Resources and mining companies dominating the headlines this past week include Fortescue Metals posting a record result, Santos reports full-year net profit is up 51 per cent, OZ Minerals reports its net profit dropped 53 per cent, BHP and Rio to spend $US 4 billion on Escondida, Murchison Metals shareholders approve the deal with Mitsubishi and Leighton reports a possible breach of its code of ethics.
Fortescue posts record resultFortescue Metals Group Limited
(ASX:FMG) has posted a record result for the six months to December, with net profit jumping 155 per cent to $US 801 million. That’s up from $US 314 million in the previous corresponding period. The record first-half earnings figure was slightly below analysts’ expectations. Fortescue has lowered its production guidance for the March quarter because of wet weather, warning the cost of its expansion project could increase by $US 200 million.
Santos FY profit up 51%Santos Limited
(ASX:STO) has posted a full-year net profit of $753 million to December, 51 per cent higher than the year before. The increase was still less than some analysts had expected. The headline result includes a $408 million profit after tax from asset sales. Underlying net profit was 20 per cent higher than 2010 due to higher oil and gas prices, partially offset by a strong Australian dollar and higher effective tax rate.
Resources NewsTaking a closer look at agricultural commodities, good weather conditions are set to lift the 2011-12 summer crop up 18 per cent according to a report by ABARES, the research unit of the Federal Department of Agriculture. But recent flooding in northern New South Wales and Queensland will cut crop values and yields. The lift in summer crop production follows record winter levels, with production estimated to have risen 7 per cent for 2011-12.
BHP, Rio Escondida expansionBHP Billiton Limited (ASX:BHP, NYSE:BHP) and Rio Tinto Limited (ASX:RIO, NYSE:RIO) will spend $US 4 billion to increase copper production at the Escondida copper mine in Chile. BHP will spend $US 2.2 billion and Rio $US 1.2 billion to replace a concentrator at the mine with a new plant. Construction will start this month and is expected to be completed in 2015. BHP has also announced a 25 per cent increase in ore reserves at Escondida.
Murchison shareholders approve Oakajee saleMurchison Metals Limited
(ASX:MMX) shareholders have approved the sale of the company’s interests in Crosslands Resources and the Oakajee Port and Rail projects to Mitsubishi. The deal is reportedly worth $325 million. Murchison advised it had satisfied the conditions set out by the Western Australian government to approve the sale of key assets to Mitsubishi. Murchison expects the completion of the transaction to take place today, Monday February 20.
Leighton reports possible breachLeighton Holdings Limited
(ASX:LEI) has booked a net profit of $340 million for the six months to December 31. Leighton also reported a possible breach of its code of ethics to the Australian Federal Police related to payments that may have been made to Leighton’s subsidiary, Leighton Offshore, in connection with work to expand offshore loading facilities for Iraq’s crude oil exports. Leighton Holdings’ chairman Stephen Johns says Leighton volunteered the information after becoming aware of a possible breach. According to the release, Leighton says it is not known at this stage whether there has been any wrongful or illegal conduct or whether there will be any adverse financial consequences.
OZ Minerals profit drops 53% OZ Minerals Limited
(ASX:OZL) says its net profit dropped 53 per cent to $274.5 million in the 2011 financial year, weighed down by impairment charges and litigation settlements. On an underlying basis the miner’s net profit dropped 19 per cent to $322.7 million. In the same period revenue came in at $1.1 billion, dipping slightly from the year before. Oz Minerals anticipates strong demand for copper and continuing constraints on supply to continue. The company says strong operational performance at its flagship Prominent Hill project and good margins will allow it to enjoy the strength of the market while also being prepared for volatility. Oz Minerals has declared an unfranked final dividend of 30 cents, bringing the full-year pay-out to 60 cents per share.
Melissa Beaumont Lee
