|Befinner meg for tiden down under, og ville bruke dette fora for aa faa noen tips om gode objekter aa investere i paa ASX. De kryr av smaa og store mining companies, og det er vanskelig aa faa oversikt. Det er jo BHP, Woodside, Telstra etc, men var ute etter noe mer spennende. Noen som har tips om stocktalks tilsvarende dette eller spennende inv objekter?
|Ingen anbefaling, men her er to Nikkelaksjer:
Minara Resources (MRE ser ticker ut til å være)
Mincor Resources (MCR ser ticker ut til å være)
|Takk for det.
Ser fra andre innlegg at du er godt informert om raavarer/metaller. Jeg er ikke saa godt inni dette og har heller ikke hatt anledning til aa digest alle dine innlegg, men hvis jeg oppfatter min skumming igjennom, saa er at nickel prisene har gaatt i vaeret, og forventes aa holde seg hoeyt? Det er ogsaa derfor du har gitt meg 2 nickel companies.
|ASX fortsetter oppgangen, med sterk oppgang for mining industrien.
Miners push local market to fresh record
May 04, 2007
THE Australian stock market rocketed to fresh highs today, buoyed by solid gains from the big miners and an easing in the inflation outlook as judged by the Reserve Bank of Australia.
The benchmark S&P/ASX200 index finished up 59.3 points to a record 6304.9, while the all ordinaries index also gained 59.3 points to 6296.2, also a record close.
At 4.18pm (AEST) on the Sydney Futures Exchange, the June share price index contract was 59 points higher at 6318, on a volume of 15,288 contracts.
CMC Markets analyst David Land said the materials and energy sectors were clearly the leaders on the day, with the large miners moving full steam ahead.
"They have has a strong run at the moment, with a particularly strong run out of BHP and Rio," he said.
"They illustrate how strong it's been. We have seen a bit more of a mixed day out of the big banks, so even without that support it still managed to push the market well ahead."
The world's largest miner BHP Billiton picked up 71 cents to $30.60, while rival Rio Tinto added $3.82 to $86.85.
Mr Land said even the mid-tier miners had a successful day, with Beach Petroleum jumping nearly 6 per cent, or 7.5 cents, at $1.33 while Jubilee Mines added 5.25 per cent or 89 cents to end at $17.85.
"You can see how widespread this has been," Mr Land said.
Earlier today the Reserve Bank of Australia lowered its inflation forecast for the rest of 2007 based on stable oil prices, a higher exchange rate and cheaper bananas.
The RBA lowered its forecast for year-end underlying inflation, which excludes volatile price movements, to fall back to 2.5 per cent or below in the next few quarters from 2.75 per cent.
This also added fire to the market, analysts said.
The gold miners also pushed the bourse higher, with the price of spot gold in Sydney adding $US5.45 at $US681.10 per fine ounce.
Gold miners benefited from the higher price, with Lihir adding four cents to $3.01 and Newcrest climbing 58 cents to $22.98.
Australian miner Bolnisi Gold NL sahres fell one cent at $3.29 after announcing it will merge with Coeur d'Alene Mines Corporation and Palmarejo Silver and Gold Corp in a $US1.1 billion ($A1.34 billion) deal to create the world's leading silver producer.
The banks were mixed, with Commonwealth firming 45 cents to $54.30, Westpac picking up eight cents to $27.28 and NAB advancing 12 cents to $44.12, but ANZ bucked the trend to give back one cent at $30.73.
The nation's fifth largest bank, St George, was up three cents at $36.60 after reporting a more than 14 per cent lift in first-half profit and upgraded its annual earnings outlook earlier this week.
National carrier Qantas was up one cent at $5.38, with today being D-Day for the prviate equity-led Airline Partners Australia's proposed $11.1 billion takeover offer for the airline.
APA consortium this morning advised that its voting power in Qantas had increased from 27.78 per cent to 34.59 per cent.
APA has acceptance instructions from a further 1.44 per cent of shareholders under its institutional acceptance facility, taking total acceptance to 36.03 per cent.
If the consortium can increase the acceptance of its $5.45-per-Qantas share offer to more than 50 per cent by today, it will trigger a two-week extension to the bid deadline.
Elsewhere, Oil Search said at its annual general meeting in Port Morseby that liquefied natural gas (LNG) was still a lucrative market, despite the collapse of the proposed Papua to New Guinea-to-Australia gas pipeline project.
Oil Search added eight cents at $3.65.
Other energy stocks faired well, with Woodside gaining 75 cents to $41.75 and Santos rising 28 cents to $12.58.
[Endret 28.05.07 08:54 av Grey]
|BHP well placed to buy Rio Tinto: Citigroup
May 07, 2007
THE world's biggest miner, BHP Billiton, is well placed to take out rival Rio Tinto Ltd in a deal that could cost over $122 billion.
Citigroup analysts say Rio Tinto's strong cashflow could make it an attractive takeover target for private equity firms, but BHP Billiton would be a more likely bidder given the likely synergies that could be generated.
“Rio Tinto's strong cashflow and nominal gearing may bring it into the crosshairs of private equity, but we think BHP Billiton is a much more likely bidder given synergies and nationalistic control issue of Australian assets,” Citigroup said.
“Applying even a modest bid premium means that any party will need to finance $US100 billion-plus through debt and equity.
“The deal is highly earnings accretive using conservative assumptions, with the major obstacle being concentration iron ore/coking coal market share and lack of BHP CEO-elect.”
Citigroup said the disposal of non-core assets could overcome the competition concerns.
A union between BHP Billiton and Rio Tinto would create the world's largest coking coal producer, the biggest thermal coal producer, the largest copper producer and position the company as the equal largest iron ore producer.
“The greatest gains would be achievable in the iron ore assets in the Pilbara through optimising product specifications, mining fleet, rail distances to the port, etc,” Citigroup said.
“Considering the scale and importance of these businesses to both companies, it is hard not to see $US500 million-plus in synergies and cost savings in this area alone.”
The brokerage said cost savings and synergies would also be achieved at the Australian coal assets, Canadian diamond mines, product marketing, logistics and global procurement.
Citigroup ruled out any interest in Rio Tinto from the major oil companies and suggested private equity would need to team up with an existing industry player to formulate a potential bid.
“From a pure market capitalisation perspective, the major oil companies like BP and Royal Dutch Shell have the size and balance sheet capability to entertain such a transaction, but we do not believe they are interested in returning to investing in the Metals & mining sector after exiting the space in the 1980s and 1990s,” Citigroup said.
“Strategic and diversification drivers could prompt other corporates to bid, but ultimately BHPB can pay the most given it has the most synergies to extract.”
By 1230 AEST, BHP shares had gained 77 cents to $31.44 while Rio picked up $2.15 to $89.00.
[Endret 28.05.07 08:42 av Grey]
|BHP rumour pushes Market to a record close
May 7, 2007 - 4:34PM
The Australian stock market continued its record run today as reports from market analysts suggesting global miner BHP Billiton could take over rival Rio Tinto sent both stocks surging.
While Rio Tinto and BHP Billiton shares drove the market upwards, shares in national carrier Qantas Airways remained in a trading halt, pending further announcements in the wake of Airline Partners Australia's failed $11.1 billion takeover bid for the airline.
ABN Amro Morgans private client adviser Craig Walker said the market was awash with merger and acquisition talk with BHP Billiton and Rio Tinto were the main drivers today.
"This (BHP Billiton and Rio Tinto) is the next target, I suppose,'' Mr Walker said.
"Whether or not that happens or whether it's hype is the next big question.''
At the 4.15pm close, the benchmark S&P/ASX200 was up 30.8 points at a new closing record of 6335.7, surpassing the prior closing record of 6304.9 set last Friday.
The all ordinaries added 33.2 points to 6329.4, also a new closing high, beating the prior record of 6296.2 also reached on May 4.
On the Sydney Futures Exchange, the June share price index contract lifted 25 points to 6345 on a volume of 14,301 contracts, by 4.15pm.
In the resources sector, BHP Billiton jumped 96 cents, or 3.14 per cent, to $31.56, and Rio Tinto strengthened $4.53, or 5.22 per cent, to $91.38.
Citigroup analysts said while Rio Tinto's strong cashflow could make it an attractive takeover target for private equity firms BHP Billiton would be a more likely bidder given the likely synergies that could be generated.
A takeover would cost at least $122 billion.
Oil and gas producer Woodside Petroleum improved $1.15 to $42.90 but Santos sagged 30 cents to $12.28.
Qantas last traded at $5.38 on Friday. Airline Partners Australia said today it would try to keep its takeover bid alive by invoking a clause in its offer to convert partial acceptances into full ones, giving it the required number to pursue the deal.
On Wall Street on Friday, the Dow Jones industrial average rose 23.24 points to 13,264.62.
[Endret 28.05.07 08:43 av Grey]
|BHP yours for just $242bn
May 07, 2007
SURELY this has got to rank as the high-water mark for the rash of takeovers gripping the market. On Friday, Merrill Lynch put out a note that BHP Billiton would fetch $242 billion if private equity wanted to control and break-up the mining powerhouse.
It's worth noting that Merrill analysts don't think BHP will be target of an imminent bid.
A bid for BHP? That's just silly.
But someone has to do the analysis.
RMA Energy has launched a prospectus for its $4.25 million IPO. RMA is the first foray into the public arena for Terry Byrt, the man with a plan to see an Ansett-branded jet back in the skies soon. RMA will consist of six exploration projects in Queensland it believes prospective for tin, uranium and coal, among other metals. Go to www.rmaenergylimited.com for a copy.
YTC Resources will hit ASX boards on Tuesday. The Orange-based junior already has support from Yunnan Group for its tin projects in NSW. YTC's flagship will be the Torrington project in northern NSW which produced about 100,000 tonnes of tin in its heyday. There hasn't been any mining at Torrington since the 1950s.
YTC raised $3.5 million and will have a market cap of $6.83 million on listing. Yunnan has thrown in $2.67 million.
SETTING aside Ramelius Resources' stunning Friday result, there are more than a few others still scratching the dirt both locally and overseas.
* Sub-Sahara Resources (SBS) has received some exciting results from the first two RC holes at its Mwamazengo project. One intercept included 15m for 4.7 grams of gold per tonne. Another returned 6m at 2.09gpt. Both were at shallow levels.
* BC Iron (BCI) reports results from its maiden drill campaign for its Nullagine project in the WA Pilbara. The best result includes 7m at 59.2 per cent iron from surface. The purity is consistent with Channel Iron Deposits at Yandicoogina and Robe River.
* Midas Resources (MDS) has begun an aircore drill program at the Intrepid target, which is part of the Lake Carey gold project. It is hoped Intrepid can show good form given it is part of a complicated geological formation that also includes Sunrise Dam, 35km to the north.
[Endret 28.05.07 08:43 av Grey]
|SA Funds expects BHP Billiton to outperform
Coronation Resources Funds reaps the benefits of bigger BHPB stake and looks for continuing relatively high commodity prices for next ten years or more while Mastermind fund also makes big investment in BHPB for first time.
