253 GMT [Dow Jones] Morgan Stanley adds Northern Star Resources (NST.AU) to its list of preferred miners, anticipating the Australian gold producer's momentum will continue. Morgan Stanley lifts Northern Star to overweight from equal-weight on valuation grounds, while predicting its FY17 output will be at the top end of the company's 485,000-515,000 oz. guidance. "We see the equity pricing in only known reserve and little more for the expansion and exploration potential," Morgan Stanley says. It expects Northern Star to produce 505,000 oz of gold in FY17 at an all-in cost of A$999/oz. NST last traded at A$3.75. (david.winning@wsj.com; @dwinningWSJ)

2246 GMT [Dow Jones] Mount Gibson Iron (MGX.AU) has had its share of disappointments in recent years, notably when the pit wall at its Koolan Island operation in Australia collapsed in late 2014. But a strong 2Q result from Mount Gibson has prompted Macquarie to raise its profit outlook and price target on the stock. Macquarie adds A$12 million to its FY17 earnings projection, also because Mount Gibson hedged 360,000 tons of iron ore at prices well above its base-case forecast. Mount Gibson, which had A$447 million in net cash at end-December, aims to decide on a restart of Koolan Island in 3Q as well as start the development at nearby Iron Hill. "Approvals for Iron Hill appear to be progressing and we believe there is upside risk to our FY17 forecasts should the approvals be secured in the next few weeks," Macquarie says. MGX last traded at A$0.38, below Macquarie's new A$0.53/share target. (david.winning@wsj.com; @dwinningWSJ)

2119 GMT [Dow Jones] Investors might be wise to bet on falls in gold through February and March, according to Alex Meintel, an analyst at Renaissance Macro Research. Meintel says gold is in overbought territory and that the "underlying trend [is] still firmly in the negative camp." In contrast, industrial metals "appear to be resuming their underlying positive trends," says Meintel. (rhiannon.hoyle@wsj.com; Twitter: @RhiannonHoyle)
 

2108 GMT [Dow Jones] Perseus Mining's (PRU.AU) weaker outlook for gold production from its African operations has Canaccord Genuity pondering its cash position. Perseus has flagged 2H production of 90,000-110,000 troy ounces, down from prior guidance of up to 145,000 oz and below Canaccord's 123,000 oz forecast. "The downgrade to 2H guidance negates our previous turnaround expectations, which were a key part of our investment case," Canaccord says. It expects negative cash flow again in the March quarter. "But we note such (working capital) tightness could be alleviated by an upsized debt facility, which is reportedly nearing finalization," Canaccord says. It drops Perseus to speculative buy from buy, and lowers its price target by 13% to A$0.65/share. PRU last traded at A$0.36. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

January 29, 2017 18:19 ET (23:19 GMT)

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