Resources and mining companies dominating the headlines this past week during reporting season include BHP posting Australia's largest-ever profit result, BlueScope's massive full year loss, Macarthur Coal's profit jumps but Whitehaven Coal is not so lucky.
We speak with Adamus Resources Managing Director and CEO Mark Connelly about the merger with Endeavour. We also hear from Westpac Senior Economist Justin Smirk about the declining price of gold over the week.
BHP posts Australia's largest profit resultBHP Billiton Limited
(ASX:BHP) has unveiled a full yet net profit of $22.56 billion, Australia's highest-ever corporate profit. Increased demand and soaring commodity prices boosted BHP's result above market expectations. The global miner has maintained a bullish outlook for commodities, underpinned by demand and supply trends from emerging markets. While no special dividend or buyback was announced, BHP has raised its final dividend by 22 per cent to $US0.55, fully franked.
Adamus inks Endeavour mergerEmerging gold producer Adamus Resources Limited
(ASX:ADU) has inked a merger deal with Toronto Stock Exchange-listed Endeavour Mining Corporation (TSE:EDV). Under the deal Endeavour has offered 0.285 of its shares for every Adamus share, valuing the company at around $305 million. Both companies are targeting gold production of 172,000 ounces this year and are focussed on securing more gold acquisitions in West Africa.
On a fully diluted basis, existing Endeavour security holders would own 55 per cent, and Adamus 45 per cent of the issued shares of the merged entity which is to be named the Endeavour Mining Corporation.
Speaking with the Finance News Network, Adamus Resources Managing Directory and CEO Mark Connelly said Endeavour was a well known name in Canada and rebranding has its benefits.
"Changing the name here I think gives us an opportunity to rebadge ourselves … Adamus is a whole new company, even in its current form. There's very little management from twelve months ago. The board has changed, the senior management, the site management. I've been in the chair since September of last year, of 2010 and literally have turned the whole business upside down and changed fundamentally most of it … It's a merger of equals."
"Merging with someone who has an operation producing mine, cash in the bank, a very good reputation for being very business savvy, it's a good fit," added Mr Connelly.
BlueScope's massive losses and job cutsBlueScope Steel Limited
(ASX:BSL) has posted a massive full year loss, announcing a major restructuring of its operations, the axing of a thousand jobs and closure of one of its blast furnaces. For the full year to June 30, BlueScope posted a net loss of $1.05 billion, that's 936 per cent lower than the year before. Managing director Paul O'Malley says the changes would deliver a material improvement in earnings and cashflow, reduce export losses and reduce earnings volatility. BlueScope will not pay a final dividend.
Macarthur profit thanks to record pricesMacarthur Coal Limited's
(ASX:MCC) full year net profit has jumped 93 per cent to $241.4 million, coming in at the lower end of its guidance. The Queensland focused coal miner's result was boosted by record prices for its products and its sale of a 20 per cent stake in the Middlemount coal mine to Gloucester Coal Limited
(ASX:GCL). A final fully franked dividend of 16 cents has been declared.
Also, Peabody Energy and ArcelorMittal's $4.7 billion takeover offer for the company was this week cleared by Japan's competition regulator, adding to clearance secured from Australian regulators. However, Macarthur is still resisting the bid that has now gone hostile and is continuing discussions with a number of other interested parties. Speculation has emerged that Anglo American is conducting due diligence on the miner.
Whitehaven profit sinksWhitehaven Coal Limited's
(ASX:WHC) full year net profit has sunk 91 per cent to $9.9 million. Despite higher production, the coal miner's result was dragged down by legacy sale contracts and a foreign exchange loss on a mine stake. Excluding one-off and accounting items Whitehaven's net profit came in higher than analysts had expected at $73.3 million. The result was boosted by a 20 per cent increase in production, climbing to 4.2 million tonnes of coal over the year. Whitehaven has declared a fully franked final dividend of 4.1 cents.
Resources NewsA Bloomberg New Energy Finance report says carbon prices under the planned emissions trading scheme are likely to weaken during the first year because of a fall in international offset prices. The research reports carbon price will fall from a fixed price of $25 in 2014/15 to $16 in 2015/16.
CommoditiesGold is on track to see its sharpest weekly fall since 2009. Westpac Senior Economist Justin Smirk says there are two factors at play responsible for the drop in price.
"One is the world is looking a bit more positive ... not so much from an economic fundamental point ... more that the markets are hoping that something comes through in terms of Ben Bernanke... [hoping he] will say something more to try and suggest they will do more to help the US economy," said Mr Smirk.
"Also what's happened is the CME's lifted its margin on gold trading, making it more expensive to trade, so trying to squeeze the speculators out of the market."
Melissa Beaumont Lee