Author: Tessa Kruger
Posted: Tuesday , 08 May 2007
Unit trust fund managers, who increased stakes in diversified miner BHP Billiton in the first quarter of this year, expect to see further good returns from the company that outperformed Anglo American by 13.5% and which stands to increase production over the next years.
Coronation Resources Fund manager Henk Groenewald said BHP Billiton would show stronger production growth over the next few years compared to competitor Anglo American.
Production growth is expected across the company's portfolio, including in base metals, oil and coal and will protect the value of the stock should commodity prices falter over the next two to three years.
Groenewald said that although he did not believe that commodities were running in a super cycle high metals commodity prices would still be sustained for ten years or more.
"Among the various commodities, we are most optimistic about are platinum and oil. Although prices will decrease, supply of these commodities will be constrained."
BHP Billiton shares climbed 24% in the three months ending March compared to a 10.5% increase in Anglo stock.
This comes against the background of BHP Billiton shares trading at historic PE ratios of 12.3 and forward PE multiples of 10.6 - compared to Anglo's historic PE ratios of 16.7 and forward PE multiples of 11.7.
Coronation Resources Fund was one of the unit trust funds that took advantage of BHP Billiton stocks that were selling cheap compared to Anglo American in the last quarter, while Billiton far outperformed Anglo.
The fund increased its stake in BHP Billiton from 11.95% in the December quarter to 15.98% in the quarter ending March, but maintained its holding in Anglo at 6.73% in March quarter compared to 6.8% in December.
Another South African fund manager- African Harvest's Matt Benzel - said its Cadiz Mastermind Fund invested (5.54%) of the fund in BHP Billiton for the first time this quarter on the basis of various valuations.
He said the fund may increase its holding in the company if the stock remained relatively cheap. Benzel expected the company to continue to outperform over the rest of the year.
Billiton's low price also meant that it should be protected against movements in the market, implying that if the market fell, the stock would decrease to a lesser extent and if the market gained the stock would make larger increases.
African Harvest does not have any major funds invested in junior miners at the moment, but would invest in this sector if it presented good opportunities in future, he added.
[Endret 28.05.07 08:44 av Grey]
|ASX hade en lang gjesp foer lunsj. Regjeringens budsjett ble presentert i gaar, og alle synes som pengene blir allokert riktig. Handel gikk noe opp, kanskje pga varslede skattelette og mer penger til barnefamilier.
Etter lunsj saa har markedet gaatt som en rakett, med Rio som leder an med en oppgang paa over 7% kl 14 uten at det er noen nyheter.
Markedet er opp 1%, med mineral og mining sektorene opp ca 2,5%.
|Some Market movers, RIO fortsetter opp, og BHP har hengt seg paa, Zinifex stiger paa nyheten om at selskapet har kjoept 95% av Wolfden (Canada).
ASX Code Price Movement
1 RIO RIO Tinto LTD 98.162 8.500 9.48%
2 CTX Caltex Australia LTD 25.452 1.110 4.56%
3 OSH OIL Search LTD 3.767 0.140 3.86%
4 CPU Computershare LTD 11.171 0.410 3.81%
5 SGM Sims Group LTD 25.324 0.790 3.22%
6 OXR Oxiana LTD 3.537 0.110 3.21%
7 BHP BHP Billiton LTD 32.160 0.970 3.11%
8 ZFX Zinifex LTD 17.866 0.490 2.82%
9 OST Onesteel LTD 6.153 0.160 2.67%
10 DOW Downer EDI LTD 7.502 -0.190 -2.47% t
[Endret 09.05.07 06:30 av Grey]
|Rio stock soars to record on BHP bid talk
May 9, 2007 - 3:40PM
Shares in Rio Tinto, the world's second-largest mining house, jumped as much as 11 percent to a record high on speculation of a pending $US100 billion-plus bid by larger rival BHP Billiton.
A rumour swept the Australian market that BHP was readying a hostile bid for Rio Tinto after a friendly offer of around $100-$110 per share - a premium of up to 23 percent from Tuesday's close - had been rebuffed, traders and analysts said.
"There is talk that BHP may bid for Rio at $110 per share and that has driven up the two stocks,'' said Sean Fenton, a portfolio manager with Jenkins Investment Management, which owns both BHP and Rio shares.
BHP spokeswoman Emma Meade said the company would not comment on market speculation. Rio Tinto spokesman Ian Head also would not comment.
Shares in Rio Tinto, which has a market capitalisation of about $US90 billion at its current price, jumped as much as 11.1 percent to a record $99.69, its biggest daily gain since 1987. But it lost steam later in the day to trade up 6 percent at $95.60.
BHP rose to a record high of $32.58, up 4.5 percent.
"I don't think it's true but who knows, it's a crazy market,'' said Ric Klusman, an institutional dealer at Aequs Securities, adding that the rumours sparked frenzied trade.
"There was screaming everywhere and people were trading like nutters,'' he said.
Some 7.9 million Rio Tinto shares had changed hands by late afternoon, double the monthly average. Some traders said BHP was also looking to buy Rio shares from the open market. But three fund managers, who own Rio shares, told Reuters they hadn't been approached.
Leadership of both companies is in flux, fuelling the speculation of a link-up.
BHP's US Chief Executive Chip Goodyear, who helped transform the company into the world's biggest mining house, is leaving by year end. A successor has not been named.
Rio Tinto CEO Tom Albanese, a New Jersey-born geologist, has been in the job less two weeks and is regarded as having an appetite for growth.
Citigroup said in a note to clients this week that Rio Tinto's hefty cashflow made it an attractive takeover target for private equity firms, although BHP would be a more likely bidder given synergies that exist between the two companies, particularly in iron ore and copper.
BHP and Rio Tinto have a combined market value of about $US237 billion - about twice the size of New Zealand's economy.
On Monday, US-based aluminium giant Alcoa said it would make a hostile bid for Canada's Alcan for nearly $US27 billion, after talks between the two aluminium producers failed to reach a friendly deal.
BHP Billiton was assembled through the merger of Australia's Broken Hill Pty. Co. Ltd. and Billiton of South Africa in 2001.
Since that time, the company has made only one major purchase, buying Australian nickel, copper and uranium miner WMC for around $US6 billion, despite widespread consolidation of the sector. It has chosen instead to reward shareholders with billions of dollars in share buybacks.
While BHP and Rio compete head-to-head in iron ore, aluminium and its derivative products, copper and uranium, the pair are also partners in the giant Escondida copper mine in Chile.
A marriage of the companies would assemble a force in iron ore mining - each digs millions of tonnes of ore annually from neighbouring lodes in far western Australia - to rival the top producer CVRD of Brazil.
Rio Tinto, itself a product of a merger of RTZ of Britain and CRA of Australia in the 1990s, also mines iron ore in Canada, where BHP's activities are largely limited to diamond mining.
Both companies have profited handsomely from a prolonged boom in mineral commodity prices, leading an industry-wide resurgence in mining and metal making after years in the investment backwaters.
BHP Billiton made $US10.45 billion in net profit last year and this year could earn $US13.2 billion, according to ABN AMRO.
Rio Tinto showed a 2006 profit of $US7.8 billion. Macquarie Bank sees 2007 profits around $US7.4 billion.
Both are dual-listed on the Australian and London bourses.
The Australian government, which at times has displayed nationalistic tendencies in corporate takeovers when foreign ownership was deemed outside the country's best interest, would not likely interfere in a bid by BHP, according to analysts.
A takeover of Rio Tinto could cost over $US100 billion, plus debt and equity, Citigroup estimated in its report, dwarfing CVRD's $US15.5 billion acquisition of Canada's Inco this year.
[Endret 28.05.07 08:45 av Grey]
|Rio calls in bankers to run a defence
Sylvia Pfeifer in London
May 14, 2007
Rio Tinto, the mining group that has been at the centre of takeover speculation, is believed to have hired Morgan Stanley, the US investment bank, to help defend it in the event of an unsolicited takeover approach.
Any approach to Rio is likely to be worth in excess of $US110 billion ($132 billion), making it one of the largest seen, and a successful merger would create the fifth largest company in the world.
Shares in Rio soared by more than 20 per cent to £40 ($95.46) last week on speculation rival BHP Billiton was about to launch a bid. Although Rio later issued a statement to the Australian Stock Exchange saying it was "not aware of any takeover approach from BHP Billiton", the move shows just how seriously it is taking the bid speculation.
After a pause on Thursday Rio shares were on the way up again Friday, 113p better at £36.52, following some speculative buying in Australia. Traders were talking about a possible £42 a share bid, and suggested BHP, up 18p to £12.23, may be planning to make a hostile move if it does not get agreement from the Rio board. There was also talk that canny US investor Warren Buffett was buying up shares in Rio.
In Australia on Friday Rio closed up 12c at $92 and BHP was down 80c at $31.
Broker Citigroup said last weekend that BHP, the world's largest mining company, could afford a $US100 billion-plus offer for Rio Tinto and cut $US500 million in costs.
But ABN Amro resources analyst Rob Clifford told the ABC network on Sunday that BHP was unlikely to make a move on its rival Rio, but that did not mean the resources sector would not stay busy with other mergers and acquisitions.
Mr Clifford said he did not believe the much-hyped BHP-Rio move would eventuate. "I think it is an attractive proposition, but no, I think the anti-trust issues, particularly in iron ore, would be very large hurdles to get over," he said.
And some analysts said the timing of any approach was not ideal as Chip Goodyear, BHP's chief executive, who helped transform the company into the world's biggest mining group, is leaving by the end of the year and a successor has not yet been named.
A successful bid for Rio would be the world's third-largest, after America Online's takeover of Time Warner in 2000, and Vodafone AirTouch's $US148 billion bid for Mannesmann in 1999. For calendar 2006, there were 1145 deals in the mining industry valued at a total $US176.5 billion.
"We have people looking at a lot of different things," BHP's president of carbon steel, Chris Lynch, said in Melbourne on Wednesday when asked about any bid for Rio Tinto. "We won't comment on specific potential targets."
[Endret 28.05.07 08:48 av Grey]
[Endret 28.05.07 08:48 av Grey]
|Stocks close in record territory
May 14, 2007 - 4:33PM
The Australian stock market closed in record territory today with the energy and resources sectors driving the bourse upwards following favourable commodity prices overnight.
At the close, the benchmark S&P/ASX200 index was up 47.7 points to a record 6345.1, while the all ordinaries gained 49.4 points to a record 6346.7 points.
At 4.20pm on the Sydney Futures Exchange, the June share price index contract was 68 points higher at 6372 on a volume of 15,587 contracts.
Austock Brokers senior client adviser Michael Heffernan said a strong lead from Wall Street, coupled with positive commodity prices helped propel the market into record territory.
"It was a very positive day on the market today, it started off with a bang,'' he said.
"We had a good lead from Wall Street, you had the trifecta going there with the Dow Jones, the Nasdaq and the S&P almost up one per cent.
"When you get three rises over there of one per cent, you've got a fuel-injected start for our market.
"The energy and resources stocks were strong, as you would expect with the strong upwards move in commodity prices ... clearly I think it was a commodity-driven rise in the market today.''
