Resources and mining companies dominating the headlines this past week include Sundance Resources' largest shareholder and suitor investigated by ASIC, Rio Tinto set to inject millions in the Pilbara, the WA Premier talks tough with BHP and Santos says coal-seam gas reserves in NSW would be lucrative.
We speak exclusively with Saracen's executive chairman Guido Staltari. We also hear from ANZ's commodities analyst Natalie Robertson, with the news headlines generating volatility in commodity markets.
Saracen profit and capital raisingSaracen Mineral Holdings Limited
(ASX:SAR) has swung from full year loss to a net profit of $47.7 million in fiscal 2011. Executive chairman Guido Staltari says Saracen's first full financial year of gold production was a major milestone for the company.
The Finance News Network speaks exclusively with Mr Staltari about the results.
"Generally we pitch conservatively. We came to adopt an attitude whereby we prefer to achieve our estimates and put out estimates that are realistic and not overstated ... [however] stretching out targets is a very important part of our achievement."
Saracen has raised $50 million, and is looking to raise a further $15 million through a share purchase plan for a total $65 million. Proceeds will fund an increased and accelerated exploration budget across the company's tenement holdings, drilling and development work at Saracen's Porphyry and Whirling Dervish mines and potential bolt-on acquisitions. Red October and Butcher Well exploration spending will be boosted to $12 million, with the total exploration budget increasing to $35 million. It's hoped the new funding will allow the company to double gold production by 2015.
"We see this as a fairly bold and exciting step for the shareholders, to get us up to a bigger league of company, where we become much more relevant in the capital markets," said Mr Staltari.
Sundance suitor hit with ASIC probeShares in Sundance Resources Limited
(ASX:SDL) fell heavily after news broke that the Australian Securities and Investments Commission is investigating executives from the iron ore explorer's largest shareholder and suitor, Hanlong Mining, for insider trading. Hanlong has insisted that the company itself is not under investigation and the executives that are will stand down. However, the investigation has cast doubt upon the credibility of Hanlong's bids for both Sundance and uranium explorer Bannerman Resources Limited
(ASX:BMN). Sundance recently claimed that Hanlong's $1.3 billion takeover offer is too low.
Rio invests in the PilbaraRio Tinto Limited
(ASX:RIO) will inject an extra $US833 million in Western Australia's Pilbara region. The funds will be geared towards power and fuel supply projects to facilitate its target of boosting iron ore output to 333 million tonnes per annum by 2015. The global miner also announced this week that it had raised $US2 billion of debt in the US public bond market. Also, the head of Rio's Australian arm has criticised the Federal Government's proposed carbon tax, claiming uncertainty surrounding the tax it is holding back deals in the power industry.
WA threatens BHP on mining royaltiesWestern Australian Premier, Colin Barnett, has threatened BHP Billiton Limited
(ASX:BHP) will not be able to expand its iron ore operations unless the global miner agrees with the state government's royalties proposal. Mr Barnett says the state owns the iron ore and that BHP's chief Marius Kloppers has no choice but to accept the plan to raise mining royalties. Western Australia's state budget, announced in May, proposes to increase the royalty on iron ore from $10 to $13 per tonne. BHP has declined to comment on the ultimatum other than to say it is in discussions with the state government on the proposed royalty increase.
Santos ramps up coal seam gas projectsSantos Limited
(ASX:STO) believes coal-seam gas reserves in New South Wales would be lucrative and the oil and gas producer is pushing the state government to develop the industry. While NSW holds a mere 5 per cent of Australia's coal-seam gas reserves Santos is understood to be interested in investing several billions into developing the state's reserves. The company has already invested $50 billion into Queensland, with the state holding more than 90 per cent of Australia's reserves. Santos' Gladstone liquefied natural gas project in the Surat Basin will get a boost to its infrastructure at the Fairview component of the project: Downer EDI Limited
(ASX:DOW) has advised that its 50:50 joint venture with Clough Limited
(ASX:CLO) has been awarded a $600 million contract for the construction of pipelines, compression facilities and infrastructure.
Resources NewsCoal exploration has reached record highs, Australian Bureau of Statistics data shows a record $207.2 million was spent in the June quarter. It's well above the previous high of $122 million in the December quarter. Total mineral exploration surged to record highs of $907 million in the June quarter, up from $650 million three months prior. Iron ore spending increased almost 50 per cent to $214.7 million.
Data from the Bureau of Resources and Energy Economics shows the value of Australia's resources and energy exports jumped to a record $175 billion last financial year, an increase of 27 per cent. Iron ore was the biggest earner, generating $54 billion. LNG exports topped $10 billion for the first time.
CommoditiesThe ANZ's commodities analyst Natalie Robertson says it's been another choppy week for commodities, with the news headlines generating volatility in commodity markets.
"The market was reacting to news as opposed to the data this week ... with investors becoming increasingly uncertain on the direction of prices, with all of these headlines coming out, one day it's positive, the next day it's negative, you could see volumes actually come off a little bit, adding to the volatility we've already seen in commodity markets."
Melissa Beaumont Lee
