Australian gold miner Newcrest cuts full-year production forecast on Cadia outage

Date Apr 26 2018 09:50:42 Source:Reuters

April 26 (Reuters) - Australia's biggest gold miner Newcrest Mining Ltd on Thursday reported a fall in third-quarter output and cut its full year production forecast for gold and copper.

Newcrest said it expects production of 2.25 million to 2.35 million ounces of gold for the full-year ending June 30, down from 2.4 million to 2.7 million ounces previously, mainly due to damage to a tailings dam wall at its flagship Cadia mine.

The miner cut its full-year production forecast from Cadia in New South Wales state to 550,000–600,000 ounces from 680,000-780,000 ounces expected earlier.

The miner restarted processing at Cadia earlier this month after halting operations due to damage to the tailings facility in early March. 

Last week, Newcrest said it expected Cadia to return to full production in the next 16 months after it won approval to use a part of mine's open pit for tailing storage.    

For the quarter ending March 31, Cadia produced 142,970 ounces of gold, compared to 168,579 ounces a year ago.

Newcrest also operates the Lihir mine in Papua New Guinea and Telfer in Western Australia.

Total gold production for the March quarter fell 3.8 percent to 575,791 ounces from the same period last year. Total copper output fell to 18,862 ounces from 22,074 ounces a year ago. The company cut full-year guidance for copper to 70,000-75,000 tonnes from 80,000-90,000 tonnes expected earlier.

Newcrest's cost of gold production for the March quarter was $826 per ounce compared with $713 per ounce a year ago, on an all-in sustaining basis. 

Russia, betting on EU Trump talks, keeps powder dry in Rusal row for now

Date Apr 26 2018 09:46:19 Source:Reuters

MOSCOW, April 25 (Reuters) - Moscow is holding off on taking retaliatory measures against the United States for imposing sanctions on Rusal, hoping the EU can persuade Washington to ease restrictions against the world's second largest aluminium producer further, sources told Reuters.

The United States on Monday gave American customers of Rusal more time to comply with the U.S. sanctions imposed earlier this month after some European capitals lobbied for them to be eased, triggering a 43-percent jump in Rusal's Hong-Kong listed shares.

With French President Emmanuel Macron already in Washington and German Chancellor Angela Merkel planning to go there later this week, Moscow hopes both leaders can reopen European markets for Rusal's aluminium, a source at the finance ministry said.

"Everyone is sitting now and waiting to see if Merkel agrees with Trump, if she secures exceptions," the source said. "This explains why Russia is not going in with all guns blazing now."

Washington blacklisted Rusal and its billionaire major shareholder Oleg Deripaska, along with some other Russian businessmen, for suspected meddling in the 2016 U.S. election and other alleged "malign activity".

For many of those affected, the sanctions were a surprise, said a source close to the Russian government.

"Our side did not think that there would be such pressure, but the West did not expect it either. Therefore, attempts are being made to ease the pressure on both sides," he added.

Russian Finance Minister Anton Siluanov met U.S. Treasury Secretary Steven Mnuchin last week, the ministry said.

Russia has a history of imposing quick bans on Western imports when it needs to send a strong response in conflicts with other countries. However, in this case the reaction is unusually slow in coming.

Russian lawmakers drafted legislation in response to the U.S. sanctions that would give the authorities the power to ban or restrict imports of U.S. goods and services to Russia on April 13. The first reading is planned on May 15.

Russia is not in a hurry to approve this law also because it cannot allow itself a tough response ahead of the World Cup it is hosting this summer and because restrictions on U.S. imports could hit its domestic industries, said a source familiar with the discussions of the draft.

"But this (law) in any case is a gun which will be hanging on the wall and can shoot someday," the source said.



Washington said on Monday it would consider lifting the sanctions if Deripaska, who along with the company was included on a U.S. sanctions list on April 6, ceded control of Rusal.

However, Deripaska wants to keep his assets, the source at the finance ministry said, adding that nobody in government likes the idea of nationalisation. 

The Kremlin is unlikely to favour a scenario whereby Washington tells it who must own what in Russia, said a source who knows Deripaska.