The Dow Jones industrial average put on 111.09 points to 13,326.22, the Standard & Poor's 500 Index added 14.38 points to 1,505.85 and the Nasdaq gained 28.48 points to 2,562.22.
Locally, the big miners were stronger, with BHP Billiton picking up 28 cents to $31.28 and rival Rio Tinto adding 82 cents to $92.82.
[Endret 28.05.07 08:49 av Grey]
|Weak commodities weigh on mining stocks
May 15, 2007
LOWER commodity prices drove the Australian sharemarket lower at midday, with the big miners losing ground.
At noon (AEST), the benchmark S&P/ASX200 index was down 37 points at 6308.1, while the all ordinaries lost 35.2 points to 6311.5.
On the Sydney Futures Exchange, the June share price index contract shed 43 points to 6324 on a volume of 7,555 contracts.
“The market's down predominantly due to weaknesses in commodities with BHP down significantly and and Rio down a little,” said Aequs Securities institutional dealer, Ric Klusman,
“We're also expecting a low figure for the US consumer price index tonight, which is probably good, but will mean the US dollar will get weaker,” he said.
“If the CPI's low, the Aussie dollar will get higher, putting additional pressure on our miners.
“The fall in copper is rattling the big miners at the moment, as well,” he said.
At 1203 AEST, BHP Billiton had dropped 41 cents to $30.87, while Rio Tinto was down two cents at $92.80.
At 1207 AEST, the energy sector was the worst performing on the local bourse, weighed down by the biggest oil stock, Woodside Petroleum, which lost $1.14, or 2.61 per cent to trade at $42.56.
Santos dropped five cents to $12.93 and Oil Search shed five cents to $3.87.
At 1210 AEST, the spot price of gold was $US669.50, down $US3.55 on yesterday's Sydney close.
The gold miners were patchy, with Lihir posting impressive growth of six cents or 1.95 per cent to $3.14, while Newcrest languished, shedding 33 cents to $22.50, as did Newmont, down eight cents to $4.89.
The banking sector also was choppy. Westpac lifted one cent to $27.77, while the Commonwealth Bank lost seven cents to $54.13.
NAB shed 30 cents to $42.95 and the ANZ lost 17 cents to $29.82.
Media stocks were mostly unimpressive, with the exception of News Corporation, which gained 56 cents or 2.01 per cent to $28.43 while its non-voting scrip also was up by 44 cents to $26.16.
Fairfax was steady at $5.08, as was the Ten Network at $3.15.
PBL shed 42 cents to $21.35 and the Seven Network was down three cents to $11.87.
Telstra dropped one cent to $4.89, and its instalment receipts also lost one cent to $3.43. Singapore Telecom, which owns Optus, gained four cents to $2.69.
The big retailers lost ground, with supermarket giant Woolworths losing five cents to $28.51 and rival Coles Group shedding 11 cents to $17.78.
At 1224 AEST, the top traded stock by volume was Qantas Airways, with 48.39 million shares traded worth $254.66 million. The Flying Kangaroo's shares were trading at $5.27, up four cents.
Market turnover was 801.8 million shares worth $2.61 billion, with 450 companies trading higher, 618 lower and 405 unchanged.
[Endret 28.05.07 08:49 av Grey]
|Energy status lift from gas bonanza
May 15, 2007
WEST Australian gas reserves have put Australia on the brink of being a world energy superpower, with significant implications for both the Australian dollar and federation.
The predictions by leading Asian economist Ken Courtis, the founder and principal of Next Capital Partners, were endorsed by resource experts at the Future Summit yesterday.
The summit also unveiled a series of dramatic changes in the resources industry that will affect the long-term outlook for miners.
Minerals Council of Australia chief executive Mitch Hooke said that while China and India relied on ever-increasing amounts of energy to maintain their growth and were reluctant to embrace greenhouse abatement measures, the incredible amounts of pollution caused by inefficient coal-burning would force them to modify their polices.
Nuclear and other low-carbon emission energy sources would play a bigger part in their mix of energy sources, but natural gas would be vital.
Former West Australian premier Richard Court noted six new liquefied natural gas projects were currently under consideration.
Dr Courtis said Australia's political stability made it a preferred supplier, which would deliver big rewards via bigger deals and higher prices.
But he warned that the repercussions of a gas- and mineral-driven boom would, in time, drive the Australian dollar above parity with the US currency and cause pressure on the federation, because Western Australia would want more of the cake.
The summit also heard Australia's eastern states would increasingly use gas rather than coal to supply their energy requirements.
One option would be to take gas from Western Australia, but this would be costly because they would have to pay export parity.
Natural gas producers said coal gas was more likely to supply NSW and Queensland, and Bass Strait's natural gas would service Victoria.
Zinifex chief executive Greig Gailey said strong mineral demand from China, India and other countries would continue.
But Mr Court warned supply was also being increased and in the long term would meet demand in many areas, including iron ore, which would be in balance in about three years.
Mr Gailey admitted the mining industry had been slow to respond to the higher demand because its exploration, investment and skills base had been run down by the long slump in the industry.
One of the features of the mining industry of 2007 was the consolidation among large companies and the emergence of state-owned enterprises.
Dr Courtis said two developments taking place in the world were unsustainable in the long term - the explosion of global debt and the race for ever-increasing amounts of energy between China, the US, Japan, Korea and India.
Eventually the global debt bubble would burst and with it would come much less confidence in paper money.
Commodities would become a more important store of value. History showed that when energy was in short supply wars could start.
Dr Courtis said the major energy consumers needed to co-operate in developing better sources of energy to take the heat out of the race.
[Endret 28.05.07 08:49 av Grey]
|What are the top 12 uranium projects in Australia? Several had been sleeping for decades and were re-awakened when the new uranium rush began in the country in the past two years. Mineweb's Australian correspondent who has followed the downs and ups for uranium exploration over the years filed this summary listing after consulting two old hands in the uranium sector.
Political differences will need to be addressed before some of these will see the light of day, but the momentum seems to be moving in favour of new uranium mine construction, although this may take longer in some States than others.
Four Mile (SA). Quasar Resources, subsidiary of Heathgate Resources 75%, Alliance Resources 25% An initial resource for part of Four Mile West was 3.9 Mt at 0.37% U3O8, for 32 million lbs contained U3O8. Grade and roll front-style deposits should provide excellent economics, given that Heathgate's Beverley mine is 10 km away. Alliance said drilling was confined to about 1 km2 covered by this resource statement is within more than 5 km2 of potential mineralisation.
Honeymoon (SA). Uranium One's proposed In Situ Leach (ISL) mine has key permitting from the SA government and was slotted for development in 2009 but may now dovetail into Uranium One's broader global planning - after its acquisition of assets in Kazakhstan.
Jabiluka (NT). Energy Resources of Australia, controlled by Rio Tinto plc. One of Australia's long-mothballed deposits with reserves of 12.8 Mt at 0.52% U3O8 and a measured-to-inferred 21.07 Mt at 0.46% U3O8, plus a 1 million oz gold deposit. ERA's need to streamline development, subject to Aboriginal landowner sanctions, may have eased with the higher uranium price making Ranger's vast lower grade stockpiles economic to work too.
Kintyre (WA). Rio Tinto may target a 2010-11 development with strong support from the local Martu Aboriginal people. Rio Tinto has outlined significant scope for other metals. The measured to inferred resource of 12.7 Mt at 2.75 kg/t for a contained 34,924t of U3O8 is considered ultra conservative by many observers.
Bigryli (NT). Energy Metals Ltd 53.3%, Paladin Resources 41.7%, Southern Cross Exploration 5%. There is an inferred-indicated resource of 14.3 M lbs of U3O8 and 16.3 M lb of vanadium pentoxide. The JV began a major new drilling programme in May, focussing mainly on targets outside the resource envelope. The JV has a good working relationship with local Aborigines.
Yeelirie (WA). A mothballed WMC Resources advanced project from the 1980s now in BHP Billiton's hands. BHP has remained low profile but this is Australia's technically best-packaged deposit for development. Yeelirrie has an indicated 35 Mt at 1.5 kg/t for 52,500t of U3O8.
Skal-Valhalla (Qld). Now controlled by half owner Paladin Resources which has an advanced takeover of partner Summit Resources. Skal has an indicated-inferred 7.712 Mt at 1.095 kg/t for 8,4506 of U3O8 while Valhalla has 33.3 Mt at 0.781 kg/t for 26,040t contained U3O8. French utility Areva is in the mix with an offtake-equity arrangement with Summit that is yet to be resolved.
Crocker Well (SA). PeninNini Minerals Ltd-Sinosteel Corporation. The most advanced of this JV's Curnamona Basin JV with resource of 19.8 million lbs of U3O8and an ambitious target of development within three years. Politics are highly favourable, being in SA and in a region of high unemployment.
Centipede (WA). Nova Energy's most advanced deposit in the Lake Way area near parent Oxiana Ltd's Wiluna gold mine. This shallow, flat lying and soft dig deposit has appealing economics but must await the eventual departure or softening anti-uranium stance of Premier Allan Carpenter. The inferred resource is 7 Mt at 0.63 kg/t for a contained 4,410t of U3O8.
Ben Lomond (Qld). Canada's Mega Uranium gained this project through takeover of Australian company Redport. This long mothballed target was established by a group of international utilities and has an indicated 1.328 Mt at 0.27% U3O8 for 7.9 M lbs U3O8, and an inferred 602,585t at 0.21% for 2.8 M lbs U3O8.
Mount Gee (SA). Marathon Resources has undertaken more detailed exploration on this old discovery with consultants recommending an underground mining operation in the North Flinders Ranges. Mt Gee now has an inferred 45.5 Mt at 0.068% U3O8, or 69 M lbs of contained U3O8.
Mulga Rocks (WA). Prospector Michael Fewster won a court hearing in early May for full ownership of this remote Mulga Rock project which had been a 1980s discovery by PNC of Japan. Fewster has links with Perth-finance group LinQ Resources Fund and another company. Uranium Equities Ltd which had claimed 50% but Supreme Court Judge Le Miere had said there was no enforceable contract with Fewster. Late 1990s data shows that the Emperor Shogun and Ambassador deposits had a non-JORC Code 10.8 Mt at 1.2 kg/t for 13,000t of contained U3O8.
[Endret 16.05.07 04:39 av Grey]
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|Norsk Hydro satser i WA
Norsk, minnow explore bauxite
Nigel Wilson, Energy writer
May 16, 2007
FALLOUT from international aluminium industry consolidation persists with Norsk Hydro, the world's third-largest aluminium supplier, agreeing to investigate Mitchell Plateau bauxite reserves with little-known Perth company United Minerals Corporation.
Norsk Hydro, 42 per cent owned by the Norwegian Government, said it had signed a memorandum of understanding with United Minerals "to explore the possibility of bauxite mining and alumina refining in the Kimberley region in Western Australia".
A combined mine and refinery could cost up to $5 billion with construction work beginning within five years, UMC executives say.
The Mitchell Plateau bauxite reserves have been known for decades. Although they are rich in alumina, they have been regarded as non-commercial because of their remoteness and the area's environmental values.
