Mounting speculation that US and Chinese economies are set to rebound has seen an increase in demand for metals, energy and crops so far this year. In the latest US economic news, investors were encouraged with the Labor Department reporting the economy added more jobs than initially posted in 2012.
JPMorgan's chief commodities strategist and head of commodities research Colin Fenton provides a positive outlook for commodity prices this year:
"The data is coming in much stronger than we had anticipated for the first part of January. We see business flows picking up around the planet and, very critically, the level of implied volatility is about as low as it can go. That is telling us that prices are going to go in one direction, which is the expectation embedded in capital markets, and it appears that direction is up, not down. When we look at the copper price, it is breaking out to the upside, the same with the Brent crude oil price. Even if we look at Australian foreign exchange markets, we see low volatility, and the days behind us will look worse than the days ahead of us."
Company news
Armour Energy Limited
(ASX:AJQ) has increased its stake in hydrocarbon explorer Lakes Oil NL
(ASX:LKO) by subscribing to $1.75 million worth of $10 convertible notes to make up a shortfall from a recent rights issue. Armour's total stake in Lakes Oil now represents a fully diluted 18.6 per cent.
Production and financial forecasts
AngloGold Ashanti Limited
(ASX:AGG) says its Tropicana Gold Project in Kalgoorlie remains on schedule to begin production in the December quarter 2013. The company has increased its capex forecast for the project by 11 per cent to between $820 and $845 million.
Resources services company Sedgman Limited
(ASX:SDM) expects to post an interim net profit of $12.3 million, down from $19.4 million in the first half of last year and in line with market expectations.
Development and budget resolutions
Fortescue Metals Group Limited
(ASX:FMG) has reached an agreement with Iron Ore Holdings Limited
(ASX:IOH) to cease the development of the Iron Valley deposit in Western Australia. Fortescue says both parties have agreed to an early termination of its exclusive option as previously agreed under an MOU in February 2012.
Aquila Resources Limited
(ASX:AQA) says it has resolved its budget dispute with joint venture partner AMCI regarding the West Pilbara Iron Ore Project. The two parties referred their dispute to arbitration in September 2012 after not reaching consensus on a proposed budget for the current financial year.
Funding
Northern Minerals Limited
(ASX:NTU) has secured funding agreements to raise $58 million for the advancement of its Browns Range Heavy Rare Earth project in Western Australia. The funds will be used to progress the project to the completion of a feasibility study.
