Mining delays and downgrades

Resources and mining companies dominating the headlines this past week include Newcrest Mining downgrading its gold production guidance, BHP Billiton inks a deal to sell its stake in the Chidliak diamonds exploration project in Canada, Woodside requests a one year delay on its deadline for making a final decision on the Browse liquefied natural gas project in Western Australia, OneSteel blames weak residential construction activity for a $150 million writedown and Macmahon Holdings finalises a $330 million contract with Fortescue Metals.

We speak exclusively with American investor and author, Jim Rogers about why he chooses to invest in commodities.

Newcrest downgrades gold guidance
Newcrest Mining Limited (ASX:NCM) has downgraded its 2011-12 gold production guidance. Australia's biggest goldminer is expecting to produce between 2.43 million and 2.55 million ounces of gold this financial year, down from a previous estimate of between 2.775 million and 2.925 million ounces. It's blaming rain in Papua New Guinea and NSW, as well as lower grades that it's mined at its Telfer mine in the Pilbara in Western Australia. Although it's 13 per cent down on the mid-point of the previous guidance, the miner says after adjusting for the recent sales of its Cracow and Mt Rawdon mines, it's only about six per cent below the original minimum guidance level.

BHP sells $8.7M diamond stake
BHP Billiton Limited (ASX:BHP) has inked a deal to sell its 51 per cent stake in the Chidliak diamonds exploration project in Canada for $8.7 million. The sale comes less than one month after the global miner said it would review its diamonds business and evaluate a potential sale. BHP will receive $8.7 million from Chidliak's original owner and BHP's joint venture partner and keep a two per cent royalty on future production from Chidliak. The transaction is expected to be completed by the end of January 2012.

Woodside's one year delay
Woodside Petroleum Limited's (ASX:WPL) has requested a one year delay on the mid-2012 deadline for making a final decision on the Browse liquefied natural gas project in Western Australia. The requested extension on the government imposed deadline comes amid growing speculation that Woodside has lost interest in the project under the guidance of the new CEO Peter Coleman. The project cost has been estimated at about $US30 billion but analysts have told The Australian Financial Review this could increase to more than $40 billion.

OneSteel $150M writedown
OneSteel Limited (ASX:OST) has blamed weak residential construction activity for a $150 million writedown it will make on the value of its LiteSteel Technologies business. Analysts have forecast the steel manufacturer will deliver a full year net profit of about $265 million in fiscal 2012, compared to a $238 million profit achieved in fiscal 2011.

Macmahon finalises Fortescue contract
Macmahon Holdings Limited (ASX:MAH) has finalised a $330 million contract with Fortescue Metals Group Limited (ASX:FMG) and started construction at the iron ore miner's Solomon Rail project. Macmahon says construction on Fortescue's Solomon Rail Spur in the Pilbara region of Western Australia is one of its biggest single construction contracts. Since being announced as the preferred contractor in August, Macmahon has undertaken preliminary works on the construction of the 81 kilometre rail formation. The project is expected to be completed in late 2012.

Commodities
Finance News Network spoke with American investor and author, Jim Rogers about why he chooses to invest in commodities.

“I own commodities, because if the world economy gets better  ... then commodities will do well because of the shortages. The lucky countries will continue to be lucky for a while. I own some currencies ... I'm worried about currency markets. I'm short stocks ... I anticipate problems in stock markets. If the world economy doesn't get better, you're not going to make money in stocks. But then central banks will print more money and when they print money ...  the thing to do is to own real assets,” says Mr Rogers.

The full interview with Jim Rogers can be watched here.