Norsk said yesterday a final agreement with UMC would give Hydro a 75 per cent holding in a potential bauxite and alumina project "in line with Hydro's strategy to grow in primary aluminium production and raise its equity coverage of the key raw material, alumina".
Last year Norsk Hydro was promoted as being a likely third party in the merger between RUSAL and SUAL to create United Company RUSAL, the world's biggest aluminium group, but that slot went to Glencore's aluminium business.
The merger ultimately led to Alcoa, up until then the No1 aluminium group, making its hostile $US33 billion offer for Alcan.
Norsk Hydro is currently merging its oil and gas business with Norway's Statoil as part of a strategy to develop as a leading aluminium and power company.
In Perth, UMC, formerly United Kimberley Diamonds, which has long been associated with corporate identity Alan Birchmore, said success of the Kimberley project would depend on achieving a large and reliable supply of bauxite at an acceptable grade and an equally large and reliable supply of gas at commercially viable prices.
The remote Mitchell Plateau is the nearest point on-shore to the Browse Basin, where major multinationals are gearing to invest billions on export LNG projects.
These plans are increasingly questioned by environmentalists and Aborigines. But UMC chief executive Jim Richards said the potential for a substantial integrated development was heavily driven by the Browse gas projects and the West Australian Government's new domestic gas reservation policy.
This requires developers of export LNG projects using onshore plant to set aside 15 per cent of their project reserves for domestic gas use if commercially viable. But Mr Richards said it might ultimately be decided that an alumina refinery using Mitchell Plateau bauxite was more economically located in the south of the state, fuelled possibly by LNG, not necessarily from the Browse.
Mr Richards said that while UMC had yet to complete a drilling and evaluation program of its Kimberley properties, the company was confident it held more than 300 million tonnes of recoverable bauxite, which would be sufficient to supply a world-scale alumina refinery.
[Endret 28.05.07 08:51 av Grey]
|4 grunner til hvorfor aksjemarkedet skal videre opp, og spesiellt hvorfor det australske markedet skal videre opp:
Four Reasons Why This Bull Market Will Continue
As promised, here are our four main reasons as to why we think this stock market will continue to push higher and higher in the months and years ahead...
Reason #1 - There is a veritable wall of money sloshing around the financial services industry. Every day, millions more compulsory superannuation dollars enter the stock market. The simple law of supply and demand dictates that this will naturally push stock prices higher.
Reason #2 - The insatiable private equity appetite for acquisitions, whatever the company, whatever the size. It seems no company is safe, even companies as big as Telstra or Rio Tinto. Forget footy tipping - picking the next takeover target is rapidly becoming the truly national pastime. It may seem stranger than fiction, but a recent report suggested BHP Billiton could be bought by a private equity group, broken up into littler pieces, each of which would be re-sold back onto the stock market, and the whole kit and caboodle could be worth more than double the current BHP share price. If that is correct, BHP and many other big companies are today severely under-valued.
Reason #3 - Some stocks, particularly some larger stocks, are just plain cheap. We mentioned BHP above in the context of takeover potential. But ignoring that, and despite the share price having risen by over 20% in the past 3 months, it still trades on a forward price to earnings ratio (P/E) of only about 10 times. The stock is cheap because too many people think commodity prices are ripe for a fall. Over the medium to long-term, we think commodity prices will continue to rise, meaning BHP Billiton continues to be great value at today's prices.
Reason #4 - The resources boom is just beginning. Chinese demand for resources such as copper and oil is strong and growing. Middle Eastern political instability is sadly a fact of life these days, and since most of the proven oil reserves in the world are also in that region, oil prices are likely to stay high and go even higher. Uranium will account for a much greater share of world energy production over the ensuing decades. Gold supply is short and demand is strong. If all that isn't enough, a recent report on Bloomberg quoted prominent investor Marc Faber as saying "the up wave of the (current commodities) cycle is likely to last another 15 to 20 years".
These Words Of Warning Could Save You Thousands of Dollars
If you think all that sounds good, we're guessing you'll be keen to plough more money into the stock market. But before you do that, we'd like to offer some cautionary words of warning...
- Not every stock will rise in this bull market. In fact, we think many of the most popular companies quoted on the stock exchange are significantly over-valued. Hence making an investment in them would be akin to placing a few thousand dollars on the black at your local online casino's roulette wheel.
- Following on from that, we firmly believe this is a stock picker's market. Blindly buying shares in the latest uranium float or because your great uncle's late milkman's son's best friend's sister's boyfriend has a hot tip for a tiny West Australian platinum miner is not going to set your portfolio alight. On the other hand, if you have the time, skill and knowledge to be able to dedicate to picking stock market winners, the world is potentially your oyster. And as an aside, we suggest you apply for the vacant Chief Investment Officer position at Warren Buffett's Berkshire Hathaway.
- Stock markets do not go up in straight lines. Over time, they have and should continue to rise inexorably. But, from time to time, they will wobble and fall. When that happens, and it last happened just over 2 months ago, don't panic. Let us repeat... do not panic. In fact, it's during those times when it usually pays to get greedy, buying more shares when everyone around you is selling in a mad panic. But, as ever, make sure you buy the right stocks!
- Not every stock you buy will be a winner. Stock market losers are as inevitable as taxes and death. That's the bad news. The good news is that you only have to be right about 60% of the time in order to be a big stock market winner. Unlike the roulette wheel, where the most you can do is double your money in any single wager, on the stock market, you can make much more than a 100% profit on one single stock market winner. On the flipside, the most you can lose is 'only' 100% of your initial investment. Even so, we suggest you avoid 100%ers!
[Endret 28.05.07 08:51 av Grey]
|Banks and miners lift stocks to record high
May 17, 2007
THE Australian stock market closed in record territory buoyed by strong gains in the resources and finance sectors after a solid lead from Wall Street overnight.
The benchmark S&P/ASX200 index was up 71.3 points to a record 6365.9 while the all ordinaries gained 69 points to hit a record of 6370.1.
At the close of day trading on the Sydney Futures Exchange, the June share price index contract was 87 points higher at 6394 on a volume of 18,437 contracts.
CMC Markets senior dealer James Foulsham said investors hit the market today looking to make a quick buck after the positive lead from Wall Street.
“It's been a pretty livewire day today, the market has been kicking on very strongly,” he said.
“There has been some good money to make today, and we've seen people getting in and out looking to make some short-term cash.
“I think people have seen how strong the market has been the last few weeks and are just trying to get in and out and make some quick money.
“We've seen some really good leads from Wall Street recently, it has been really strong over there ... you throw that into the equation and things are looking very positive for our market.”
The big miners were stronger, with BHP Billiton gaining 54 cents to $31.48 and rival Rio Tinto adding $1.65 to $92.30.
Iron ore hopeful Fortescue Metals Group surged $3.90 to $37.40 after the company inked an offtake agreement with China's third largest steel mill, Tangshan Iron and Steel Group.
The spot price of gold was lower and it closed Sydney trading at $US664 an ounce, down $US8.15 an ounce from yesterday's local close.
The gold miners were mixed, with Newcrest picking up 86 cents to $22.70, Lihir Gold gaining six cents to $3.21 and Newmont dipping one cent to $4.84.
The banks were mixed, with the National Australia Bank picking up 54 cents to $43.19, ANZ adding 27 cents to $29.82, the Commonwealth Bank finding 65 cents to $54.52 and Westpac dipping 63 cents to $26.95.
Biotech company Peptech gained 7.5 cents to $1.685 after the company posted a $137.7 million half year profit, a jump of 2,415 per cent on the previous year, and a record for the company.
Explosives company Orica dropped 46 cents to $31.59 after it said it was deciding whether to take part in the auction for private equity firm Industri Kapital's Dywidag-Systems International business.
Brewer Lion Nathan picked up eight cents to $9.15 after it posted a near nine per cent lift in first-half earnings to $162 million.
The retailers were stronger, with Woolworths putting on 31 cents to $28.81, Harvey Norman rising 16 cents to $5.37 and David Jones adding four cents to $5.26.
Australia's second largest retailer Coles Group gained nine cents to $17.77 after it reported a small rise in third quarter sales to $8.4 billion.
The media sector was mixed, with New Corp finding 21 cents to $28.41, its non-voting shares rising 14 cents to $26.25, Fairfax inching 12 cents higher to $5.10 and the James Packer-led PBL dipping eight cents to $21.00.
The energy sector was mixed following a dip in the oil price overnight, with Woodside adding $1.14 to $43.24, Santos finding 20 cents to $12.80 and Oil Search steady at $3.90.
Sigma Pharmaceutical was the most traded stock on the market today, with 94.1 million shares changing hands worth $223.4 million.
Market turnover reached 2.08 billion worth $7.39 billion, with 707 stocks moving up, 546 down and 378 unchanged.
[Endret 28.05.07 08:52 av Grey]
|Resource projects rise 24pc: ABARE
May 17, 2007
BHP Billiton and rival Australian mining and energy companies are planning a record $43.4 billion of new projects, driven by rising prices and demand, the government's commodity forecaster said.
The value of advanced projects to build mines and oil and gas fields is 24 per cent higher than the $34.9 billion reported in October by the Canberra-based Australian Bureau of Agricultural and Resource Economics.
The bulk of the increased spending came from the approval of three new iron ore projects valued at $7 billion, the bureau said.
Mining companies are boosting output as prices for commodities reach records, driven by demand led by China, the world's fastest growing major economy.
Prices for iron ore, which is used to make steel, have risen for five consecutive years, while nickel, lead and tin also touched records this year.
"These numbers show that investment remains strong, enhancing the prospects for sustained growth in the Australian mineral resources sector," said Phillip Glyde, executive director of the research bureau.
The nation has a record 279 major projects planned, with 91 considered to be "advanced".
There were 188 projects at less advanced stages or which were undergoing feasibility studies, the bureau said.
Labour shortages and the higher costs of material and construction continued to affect the timing and cost of some projects, Mr Glyde said.
"Project cost pressures and delays are unlikely to ease in the short to medium term while this level of development activity continues," he said.
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|Fortescue now No. 3 'miner'
Andrew Forrest … the shares he bought for 8c each were selling yesterday for $38.50.
May 18, 2007
ALTHOUGH it is at least a year away from producing any iron ore or profits, Fortescue Metals yesterday became the third biggest mining company in Australia by market value, trailing only its Pilbara arch-rivals, BHP Billiton and Rio Tinto.
Fortescue, led by controversial Perth entrepreneur Andrew Forrest, has surpassed Alumina and Zinifex in market value despite very little support from Australian institutional investors.
Fortescue's share price yesterday reached a record high of $38.50 after it signed another offtake agreement with a Chinese steelmaker in Beijing.
That took its market value past the $10 billion mark for the first time.
Fortescue shares closed $3.90 higher at $37.40.
Mr Forrest's 39 per cent stake - which he acquired for 8c a share - is worth $3.8 billion.
But despite the stunning share price rise since he vended his iron ore tenements into the company in 2003 - and plans to increase production from an initial 45 million tonnes a year to more than 100 million tonnes a year - many local institutions seem unwilling to risk investing in Fortescue.