"Plus, the situation is not easy for Deripaska, no one likes it when someone is talking to him from a position of strength," the source added.

Russian industry minister Denis Manturov said on Tuesday that he would not rule out the possibility of the state buying a stake in Rusal from Deripaska, but there had been no detailed discussion on the subject yet.

Kremlin spokesman Dmitry Peskov said on Tuesday that neither Macron nor Merkel had discussed their efforts to secure an easing of sanctions with Putin.

However, "it is known that many business structures and legal entities, including from Europe, are actively raising this subject with the governments of their countries," he added.

The coordinated European effort to alleviate the impact the sanctions could have on their own companies includes France, Germany, Italy and Ireland, French sources said on Monday, adding that American officials had offered a sympathetic ear.

EU aluminium consumers are concerned because Europe is Rusal's largest market with 42 percent of the company's products sold there in 2017. The sanctions also damaged Rusal's overseas supply chain, smelters and refineries, partly based in Europe.



If Rusal is allowed to keep its European market, Russia's retaliatory measures on U.S. companies are likely to be modest and the government would be able to focus on restructuring the company's loans, the source at the finance ministry said.

Help with loans is likely to be needed because while the United States on Monday extended the license allowing continued business relations with Rusal from June 5 to Oct. 23, another license restricting financing operations was unaltered and will expire on May 7.

Russian companies hit by U.S. sanctions have asked for 100 billion roubles ($1.6 billion) in liquidity support from the government, Siluanov said last week.

The current plan is to use Promsvyazbank, a lender earmarked by the government to provide credit to sanctioned entities so that other lenders can offload the risk, to solve the short-term liquidity problems for Rusal, the finance ministry source said.

In the longer term, the rescue package may include the creation of offshore zones in the Russian cities of Kaliningrad and Vladivostok which would provide sanctions-hit companies registered there with corporate confidentiality, the source added.

In a sign that support from state banks was being prepared, Russia's central bank on Monday decided to permit Russian banks not to raise risk levels when assessing the creditworthiness of companies sanctioned by foreign countries.

Rusal's foreign creditors were not on the government's agenda for now because Moscow was focused on securing aluminium supplies to Europe, the source added.

Brazil's Vale 1st-qtr profit slumps by a third as costs rise

Date Apr 26 2018 09:34:02 Source:Reuters

RIO DE JANEIRO, April 25 (Reuters) - Vale SA, the world's largest iron ore producer, posted a 36 percent slump in first-quarter profit compared to the same quarter a year earlier, missing estimates, as costs rose and iron ore prices slipped, results showed on Wednesday.

In a securities filing, Brazil's Vale said quarterly net income totaled $1.59 billion, below a consensus estimate of $1.926 billion and the $2.49 billion reached a year ago.

Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, slumped to $3.971 billion, below a consensus estimate of $4.387 billion compiled by Thomson Reuters and the $4.308 billion posted in the year-ago quarter.

The world's top nickel producer said costs and expenses rose by nearly 10 percent compared to the year-earlier period while a benchmark index of spot iron ore prices showed a 13.2 percent drop over the same period.


However, Vale slashed net debt to $14.9 billion in the quarter from over $18 billion at the close of 2017, reaching the lowest level in nearly seven years. The company promised to lower its debt to $10 billion in the "short term," after saying in January it hoped to reach the target by mid-2018.

Capital expenditure slid to $890 million in the first three months of the year, the smallest such outlay for a first quarter since 2005, Vale said.

Net operating revenue rose just 1 percent to $8.603 billion from the first quarter of last year, but did not reach analysts' expectations of $8.698 billion.

Earlier this month, Vale said total iron ore output slipped in the first quarter due to heavy rains, but kept its output goal for the year on hold at 390 million tonnes.

Anglo American's Minas-Rio delay hits earnings by $300-400 million

Date Apr 25 2018 11:45:44 Source:Reuters

LONDON, April 24 (Reuters) - Anglo American will resume output of iron ore from  Minas-Rio in Brazil only in the fourth quarter of 2018 after  pipeline leaks, denting annual group earnings (EBITDA) by $300-400 million.

