A range of results were released in the final week of a busy reporting season.
Mergers and acquisitions were also quite a feature in the last week of a very volatile month in the markets. Investor sentiment was given a boost though, with supply deals and a range of miners forecasting strong demand for commodities.
This week FNN took a look at the companies who reported, who were active in M&A activity, and delivered a snapshot of how the commodities markets rounded off the week that ended August.
M&A'sCoal miner New Hope Corporation Limited
(ASX:NHC) made a $2.00 per share all-cash off-market bid to buy all the shares in coal explorer Northern Energy Corporation Limited
(ASX:NEC) that it does not already own. New Hope currently holds an 80.83 per cent stake in Northern Energy and with its offer representing a 29 per cent premium to the Northern Energy closing price on the 28th August.
Macarthur Coal Limited
(ASX:MCC) backed a sweetened $4.9 billion bid from Peabody Energy and ArcelorMittal, after a rival bidder failed to emerge. The Queensland-focused coal miner recommended shareholders to accept the revised offer. Peabody and ArcelorMittal increased their original offer of $15.50 to $16 per share and will also pay Macarthur's $0.16 per share dividend, bringing the total value of the bid to $16.16 per share.
Atlas Iron Limited
(ASX:AGO) moved a step closer to securing control of iron ore developer FerrAus Limited
(ASX:FRS). Atlas launched an all-scrip $240 million bid to combine its South East Pilbara assets into FerrAus in June. Atlas has now acquired a 39 per cent stake of its takeover target. This stake could rise to 52.2 per cent after a major FerrAus shareholder, China Railway Materials, indicated that it intended to accept the offer as soon as possible.
Takeover target Sundance Resources Limited
(ASX:SDL) has again claimed its suitors bid was too low. CEO Guilio Casello told the Africa Down Under conference his company believed Hanlong's $1.44 billion bid undervalued the company, though discussions are still continuing. The Chinese company launched the offer in July, four months after it became Sundance's largest shareholder.
FY resultsOil and gas explorer Cue Energy Resources Limited
(ASX:CUE) posted a 30.5 per cent fall in its annual net profit, coming in at $19.1 million. The result was dragged down by impairment charges on exploration write-offs, oil hedge expenses and the impact of a strong Australia dollar. Cue Energy described the year as one of consolidation, following on the development and first oil production from its Maari oil field in New Zealand.
Coal hauler QR National
(ASX:QRN) swung from a loss of $36.8 million to a full-year net profit of $349.5 million. The result was underpinned by an 11 per cent rise in revenue to $3.29 billion. Managing director Lance Hockridge said the floods in Queensland contributed to a 37 million tonne reduction in coal haulage volumes. QR National expects to spend about $1.6 billion on capital projects in fiscal 2012 to support the anticipated growth in its key markets.
Oil and gas company AWE Limited
(ASX:AWE) extended its full-year loss, pulled down by write downs and impairment charges. In the 2011 financial year the AWE booked a net loss of $117.6 million. The result included $145.2 million of one-off losses, and an $8.2 million hit from the strong Australian dollar.In the same period operating cashflow increased 61 per cent, taking the company's underlying loss to $16.1 million.
Gold miner CGA Mining Limited's
(ASX:CGX) preliminary final report showed that its full year net profit grew more than 300 per cent to $65 million. The result was underpinned by a 27 per cent increase in gold production, and a 70 per cent increase in gross profit. In the 2011 financial year, revenue from gold and silver sales rose 51 per cent to $235 million. CGA said it planned to undertake $US20 million of drilling over the next year.
Contract mining services company Ausdrill Limited
(ASX:ASL) reported a record full-year net profit of $73 million, above its forecast and 52 per cent higher than the year before. In the 2011 financial year sales revenue rose 32 per cent and EBITDA grew 30 per cent on the prior year. Ausdrill is targeting $1 billion in revenue for the year ahead.