The top shareholders, as listed by Bloomberg, are primarily from North America and Europe, with only one Australian name, the Commonwealth Diversified Share Fund, which owns just 9283 shares.
Fund managers contacted by the Herald said they did not invest in Fortescue, in part because there was no price/earnings ratio - because there were no earnings - to help them value the company.
Fortescue has yet to earn money since it is at least a year away from shipping the first ore from its $3.2 billion Pilbara iron ore project.
"There's a massive valuation put on Fortescue at the moment," said Angus Geddes of Fat Prophets.
"They are not producing anything. They are not making any money.
"There are a lot of potential risks with that company getting into production in the future."
He said Fat Prophets instead held shares in BHP and Rio.
In a recent report, BBY analyst John Veldhuizen, one of only two analysts in Australia to formally cover the stock, predicted Fortescue would lose $234 million this year and $177 million next year before turning a $552 million profit in 2009.
John Robinson, the chairman of listed fund Global Mining Investments, said its decision to invest in miners like Brazil's CVRD, BHP and Rio was made based on "underlying value" and also on management quality.
"With Fortescue, as we know, it's trading at a very high price to earnings ratio," he said. "It remains to be seen whether that is justified."
White Funds Management's Atul Lele said his fund had stakes in BHP, Rio, Alumina, Zinifex and others but not Fortescue.
"There's obviously some doubts still remaining regarding the project's timing," he said. "The potential for steel prices to fall from here remains large and that will have flow-on effects into the iron ore market."
Mr Lele said he expected iron ore prices to start falling in 2009, the year Fortescue expects to reach its initial production target.
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|Stocks tumble on weak commodities
AUSTRALIAN stocks slumped to end the week lower after resources stifled the market amid weaker commodity prices.
The benchmark S&P/ASX200 index ended down 53.4 points at 6312.5, while the all ordinaries shed 50.4 points to 6319.7.
On the Sydney Futures Exchange, the June share price index contract retreated 58 points to 6336 on a volume of 17,774 contracts.
“The market has been a bit weaker today, there wasn't much of a lead from the US market overnight,” CMC Markets senior dealer James Foulsham said.
“A lot of it is cutting positions before the weekend.”
Mr Foulsham said it was mainly mining giants BHP Billiton and Rio Tinto putting a drag on the market, while iron ore hopeful Fortescue Metals gave back a lot of its gains from yesterday.
“Some of the commodity prices were weaker overnight and it's just on the back of that,” Mr Foulsham explained, adding that zinc and copper had both lost ground.
BHP Billiton descended 77 cents to $30.71, while Rio Tinto backtracked $1.39 to $90.91 and Fortescue Metals slumped $2.95 to $34.45.
Qantas shares gave back three cents to $5.22 after its chairwoman Margaret Jackson and board member James Packer quit the airline's board after Airline Partners Australia's (APA) failed $11.1 billion takeover bid.
Mr Packer's PBL surrendered six cents to $20.94, after Eddie McGuire announced he will step down as chief executive of Nine Network but insisted he wasn't pushed.
Elsewhere in media, Fairfax was 13 cents weaker at $4.97, News Corp added four cents to $28.45 and its non-voting stock climbed 15 cents to $26.40.
Energy interests were mixed, with Woodside swelling eight cents to $43.32 but Santos relinquishing 11 cents to $12.69.
The price of spot gold in Sydney ended $US6.15 lower at $US657.85 per fine ounce.
Miners of the precious metal followed the decline, with Lihir losing five cents to $3.16 and Newcrest surrendering 50 cents to $22.20.
Banks were mostly higher, with Commonwealth finding 11 cents to $54.63, ANZ lifting five cents to $29.87 and Westpac ahead five cents at $27.00, but NAB reversed 21 cents to $42.98.
US stocks finished slightly weaker overnight after being in and out of positive territory earlier after an upbeat report on business conditions and data suggesting the strength of the US job market signalled a reduced chance of interest rate cuts by the US Federal Reserve.
Shares of interest rate-sensitive plays including banks declined, but energy shares rose to record highs after oil prices jumped by more than $2 a barrel.
The Dow Jones industrial average declined 10.81 points to end at 13,476.72. The Standard & Poor's 500 Index dipped 1.39 points to finish at 1,512.75.
The Nasdaq Composite Index shed 8.04 points to close at 2,539.38.
Retailers were mostly lower, with Australia's largest grocer Woolworths tumbling 59 cents to $28.22 and Coles retreating 11 cents to $17.66, but David Jones managed to eke out a gain of two cents to $5.28.
The most traded stock of the day was minerals explorer Jervois Mining, which ended up 0.7 cents at 2.9 cents after it said it was continuing talks with a Chinese investment company for a joint venture to develop its Young nickel laterite project in south-western New South Wales.
Jervois saw 266.46 million of its shares, worth $7.29 million, change hands.
Overall market turnover was 1.78 billion shares worth $5.36 billion, with 570 stocks up, 717 down and 336 unchanged.
|It's official: $1.2bn deal makes Twiggy the third force in iron ore
Rowan Callick, China correspondent
ON a blustery day in Beijing last week, in the Great Wall Sheraton hotel, the unthinkable became the inevitable.
The signing of a $1.2 billion a year contract on Thursday confirmed that Andrew Forrest, the silver-spoon upstart, will around this time next year emerge as not just a paper billionaire, not just a figure of controversy, fear and fun, but as the third force in Australian iron ore.
It might still seem drab to those thrilled a decade ago by the concept of a "new economy", it might even be disliked by those Australians who find mining altogether distasteful. But there is no bigger game in town than iron ore.
Last year we sold $7.6 billion of it to Chinese steel mills - our largest single export item by a very long way.
As long as "Twiggy" Forrest can prove up his 932 million tonnes of ore now classed as "probable", his mine in Western Australia's Pilbara now looks unstoppable. This is an outcome on which many banks and other investors have bet the $3.7 billion it is costing to build Fortescue Metals Group's mine, railway and port there.
His contract with Tangshan Iron & Steel Group for up to 20 million tonnes of iron ore a year follows a similar deal signed with Baosteel in March. They are respectively China's third and top steel producers, and these are the two biggest single deals, in annual production terms, that any Australian firm has yet signed, surpassing even the liquefied natural gas contract with China, albeit that one was very charitably priced.
Fortescue has also signed smaller contracts with Wuhan Iron & Steel for up to 7 million tonnes per year and with Fengli for 4 million tonnes per year.
Forrest could still come unstuck personally, as the Australian Securities & Investments Commission continues to press charges that he deceptively claimed in 2004 to have secured "binding" funding and construction contracts with Chinese partners.
But FMG seems set to survive even a personal defeat for Forrest at the hands of ASIC. The new contracts are kosher. And progress on the mine last month improved 6-7 per cent, Forrest said in Beijing, while the port was 3-4 per cent ahead of schedule - although construction of the railway has been set back by three cyclones.
As a result of the ASIC case, Forrest said in Beijing: "We have lost time we will never recover - but the company has been able to get on with its life and raise money, still with the absolute and utter support of China. I don't have any regrets."
Wang Tianyi, the chairman of Tangshan, which is based in Hebei province 150km east of Beijing, said at the signing ceremony that "for us, Fortescue is an old friend, from the earliest stage" in the project.
"When everyone was wondering whether it was going to be successful, we believed Andrew Forrest and his team would be a success."
He said the company aimed to be the top steel mill in the world, and that FMG would be its "preferred partner" in this drive.
That helps explain how Forrest has recovered from that row - which seemed crippling at the time - with his three former Chinese partners, led by China Metallurgical Construction Corp.
The Chinese players are all ultimately government-owned, and must in extremis respond to policy dictated at the highest levels in China. But in many day-to-day operations, they behave - and have the personal incentives to behave - extremely competitively, even jealously.
So the situation is not like Japan Inc where in the past private firms have tended to collude and walk in lockstep under the guidance of powerful officials. In China, state firms often give lip service to officialdom while seeking to maximise their own autonomy, and above all to come out as top dog against their domestic rivals.
The ore shipped by FMG to Tangshan, Baosteel and the others will be bought at the price benchmarked by the annual contracts negotiated between the three biggest producers, BHP Billiton, Rio Tinto and Brazil's CVRD, and the major international steel mills.
Forrest said: "We get a lot of pressure to break away from the benchmark. When the price goes down, buyers love it, and when it doesn't they don't. It's a fair instrument.
"We're happy to be a volume competitor and a price follower." Especially since the price has kept leaping in each of the past four years, and most analysts are forecasting a further 5-7 per cent rise for 2008. And especially since his products are somewhat different from those of BHP and Rio, which might - despite successful testing of modest samples by main customers - prompt some pricing questions as the mine cranks up to full production.
China has now, after an initial hiccup, taken over from Japan the role of lead negotiator in the annual iron ore price negotiations. The talks' regular timetable has shifted from a cut-off of April 1, when the Japanese financial year starts, to January 1, for the Chinese financial year.
It would be strange if the major Chinese customers - whose total output rose 18.5 per cent last year, when the country turned into a net steel exporter - were not looking to the arrival of a big new producer as an opportunity to drive the price down.
It would be equally strange if Forrest were not now, as he says, "a happy follower" of the Big Three.
The Indian Government's recent imposition of an export tax costing $8.50 per tonne of iron ore will reinforce the Big Three's dominance and capacity to control price. India supplied 23 per cent of China's imported ore last year.
But as volume catches up with demand in the years ahead, the balance might swing back to the buyers, and Forrest, as the new boy on the producers' block, will come under the greatest pressure.
His commitment to China as virtually his sole international customer could then become a liability, as - motivated by the chance to derail price-settin
|Miners, banks lead sharemarket to fresh record
AUSTRALIAN stocks burst back into record territory today, recovering all of Friday's losses, with the miners and banks the major movers.
At the 4.15pm (AEST) close, the benchmark S&P/ASX200 index was up 56.5 points at 6369, while the all ordinaries gained 52.8 points to 6372.5.
On the Sydney Futures Exchange, the June share price index contract added 46 points to 6382 on a volume of 18,007 contracts.
ABN Amro Morgans private client adviser Bill Bishop said the market had benefited from a strong Friday close on Wall Street, and a rise in commodity prices.
"A good knock by the Americans, a handy run over there on Friday night, and a rise in the commodity prices have set the scene," Mr Bishop said.
"A very strong performance from the banks in particular. Macquarie Bank is down, but it's just gone ex (dividend).
"St George Bank is up almost two per cent. Commonwealth bank is up, NAB's up. They all had a massive run.
"The miners have had a big day. Commodity prices have risen quite strongly."
Mr Bishop forecast that the markets would continue to trade solidly tomorrow.
"It's a reasonable bet to say that tomorrow should be a solid day," he said.
"It's a jolly good market. Watch this space, the oceans of cash are lapping at the shores once again."
The bellwether resources stocks performed well on stronger commodities prices.
BHP Billiton ascended 47 cents to $31.18, while Rio Tinto leapt $1.38 to $92.29.