The news pushed share prices 1.2 percent lower by 0850 GMT, as analysts said the problem was more disruptive than previously thought, although overall group production was broadly in line with expectations. 

As a whole, the company reported a 4 percent increase in total production on a copper equivalent basis in the first quarter of 2018, compared with the same period of 2017, citing improved efficiency.

But Minas-Rio in southeast Brazil, Anglo American's biggest development project, has suffered repeated delays and is on hold pending an investigation into leaks in the more than 500-km pipeline that helps to deliver its iron ore to export markets.

Anglo said it expected a pick up in the last quarter and 2018 output would be an estimated 3 million tonnes - the amount produced so far this year. That represents a 30 percent fall in production compared with 2017. 

Every section of the pipeline will be checked and tested and operations will resume when Brazil's regulatory authorities have given consent.

In a statement, CEO Mark Cutifani also said Anglo was working with unions to agree "the appropriate terms for the approximately 35 percent of our employees at Minas-Rio who will be on an extended period of leave". The total workforce is around 2,500.

Anglo American shares had risen nearly 15 percent this year, outstripping its peers, despite the issues at Minas-Rio.

It was one of the companies hardest hit by the commodities price crash of 2015-16, but has since sold some assets and improved productivity, while drawing strength from a more positive political mood in South Africa, its core territory.

Anglo American's overall 4 percent output increase derived from a 15 percent rise in diamond production as it expanded production at its new Gahcho Kue mine in Canada, while copper production rose 9 percent.

Platinum and palladium rose by respectively 7 percent and 9 percent and its Kumba iron ore operations in South Africa increased output by 4 percent. Coking coal rose 6 percent.   

Minas-Rio accounts for less than 5 percent of overall earnings as it is still in ramp-up phase.

The group reported annual underlying EBITDA of $8.8 billion, a 45 percent increase year-on-year in February. 

Analysts said the shut-in did not fundamentally change their view on Anglo.

Morgan Stanley analysts, which rate the stock "overweight", said in a note there was time to make up the small impact on full-year revenue over the rest of the year. There was "no change to the investment case" in the company, it added. 

Centerra Gold says no interest in offer for Kyrgyz mine

Date Apr 25 2018 11:36:53 Source:Reuters

ALMATY, April 24 (Reuters) - Canada's Centerra Gold said on Tuesday it had received an unsolicited bid for its Kumtor gold mine in Kyrgyzstan from  Chaarat Gold Holdings (CGH) but that it had informed the London-listed company that it was not interested in the offer.

Chaarat said earlier on Tuesday it had it had made an offer to Centerra to buy Kyrgyzstan's largest gold mine for an undisclosed cash sum, in a deal that would also involve Kyrgyz state firm Kyrgyzaltyn.

Toronto-based Centerra said it had received the non-binding offer last month and had "promptly communicated to Chaarat’s advisers that it has no interest in the transaction proposed by Chaarat."

In recent meetings senior Kyrgyz officials have confirmed to Centerra that the government also is not interested in pursuing the transaction proposed by Chaarat, Centerra said.

Centerra and Kyrgyzstan have had a series of disputes over sharing profits from Kumtor, and Chaarat said it was offering the Central Asian nation a way to increase its stake in the project's cash flow in the three-way deal.

Under the proposal, Chaarat and Kyrgyzaltyn would acquire Kumtor from Centerra, Chaarat said. Chaarat would then operate the mine, while Kyrgyzaltyn would own Kumtor's preferred equity and be entitled to "50 percent of the economic benefits" of Kumtor.

Chaarat said it would fund its portion of the consideration with cash, and Kyrgyzaltyn - subject to the Kyrgyz government's approval - would transfer most of the shares it currently holds in Centerra back to Centerra.

Chaarat said it planned debt and equity financing for the deal and had the backing of "two major international financial institutions."

Under its current arrangement with Centerra, Kyrgyzstan owns a 26.6 percent stake in the Canadian company, the biggest foreign investor and taxpayer in the former Soviet republic, contributing up to 10 percent of its gross domestic product.