Resource and mining companies making news include Atlas Iron Limited (ASX:AGO), Santos Limited (ASX:STO) and AngloGold Ashanti Limited (ASX:AGG) all posting an increase in second quarter production, with Atlas bullish on its production for the rest of the year.
Mining opportunities in M&A
A new report released by Ernst & Young shows merger and acquisition activity in the Australian mining sector is at year lows. Volumes have dropped 20 per cent to 107 deal deals made domestically. Globally 470 deals have been sealed, 19 per cent down year-on-year. The report suggests companies are well placed to be looking for acquisition opportunities with many miners holding strong balance sheets and lower valuations.
"Balance sheets are strong and while the extreme price peaks may have passed, the longer term supply-demand outlook remains strong for most mined commodities. During the next year or two we will see once-in-a-decade acquisition opportunities that will position companies for future growth in the high-demand commodities, particularly copper, iron ore and coal," says Ernst & Young's transactions mining and metals leader for Australia, Paul Murphy.
Mining boom forecast to end soon
Private-sector budget forecaster Deloitte Access Economics made headlines when it forecast Australia’s mining boom will slow and not last beyond another two years, mainly due to a forecast drop in coal and iron ore prices.
Copper and gold miner OZ Minerals Limited (ASX:OZL) has posted falls in its June quarter production, maintained its full year gold production guidance but warned full year copper production will come in at the lower end of its guidance.
Western Australian miner Atlas Iron Limited (ASX:AGO) has increased its shipments by 25 per cent in the June quarter, in line with its guidance. The iron ore miner says it is on track to double production by the end of the year.
Oil and gas producer Santos Limited (ASX:STO) has revealed its second quarter production rose 9 per cent. Sales revenue gained 18 per cent in the same period, driven by higher oil and gas prices and increasing sales volumes. Gas production rose 4 per cent on the back of new production assets. Crude oil production hit its highest level in four years.
The world's third-largest gold miner AngloGold Ashanti Limited (ASX:AGG) has announced a 9 per cent increase in second quarter gold production. The production results exceeded its market guidance and were attributed to strong operating performances from its continental Africa and the Americas regions.
Iron ore developer Northern Iron Limited (ASX:NFE) has received a revised $518 million takeover offer from India's Aditya Birla Group.
Coal producer Cockatoo Coal Limited (ASX:COK) has inked a new long term rail haulage contract with rail freight company QR National (ASX:QRN) to secure the transport of coal from the expansion of its Baralaba Complex in Queensland's Bowen Basin.
Gold producer Resolute Mining Limited (ASX:RSG) has awarded mining services provider Ausdrill Limited (ASX:ASL) a $US540 million contract for its Syama Gold Project in West Africa.
Elemental Minerals Limited (ASX:ELM) has started drilling its first exploration hole in the Dougou area in the Republic of Congo. The African focused potash explorer says an extensive target was identified following historic drilling and seismic data.
Reporting forecasts for resources
FNN asked AMP Limited’s (ASX:AMP) AMP Capital Investors Head of Investment Strategy and Chief Economist, Dr Shane Oliver, about his expectations for the upcoming reporting season:
“Commodity prices have come down, so that’s weighing on resources stocks, so their profits will be off about 10 per cent,” Dr Oliver predicts.
However Dr Oliver also believes mining stocks are currently getting over-sold and believes, “they are probably due for a bit of a bounce here”.
To watch the full interview click here