H1 resultsMagnetite iron ore pellet producer Grange Resources Limited
(ASX:GRR) generated a $58.1 million interim profit, and declared a maiden dividend. In the first half of 2011 revenue from mining operations rose 8 per cent to $209 million. In the same period, the company's flagship Savage River operations in Tasmania produced more than 840,000 tonnes of pellets. The company says it is on track to achieve 2 million tonnes of pellet production this year.
Supply dealsLynas Corporation Limited
(ASX:LYC) has signed an agreement to sell rare earths to German chemicals giant BASF. The long-term agreement means Lynas is a step closer to selling out the first tranches of supply from its Malaysian processing plant. Lynas says it will supply BASF with enough lanthanum to meet much of its long-term needs, and sales of the rare earths metal will be linked to market prices. BASF uses lanthanum when making catalysts for oil refineries and chemical plants.
Rival rare earths producer Arafura Resources Limited
(ASX:ARU) revealed it is in advanced talks to pre-sell more of its product to global players. Managing director, Steve Ward, told Reuters that Arafura is in a number of discussions in Asia, Europe and the US. Arafura is targeting to become the world's fourth-biggest producer of rare earths. Mr Ward says global demand for the commodity is currently taking off at the same time when China's exports are being reduced.
Rio Tinto Limited
(ASX:RIO) has forecast iron ore demand will soar. Speaking at the Africa Down Under mining conference, managing director of Rio Tinto's iron ore expansion projects, David Joyce, said production will need to reach at least 100 million tonnes per annum over the next eight years in order to satisfy demand. Mr Joyce also said Rio is on track to expand its Pilbara iron ore output capacity from 225 million tonnes per annum to 333 million tonnes per annum. Rio also this week lured the former chief financial officer of rival miner BHP Billiton Limited
(ASX:BHP), Chris Lynch, to its board as a non-executive director.
Stake salesWhitehaven Coal Limited's
(ASX:WHC) two biggest shareholders, First Reserve Corporation and AMCI International, have sold $390 million worth of shares, or about 13.15 per cent of the company, to institutions for $6.00 per share. The companies will remain Whitehaven's two largest shareholders after the selldown, with 14.7 per cent and 9.7 per cent respectively.
RegulationsThe federal government has largely excluded the site of Woodside Petroleum Limited's
(ASX:WPL) proposed $30 billion liquefied natural gas hub at James Price Point in Western Australia from the national heritage list. The landmark decision means Perth-based Woodside remains on regulatory track to develop its controversial project. A major environmental review of the project is due at the end of 2011 and a final investment decision is expected by mid 2012.
CommoditiesCommodities markets had a slightly more positive week. ANZ Research's commodities analyst, Natalie Robertson, said it was on the back of sentiment improving at the beginning of the week.
"Data was relatively OK throughout the week, it wasn't as weak as the market was expecting," she said.
However, manufacturing data from Europe contracted for the first time in almost two years.
GoldTowards the beginning of the week gold surpassed US$1,800 an ounce, but the price retreated a little at the end of the week.
"There have been mixed influences in gold, so the rally in equity markets has led to an improved sentiment and reduced safe-haven bids for gold, but on the other hand, you're still getting very weak numbers out of Europe and worries over the banking and sovereign debt issues over there, so that would be supportive, but it's difficult to tell what will happen though because it's risk driven and risk is driven by sentiment," Ms Robertson said.
OilMs Robertson said oil appeared to be supported by supply tightness. As oil often tracks what happens in the macro-environment, crude benchmarks rose on expectations that QE3 could be announced.
"Also underlying that increase was concerns over gasoline and fuel supplies being hampered by Hurricane Irene at the beginning of the week, and at the end of the week there was another potential hurricane developing in the Gulf of Mexico, as well as a tropical storm also developing," Ms Robertson said.
"September is generally the most active season for hurricanes, so you usually see a pick-up in markets as a result of bad weather."
CopperThe London Metals Exchange started the week closed on a public holiday. With light volume, it did pick up a little in line with broader commodity markets.
"Also supporting copper is striker action in Chile, showing an 18 per cent drop in Chile, the biggest producer of copper output in the world," Ms Robertson said.
Rebecca Richardson