Meanwhile, the banks were mostly higher, with Commonwealth finding 80 cents to $55.43, ANZ six cents to $29.93, and NAB eleven cents to $43.09.
However, Westpac lost three cents at $26.97. St George jumped nearly two per cent, up 73 cents to $37.48, and investment banking giant Macquarie lost 10 cents to $97.
Energy stocks were mixed, despite a slight rise in the crude price on Friday.
Woodside fell two cents to $43.30, but Oil Search added four cents to $4, and Santos was up five cents at $12.74.
The price of spot gold in Sydney was $US3.55 higher than Friday's Sydney close, at $US661.40 per fine ounce.
In Perth today head of the world's fourth largest gold producer Gold Fields Ian Cockerill said the outlook for gold was positive amid strong demand for the yellow metal.
Mr Cockerill told delegates at the Paydirt gold conference that the gold price was trending upwards.
But the local miners showed little of this buoyancy, with Newmont adding just two cents to $4.77, Lihir was up seven cents to $3.23, and Newcrest was up four cents to $22.24.
Media stocks were mixed, with New Corp finding 40 cents to $28.85, and its non-voting shares were 45 cents stronger at $26.85.
Fairfax dropped four cents to $4.93, while the James Packer-led PBL dipped two cents to $20.92.
The retailers were in better shape, with Australia's largest grocer Woolworths rising 49 cents to $28.71.
Rival Coles inched up four cents to $17.70 and upmarket retailer David Jones grew eight cents to $5.36.
Telstra lost one cent to $4.85.
And former takeover target Qantas rose five cents to $5.27.
Melbourne-based Slater and Gordon made legal and corporate history today as the first law firm in the world to list on a stock exchange. Slater and Gordon closed at a 40 per cent premium in a solid debut, up 40 cents to $1.40.
Preliminary market turnover was 1.92 billion shares worth $5.7 billion, with 714 stocks up, 561 down and 359 unchanged.
|Banks lead sharemarket to lower close
May 22, 2007
AUSTRALIAN stocks have ended the day on a lower note with banks leading the bourse lower, but a resolute resources sector softened the slide.
At the 4.15pm (AEST) close, the benchmark S&P/ASX200 index was down 30.2 points at 6338.8, while the all ordinaries lost 22.3 points to 6350.2 but touched a new intraday high of 6390.3.
On the Sydney Futures Exchange, the June share price index contract dropped 10 points to 6360 on a volume of 14,943 contracts.
"We're having a little bit of a breather today," Macquarie private client adviser Helen Spencer said.
Ms Spencer said offshore markets were partly to blame for the lower trading.
"The China market is a bit weaker today, which looks like it's feeding through to us, with a bit of profit-taking," she said.
"The banks are taking a bit of a back step. But against that trend, the resources sector is predominantly trading higher, certainly it seems at the cost of some of the industrials."
Ms Spencer said that a slight recovery in commodity prices overnight helped the miners.
Among the major banks, Commonwealth declined 48 cents to $54.95, NAB shed 31 cents to $42.78, ANZ also backtracked 31 cents to $29.62 and Westpac gave back 27 cents to $26.70.
But the resources sector managed to stay afloat, with BHP Billion adding 19 cents at $31.37 and Rio Tinto improving 31 cents to $92.60.
The spot price of gold in Sydney had ticked slightly higher, up US75c at $US662.45 per fine ounce.
Miners of the precious metal were mixed, Lihir was six cents weaker at $3.17, but Newcrest was up 10 cents at $22.34.
Fellow gold miner Newmont also added 6 cents to $4.83 after announcing plans to slash jobs at two of its major Australian operations amid rising labour and material costs.
Queensland Cotton added 36 cents, or just over seven per cent to $5.47, after Belgian-based commodities supplier Louis Dreyfus Commodities BV made a $150 million takeover offer, trumping a bid by Singapore-based Olam International.
Troubled wheat exporter AWB lost 37 cents, or 10 per cent, to $3.33 after the federal government decided to keep the single-desk system for the export of Australian wheat but said it planned to shift the monopoly's powers to a new body.
The local bourse's lower close came despite a positive lead from Wall street overnight, with US stock indices finishing mostly higher on the latest round of deal news, including China's $US3 billion investment in private equity powerhouse Blackstone Group, but rising oil curbed gains.
The Dow Jones industrial average declined 13.65 points, or 0.10 per cent, to end at 13,542.88, after earlier climbing to an intraday record high at 13,586.03.
The Standard & Poor's 500 Index rose 2.35 points, or 0.15 per cent, to finish at 1,525.10. The Nasdaq Composite Index gained 20.34 points, or 0.80 per cent, to close at 2578.79.
Media was mostly higher, with News Corp firming 13 cents to $28.98, its non-voting stock putting on 19 cents to $27.04 and PBL inching up one cent to $20.93, but Fairfax was the odd one out, five cents poorer at $4.88.
Retailers were mostly lower, with Woolworths surrendering 21 cents to $28.50, Coles tumbling 10 cents to $17.60 and David Jones reversing 16 cents to $5.20.
Telecommunications giant Telstra retreated five cents to $4.80, while national carrier Qantas rose by five cents to $5.32.
|Metals dip sees sharemarket open in red
May 25, 2007
THE Australian sharemarket continued its downwards trajectory from Thursday after opening lower from weak base metal prices and a poor lead from Wall Street.
At 10.15pm (AEST), the benchmark S&P/ASX200 index had dropped 49.3 points to 6229.8.
The all ordinaries dumped 45.8 points to 6252.80.
On the Sydney Futures Exchange, the June share price index futures contract was 52 points lower at 6,246 on a volume of 6275 contracts.
This follows Thursday's trading during which the three indices lost over 1 per cent.
US stocks fell overnight, as interest-rate concerns spurred investors to lock in profits from the market's recent rally.
The US market has been expecting an interest-rate cut to encourage economic growth later in the year.
All the major US indices fell after both the Dow Jones industrial average and Standard & Poor's 500 Index had hit intra-day trading records.
The Dow slid 84.52 points, or 0.62 per cent, to end at 13,441.13, swinging about 200 points during the session. Earlier, it had rallied to a record intraday high of 13,624.55.
The S&P500 dropped 14.77 points, or 0.97 per cent, to finish at 1,507.51, after earlier climbing nearly two points above its record closing high set on March 24, 2000, in the waning days of the dot-com bubble.
The Nasdaq Composite Index fell 39.13 points, or 1.52 per cent, to close at 2537.92.
Shares in the major minors started negatively from the lower base metal prices with both over 1.5 per cent lower than Thursday's close.
BHP Billiton was down 70 cents to $30.30 and Rio Tinto dropped $1.71 cents to $92.29.
Banks were lower in the start of the morning trade, following interest-rate sensitive stocks on Wall Street dropping.
Commonwealth Bank slumped 18 cents to $54.54, ANZ lost 23 cents to $29.04, National Australia Bank contracted 30 cents to $42.20 and Westpac shrank 18 cents to $26.11.
ABN AMRO Morgans Ipswich manager Tony Russell said the market was down following Wall Street's lead and weaker commodities prices.
"Both precious metals, gold, oil prices, copper, zinc, all that all had some consolidation last night and we're seeing that in those stocks today," Mr Russell said.
"I think we'll probably see it weaken and these levels will probably be a little bit weaker with concerns going into Wall Street tonight."
"This time of year take into mind that a lot of the major institutions will close off their books, a bit of profit-taking for fund performances and no further re-investment in the market.
"That general weakness at this time of year is par of course."
Qantas continued to rise, gaining 14 cents to $5.60 after hitting an-all time high of $5.61 earlier, while Virgin Blue sliced off one cent to $2.63.
NYMEX July delivery crude settled down $US1.59 or 2.4 per cent at $US64.18 per barrel, moving from $US63.82 to $US66.15.
Energy stocks slipped, with Woodside Petroleum the biggest loser, down 29 cents to $44.37, Oil Search slid six cents to $3.88 and Santos was two cents lower to $12.80.
AWB continued to rise, up by six cents to $3.56 after losses earlier in the week.
In media, Publishing and Broadcasting was the only stock higher, by 11 cents to $21.22.
News Corp was the opposite, down nine cents to $28.73 with its non-voting stock losing six cents to $26.95.
Fairfax Media was flat at $4.81, with Seven Network and Ten Network Holdings both steady at $11.50 and $3.10 respectively.
Telstra shaved two cents to $4.77, while its instalment receipts also two cents lower to $3.30.
All of the major retail stocks continued the down trend of the morning.
Woolworths dumped 23 cents to $27.41, Coles shed one cent to $17.48 and David Jones sank four cents to $5.18.
The spot price of gold was $US653.70, $US7.65 lower than Thursday's close.
Gold stocks were mixed after the fall overnight from central banks selling larger than expected amounts, which set off triggers.
Newmont Mining was the sole one ahead among the major gold miners, ahead one cent up to $4.82.
Lihir Gold dropped seven cents to $3.14 and Newcrest Mining lost nine cents to $21.90.
[Endret 25.05.07 05:57 av Grey]
|For alle intressert i mining industrien saa boer man ogsaa holde ett oeye med service industrien som hoerer til. Her er en artikkel om god gamle Dyno Noble som er ute av Oslo Boers , men er aa finne paa ASX.
Dyno Nobel riding the boom
May 25, 2007
EXPLOSIVES maker Dyno Nobel remains bullish about its outlook as a booming global market for resources and commodities boosts demand for its core product.
Dyno, which yesterday held its first annual meeting since listing in April last year, said demand for explosive products and services, particularly in developing economies, was driving growth.
"From an outlook point of view, we are still fairly bullish," Dyno chairman Geoff Tomlinson told shareholders.
"We are experiencing a period of strong global demand for resources and commodities, and the indications point to this continuing.
"There may be weakness in some commodity prices but the quality and proximity of our resources to growth markets like China and India (mean) we are of the belief that growth will be with us for some time."
The company said its acquisition of a 29.9 per cent stake in Chinese explosives manufacturer Fabchem gave it a strong platform to enter China.
"It is an important acquisition for us as it gives us access to a trillion-dollar economy," Dyno chief executive Peter Richards told shareholders.
"We will be expanding in China without a doubt."
Analysts say Chile's Enaex, the largest explosives maker in Latin America, would be a good acquisition for Dyno.
Mr Richards said yesterday that expansion in Latin America was important but the expectations of vendors was "very high" and Dyno had to decide how much it was willing to pay.
"We pulled out of (a deal) in Germany, where we spent nine months in the process and decided that the price did not warrant the acquisition," he said.
Mr Richards also said there were opportunities to re-enter markets through strategies such as Dyno Nobel's recent acquisition of a 50 per cent stake in South Africa's Sasol Dyno Nobel.
Dyno Nobel had owned 40 per cent of SDN before European private equity firm Industri Kapital sold the Norwegian-based Dyno Nobel Group to a consortium led by Macquarie Bank in September 2005.
Parts of the group were sold to explosives and chemicals group Orica and the remaining operations were listed on the Australian stock exchange as Dyno Nobel Ltd.
