Queensland floods cause mining delays

Resources Corner

Mining companies who have been hit by Queensland’s extreme weather conditions could be re-thinking their production targets. China’s PMI suggests operating conditions are improving. Despite strong Chinese growth figures in recent months, Westpac’s Senior Economist Bill Evans says we are yet to see a peak in growth in the S&P/ASX 200.
 
QLD floods cause mining delays

Companies impacted by Queensland’s ex-tropical cyclone Oswald over the weekend include BHP Billiton Limited (ASX:BHP) and Chinese controlled Yancoal Australia Limited (ASX:YAL). BHP confirmed its operations in the Bowen Basin had been affected however, no indication of the size of the impact has been provided. The global miner is expected to post its quarterly production figures in April. Yancoal Australia suspended operations at its Middlemount and Yarrabee open cut mines in central Queensland due to the weather conditions. The coal explorer reported a burst levee and expects production at Middlemount to be impacted for at least three weeks while the Yarrabee mine could re-open this week. 
 
Rinehart Lakes Oil investment
 
West Australian mining magnate Gina Rinehart has bought a substantial interest in oil and gas explorer Lakes Oil NL (ASX:LKO). Ms Rinehart’s company Hancock Prospecting has spent $4.25 million to take up an 18.6 per cent stake through a notes placement. As part of the deal climate change commentator, Professor Ian Plimer has been appointed as a non-executive director. Lakes Oil says the issue provides it with funds to progress its oil and gas activities in on-shore regions of Victoria. Joint venture partner, Armour Energy Limited (ASX:AJQ) has also bought $1.75 million of notes to boost its interest to 18.6 per cent.
 
China’s PMI hits 24-month high
 
HSBC's Flash Chinese manufacturing purchasing managers index (PMI) hit a 24 month high in January, rising to 51.9, from 51.5 in December. The positive result is an indication Chinese operating conditions are improving, given any reading above 50 signals expansion.
 
Commentary
 
FNN spoke with Westpac Banking Corporation (ASX:WBC) Senior Economist, Bill Evans on how he expects S&P/ASX 200 to perform in the coming year:
 
“We think the peak in growth will be the middle part of the year, and in the second half of the year the government will be comfortable to moderate growth. That means that the euphoria that we’re seeing around commodities and around China at the moment will start to ease in the second half. So while I’m quite optimistic about the resource sector in the first half of this year, I feel we may run into some headwinds in the second half.” 
 
To watch more of the interview click here:
 
Output forecasts 
 
Altona Mining Limited (ASX:AOH) has boosted its full year production forecast after posting record production in the December quarter. The mining company expects to deliver between 6,500 and 7,000 tonnes of copper metal and 6,500 to 7,000 ounces of gold in concentrate in the 2013 financial year. 
 
Mirabela Nickel Limited (ASX:MBN) has reported annual production results in line with its guidance and lifted its 2013 production target. The nickel miner expects to produce between 22,000 to 24,000 of nickel in concentrate. 
 
Global miner BHP Billiton Limited’s (ASX:BHP) iron ore production has risen above expectations in its second quarter. In the three months to the end of December, the global miner posted a 3 per cent increase on the previous corresponding period.
 
Beach Energy Limited (ASX:BPT) has affirmed its full year production targets despite posting a drop in quarterly output. The oil and gas company’s production fell 12 per cent and sales fell 21 per cent in the December quarter but has stronger second half production and maintained its annual production guidance of 8.5 to 9 million barrels of oil equivalent. 
 
Fortescue Metals Group Limited (ASX:FMG) has maintained its full-year production guidance after reporting a rise in second quarter iron ore production. The Pilbara focused miner posted a 32 per cent increase on the previous corresponding quarter, and a 24 per cent increase on the September quarter.
 
Contract wins and new deals
 
Western Areas Limited (ASX:WSA) has signed an improved offtake contract with China's biggest nickel company Jinchuan Group Limited. Under the deal the mining company will sell up to 26,000 tonnes of nickel in concentrate from next month for the following two years. 
 
Fortescue Metals Group Limited (ASX:FMG) has awarded Macmahon Holdings Limited (ASX:MAH) a $1.8 billion contract for its Christmas Creek Mine expansion.
Macmahon says it is the largest single mining contract it has ever been awarded and lifts the mining contractor’s order book to a record $3.6 billion.
 
Mining IPOs
 
Oilfield Workforce Group Limited (ASX:OFW) who provide services to the oil and gas industry floated with an issue price of $0.50, opened at $0.50 and closed at $0.50 on January 29, 2013.
 
Uranium explorer Zeus Resources Limited (ASX:ZEU) started trading with an issue price of $0.20 and opening at $0.18 and closed at $0.14 on January 21, 2013.

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