Mr Richards said North America was also an important market, because it generated 85 per cent of group earnings, and the company was looking for zero to 2 per cent growth in volumes there this year.
In February, Dyno Nobel reported a net profit of $US83 million for calender 2006, up 10 per cent on its prospectus forecast.
Dyno Nobel also said it was strengthening its global alliances with commitments from Rio Tinto, Anglo Coal and Xstrata for it ammonium nitrate Moranbah project in Queensland. The project is its biggest investment to date at an estimated capital cost of $520 million.
Dyno said it was also keeping an eye on its carbon output.
Vice-president of safety and sustainability Ross Kelly said the company was auditing its emissions.
"We are not aiming to just meet our emissions requirements - we want to exceed those, and it is just good business to do so," he said.
"All businesses will have to consider the price of carbon ... but the implications of how it will affect the running of your business is not clear at this point."
Mr Richards said he was not worried about Dyno Nobel's performance as the world moved towards a carbon-constrained economy.
"I think carbon constraints just mean you are going to look for other sources to continually supply the ever increasing need for energy.
"We are aware of the issue but we don't see it as being a problem from our perspective."
Dyno Nobel shares fell 1c to $2.57.
PS idag er kursen 2.59, opp 0.78%
|Shares fall again as metals, Wall St take toll
May 25, 2007
THE Australian stockmarket closed lower today after concerns about a market correction in the US weighed on the Dow and weaker base metal prices hit local miners.
At the 16.15pm (AEST) close, the benchmark S&P/ASX200 index had dropped 26.3 points to 6252.8 while the all ordinaries index lost 25.3 points to 6273.3.
On the Sydney Futures Exchange, the June share price index contract shed 33 points to 6265, on a volume of 20,306 contracts, according to preliminary calculations.
CMC markets senior dealer Josh Whiting said the local bourse followed a negative lead from Wall Street, triggered by comments by former US federal reserve chairman Alan Greenspan bout the sustainability of the market.
"There's been a bit of a drag over in the US over comments made earlier in the week by Greenspan about a possible opportunity for a pullback in the market, and that's kind of flowed through the Asian region," Mr Whiting said.
"Metals were lower as well, so BHP's been the biggest dragger on the index today."
BHP Billiton fell 34 cents to $30.66 and Rio Tinto reversed $1.28 to $92.72.
US indices traded lower after stronger than expected housing figures doused hopes for an interest rate cut by the US Federal Reserve.
The Dow slid 84.52 points to 13,441.13 and the S&P500 dropped 14.77 points to 1507.51.
The Nasdaq Composite Index lost 39.13 points to close at 2,537.92.
Back home, banking stocks were lower, apart from the Commonwealth Bank of Australia, which lifted 66 cents to $55.36 after a broker upgraded its target price for the stock.
National Australia Bank shed 30 cents to $42.20, ANZ dipped 20 cents to $29.07 and Westpac fell 19 cents to $26.10.
Investment bank Babcock & Brown lost 61 cents to $31.39 despite upgrading its annual earnings forecast. Rival Macquarie Bank lost $2.55, or 2.77 per cent, to $89.45.
Making headlines today was APN News & Media, which picked up seven cents to $5.87, after shareholders of diversified media group voted down a $3 billion private equity offer led by major shareholder, Irish media mogul Tony O'Reilly.
Publishing and Broadcasting declined 15 cents to $20.96, News Corp lost nine cents to $28.73 and its non-voting scrip added four cents to $27.05.
Telstra lifted three cents to $4.82 and Qantas continued its upward trajectory, adding 20 cents to $5.66.
Qantas was the top traded stock by volume, with 117.57 shares worth $661.9 million changing hands.
Woodside Petroleum fell 36 cents to $44.30 as NYMEX crude settled down $US1.59 or 2.4 per cent at $US64.18 per barrel on Thursday night.
Gold miner Newcrest Mining shed 10 cents to $21.89 as precious metal's spot price fell to $US654.60, down $US6.75 on last night's close.
Preliminary national turnover was 2.01 billion shares worth $9.75 billion, with 545 shares rising, 728 falling and 340 unchanged.
[Endret 25.05.07 09:07 av Grey]
|Rio Tinto may join the fray for Alcan
May 28, 2007 - 12:44PM
Rio Tinto Ltd's name has been thrown into the mix as another possible bidder for Canadian aluminium producer Alcan Inc, after news reports said it had hired Deutsche Bank to advise on a possible bid.
If Rio Tinto has joined the fray for Alcan, it may find itself pitted against its larger rival and the world's biggest miner, BHP Billiton Ltd, which also is thought to be interested in Alcan.
A Canadian newspaper reported last week that BHP Billiton was in early stage talks with Alcan, after the Canadian miner rejected a $US27 billion ($A33.03 billion) takeover offer from US rival Alcoa, saying it was in talks with other parties.
ABM Amro analyst Rob Clifford said that, thus far, there still was no confirmation that either BHP Billiton or Rio Tinto were interested in Alcan.
"It is continued speculation, but ultimately one of these rumours is going to be true," he said.
"I think it is less likely (Rio being interested in Alcan) than some of the other bidders - CVRD, Anglo and Xstrata."
Companhia Vale do Rio Doce, or CVRD, the world's second biggest mining company, Swiss-based Xstrata Plc and UK-based Anglo American plc all have been pegged as potential predators for the aluminium producer.
Australian aluminium producer Alumina Ltd will be watching the proceedings eagerly, with further speculation a bid might be forthcoming if Alcan is successfully taken over.
Alumina owns 40 per cent of Alcoa World Alumina and Chemicals (AWAC), the world's largest alumina business, with partner Alcoa owning the other 60 per cent.
Rumours pegging Rio Tinto and BHP Billiton as possible bidders for Alcan have been circulating since February, with both mining giants cashed up as they ride the commodities boom and generate surplus cash.
A Rio Tinto spokeswoman declined to comment on the reports.
At 1205 AEST on Monday, Rio Tinto's shares were up $1.73 or 1.9 per cent at $94.45, BHP Billiton had risen 48 cents, or 1.6 per cent, to $31.14, and Alumina was 22 cents or 2.9 per cent higher at $7.80.
|Market unchanged despite positive start
THE stock market closed relatively unchanged today despite a positive start to the day, with strong gains among the miners offset by across the board falls.
At the 4.15pm AEST close, the benchmark S&P/ASX200 index had dropped 1.4 points to 6251.4 while the all ordinaries index added 1.7 points to 6275.0.
On the Sydney Futures Exchange, the June share price index contract was steady at 6271, on a volume of 12,989 contracts, according to preliminary calculations.
Macquarie Equities client adviser David Halliday said strong commodity prices and a positive Friday close on Wall St gave an initial spur to the market, but falls among industrial stocks dragged the bourse down this afternoon.
"I think everyone was expecting a big day and we rallied early, but I think the reality of this two-speed market that we've got," Mr Halliday said.
"The resources have held up, and in terms of things to buy they look like the cheapest and best-value stocks in the market at the moment. But as for everything else, it's not so easy.
"Outside of the resources, it's getting harder to find too much value in this market and as such you're seeing the resources move up, but overall the market's coming down because a lot of the industrials look pretty expensive."
With the US and UK markets closed for public holidays tonight, Mr Halliday expected another quiet day on the market tomorrow.
"Again, we might be a little bit directionless," he said.
The big miners were some of the few stocks to star today, on stronger commodity prices.
The world's biggest miner, BHP Billiton, added 47 cents to $31.13, while rival Rio Tinto jumped $1.43 to $94.15.
Banking stocks reflected the overall market trend, with the big four all weaker.
The Commonwealth Bank of Australia dipped one cent to $55.35, the National Australia Bank three cents to $42.17, ANZ three cents to $29.04, and Westpac one cent to $26.09.
Building materials company James Hardie Industries NV posted an annual profit, turning around an asbestos compensation-related loss last year.
The company made a net operating profit of $US151.7 million ($185.6 million) for the year ended March 31 compared with a loss of $US506.7 million for fiscal 2006.
James Hardie closed up 31 cents at $9.25.
Among energy stocks, Woodside Petroleum rose eight cents to $44.38, Santos was steady at $12.90, and Oil Search slipped one cent to $3.91.
Qantas shares set a record close for the third consecutive trading day after the national carrier said it would increase services to Los Angeles and South Africa next year and fly to South America for the first time.
Qantas closed eight cents at a record $5.74, while Virgin Blue lost four cents to $2.58.
At 4.33pm AEST the spot price of gold in Sydney was $US656.20 per fine ounce, up $US1.26 on Friday's close.
Gold miner Newcrest Mining was unchanged at $21.89, Newmont was down three cents at $4.80, and Lihir Gold also three cents to $3.10.
As the expectation grows that Publishing and Broadcasting will divest itself further of its "old media" assets, shares in the company rose 26 cents to $21.22.
PBL today said it was in talks to sell a further 25 per cent stake in its media joint venture, PBL Media, to partner CVC Asia Pacific.
Other media stocks were mixed, with News Corporation adding 31 cents to $29.04 and its non-voting scrip up 30 cents to $27.35.
Fairfax grew four cents to $4.84, Channel 10 by one cent to $3.10, but Channel 7 lost one cent to $11.49.
Telecommunications giant Telstra dropped six cents to $4.76.
Qantas was the top-traded stock by volume, with 55.07 million shares worth $317.39 million changing hands.
Preliminary national turnover was 1.51 billion shares worth $4.93 billion changing hands, with 573 shares rising, 706 falling and 342 unchanged.
|Perth pips Sydney in count of listings
May 29, 2007
SYDNEY's claim to the title of "premier state" has been dealt another blow, being overtaken by Perth as home to the biggest number of listed, tradeable companies in Australia.
Official figures from the Australian Stock Exchange show Perth has pulled ahead with 675 listed companies, compared with Sydney's 674, excluding non-tradeable duplicate listings.
Perth companies accounted for two out of every five company listings on the stock exchange last year, figures provided to the Herald show.
A spokesman for the ASX, Matthew Gibbs, said that a flurry of listings from junior mining companies was behind the Perth boom.
"Perth became the second largest home branch for listings in 1986 and in recent years has rapidly closed the gap between it and Sydney," he said.
Sydney's traditional rival, Melbourne, is in third place with 364 companies, followed by Brisbane's 185 and Adelaide's 92.
However, Mr Gibbs cautioned that figures by market capitalisation told a different story.
"In terms of the value of companies, Sydney and Melbourne still dominate because more of the largest companies listed on the ASX are headquartered in those cities."
Of the total value of the sharemarket, Sydney and Melbourne listed companies accounted for about 40 per cent each, with Perth accounting for less than 10 per cent.
"Despite having more listings, excluding stapled securities, Perth still trails."
The executive director of the Sydney Chamber of Commerce, Patricia Forsythe, said the explosion of Perth-based miners typically followed a boom-bust pattern.
"The question remains whether those upstart miners can stay the distance," she said.
Sydney was still home to 60 per cent of Australia's top 100 companies, she said.
"I don't think Sydney needs to panic at this stage because we have got the size and the strength," she said.
"What we haven't got is those young upstarts."
But caught on the wrong side of the minerals boom, Sydney is now trailing Perth on a range of economic measures, including growth, unemployment and wages.
National accounts show state final demand - the main state-based measure of economic health - grew just 1.8 per cent in NSW last year, a quarter of the pace of growth in Western Australia of 7.8 per cent.
Western Australia's jobless rate, 2.7 per cent, is almost half that of NSW's 5.1 per cent.
Average annual wages in Western Australia grew 6.7 per cent to $59,405 over the year ended February but wages in NSW fell further behind, growing just 3.6 per cent to $58,016.
State government finances also tell a story of divergence, with Western Australia enjoying a budget surplus of $1.85 billion this financial year, compared to NSW's deficit of almost $500 million.
|Stocks weaker at close, BHP bucks trend
THE stock market closed weaker with falls in China sending the bourse into negative territory.
At the close, the benchmark S&P/ASX200 index was down 22.1 points to 6370.8, while the All Ordinaries shed 19.7 points to 6399.9.
At 4.24pm (AEST) on the Sydney Futures Exchange, the June share price index contract was 17 points lower at 6391 on a volume of 17,743 contracts.
Macquarie Equities client adviser David Halliday said falls in China spooked investors, with the banks and retailers weighing heavily on the bourse.
"I think everyone has been scared by the big falls that we have seen so far in the trading session over in China, that's certainly knocking things around a little bit,'' he said.
"The banks were a bit weaker ... and the retail sector was terribly weak, Metcash got sold heavily on a very ordinary outlook statement for 2008, and that sort of dragged on the rest of the sector.
"We've seen the US market make record highs in the two or three of the last four sessions and there is no strong evidence of that market having any kind of pullback or any major jolts.
"While that keeps ticking along and while that external demand picture is strong, we should be stronger by the end of the week.''
The market got off to a poor start despite a weak lead from Wall Street overnight.
The Dow Jones industrial average put on 8.21 points to 13,676.32, the Standard & Poor's 500 Index gained 2.84 points to 1539.18 and the Nasdaq added 4.37 points to 2618.29.
Locally the big miners were mixed, with BHP Billiton lifting eight cents to $32.93 and rival Rio Tinto adding 25 cents to $96.15.
The banking sector was weaker, with ANZ losing one cent to $29.25, the Commonwealth Bank dipping 41 cents to $54.91, the National Australia Bank dropping 34 cents to $41.51 and Westpac shedding 14 cents to $26.15.
The retailers were mixed, with David Jones gaining 10 cents to $5.36, Coles dropping 16 cents to $16.72, Woolworths slipping 50 cents to $27.64 and Harvey Norman shedding five cents to $5.28.
Metcash lost 37 cents to $4.81 after the food and liquor wholesaler said it was facing an uncertain future trading environment with the ownership of Coles still undecided.
Wesfarmers dipped 18 cents to $38.81 despite the company saying it was expecting a boost in profit from its property development division after it netted $203 million from the sale of a portfolio of Bunnings warehouses.
The media sector was weaker, with News Corp dropping 12 cents to $29.09, its non-voting shares dipping 13 cents to $27.19, the James Packer-led PBL shedding 28 cents to $20.58 and Fairfax losing two cents to $4.87.
Destra gave up half a cent to 32.5 cents after the media company inked a deal with aspiring new media mogul Lachlan Murdoch to increase its stake in online film subscription outfit, Quickflix to almost one-fifth.
Quickflix put on one cent to 19.5 cents.
The energy sector was mixed despite an increase in the oil price, with Woodside finding 27 cents to $44.22, Oil Search picking up three cents to $4.10 and Santos dropping 33 cents to $13.57.
The spot price of gold was slightly higher, and at 4.33pm was trading at $US672.30 an ounce, up $US2.55 an ounce on yesterday's close.
The gold miners were mixed, with Newcrest adding 45 cents to $23.34, Lihir Gold picking up seven cents to $3.25 and Newmont dipping six cents to $4.98.
Sultan Corp was the most traded stock on the market today, with 88.6 million shares changing hands worth $4.44 million. Sultan dipped 0.4 cents to 4.3 cents.
Preliminary market turnover reached 2.01 billion worth $5.81 billion, with 610 stocks moving up, 738 down and 318 unchanged.
|Stocks close lower on weak US lead and metal prices
June 6, 2007 - 4:37PM
The Australian stock market closed weaker with today as local market struggled to gain its footing after a weak lead from New York and lower metals prices hurt the miners.
At the close, the benchmark S&P/ASX200 index was down 33.7 points to 6337.1, while the All Ordinaries shed 32.5 points to 6367.4.
At 4.15pm on the Sydney Futures Exchange, the June share price index contract was 56 points lower at 6346 on a volume of 23,039 contracts.
ABN AMRO private client adviser Bill Bishop said the local market got off to a poor start following a weak lead from Wall Street overnight and lower metals prices that hindered the big miners.
"BHP is struggling to stay ahead while Rio is down,'' Mr Bishop said.
"The banks have been all over the place, in the red then the green, then back to red.
"We haven't had a great day but the market is operating correctly and trying to set prices.
"This raggedy behavior is just that - setting prices.''
The world's largest miner, BHP Billiton, managed to hold on to positive territory, finishing 13 cents higher at $33.06, as news that one of its top executives, Chris Lynch, will leave after missing out on the top job at the company, and could be eying the driver's seat at zinc and lead miner Zinifex Ltd.
Mr Lynch lost out Marius Kloppers as new chief executive role. Mr Kloppers will replace Chip Goodyear in the new fiscal year.
Meanwhile, BHP rival Rio Tinto fell $1.05 cents to $95.10.
Mr Bishop said markets don't go up in the straight line always and, overall, markets are up significantly.
Since the beginning of the year, the all ordinaries has gained more than 726 points.
US equity markets were lower overnight as Treasuries declined, with markets reducing expectations of a near-term rate cut following strong economic data.
The Dow Jones industrial average slid by 80.86 points, or 0.59 per cent, to end at 13,595.46, while the Standard & Poor's 500 Index fell 8.23 points, or 0.53 per cent, to finish at 1,530.95.
The Nasdaq Composite Index declined 7.06 points, or 0.27 per cent, to 2,611.23.
|Stocks claw back losses, but still end in red
AUSTRALIAN stocks have recovered some of their earlier losses but still ended the day on a low note, after overseas markets and interest rate fears struck the local bourse.
At the 5.15pm (AEST) close, the S&P/ASX200 index was down 26 points at 6311.1 and the all ordinaries was 29.2 points lower at 6338.2.
On the Sydney Futures Exchange, the June share price index futures contract was 26 points lower at 6321 on a volume of 24,797 contracts.
"A very strong performance really, given what's happening offshore," Aequs Securities institutional dealer Ric Klusman said.
Mr Klusman said the major movers for the day were Woolworths, which added 34 cents to $27.50, and ANZ, which climbed 24 cents to $29.51, after a management reshuffle that will has Peter Hodgson taking over as group managing director institutional.
Other banks were not as positive, NAB lost 17 cents to $41 and Westpac dropped 11 cents to $25.90, but Commonwealth firmed three cents to $54.67.
Elsewhere, in retail, Coles shed eight cents to $16.52 and David Jones also reversed three cents to $5.27.
"The problems were BHP and Rio Tinto, and I think Fortescue had a bit of blood today," Mr Klusman said.
"Generally the market is a bit nervous with all the interest rate talk, but it was a pretty strong performance to come back.
"Looks like there's some big mandates moving around the fund management area, too, putting some pressure on particular stocks."
In the resources sector, the world's biggest miner BHP Billiton declined 13 cents to $32.93, smaller rival Rio Tinto plummeted $1.60 to $93.50 and iron ore hopeful Fortescue Metals slumped $2.23, or 5.76 per cent to $36.50.
The spot price of gold in Sydney improved by US95c to $US672.20 per fine ounce.
Miners of the precious metal were mixed, Lihir dropping two cents to $3.21 but Newcrest added 29 cents or 1.23 per cent, to $23.90 after it revealed it is considering closing its gold-hedge book.
Energy plays were trading higher, Woodside gaining 15 cents to $44.30 and Santos swelling eight cents to $13.58.
The market was earlier dealt a blow by Wall Street, with US stocks falling sharply for a second day after data showing higher than expected labor costs stoked worries about inflation and interest rates.
Energy stocks such as Exxon Mobil Corp fell, after government data showed gasoline stockpiles were up more than forecast.
The Dow Jones industrial average slid 129.79 points, or 0.95 per cent, to end at 13,465.67.
The Standard & Poor's 500 Index tumbled 13.57 points, or 0.89 per cent, to 1,517.38, posting its biggest two-day drop since March.
The Nasdaq Composite Index skidded 24.05 points, or 0.92 per cent, to 2587.18.
Telecommunications giant Telstra backtracked three cents to $4.81, while national carrier Qantas managed to eke out a gain of two cents to $5.68.
But media interests were generally lower, with PBL dropping 22 cents to $19.90, News Corp giving back 15 cents to $28.72, its non-voting stock retreating 17 cents to $26.70 and Fairfax lost five cents to $4.77.
The most traded stock of the day by volume was investment company Imperial Corp, with 38.9 million shares worth $605,824 changing hands.
Imperial holds stakes in mineral sands mining company BeMaX Resources and Asian-based media company Catcha.com.
Preliminary market turnover was 1.70 billion shares, worth $7.01 billion, with 544 companies ending higher, 751 lower and 337 unchanged.
|Local stocks close sharply lower
June 8, 2007 - 4:40PM
The Australian stockmarket closed sharply lower today, following a big drop in United States markets overnight and generally lower prices for base metals.
CMC Markets senior dealer James Foulsham said the local market was looking a bit shaky after a few strong months.
The sell-off in the US overnight followed concerns that the US Federal Reserve was going to lift interest rates.
"This had a strong flow-on effect across the board on the Australian market but particularly on stocks like (property group) Westfield that rely on the US for a lot of their revenue,'' Mr Foulsham said.
"Metals (prices) were also weaker overnight, which added to the downward pressure on the market.''
At the 4.15pm close, the benchmark S&P/ASX200 index had dumped 79.4 points to 6231.7, while the All Ordinaries had descended 79.8 points to 6258.4.
On the Sydney Futures Exchange, the June share price index contract was down 81 points lower at 6235, on a volume of 30,581 contracts, according to preliminary figures.
Among the major banks, the National Australia Bank lost 79 cents to $40.21, the Commonwealth Bank reversed 52 cents to $54.15, the ANZ retreated 40 cents to $29.11, and Westpac surrendered 17 cents to $25.73.
In the resources sector, global miner BHP Billiton eased six cents to $32.87, and Rio Tinto shed $1.53 to $91.97.
Uranium miner Energy Resources of Australia (ERA) plunged $1.18 to $21.22 after it said it expected a first-half loss of between $5 million and $10 million following heavy rainfall at its Ranger operation in the Northern Territory earlier this year.
Fortescue Metals Group weakened 50 cents to $36.00 as it took a subtle swipe at sceptics of its iron ore vision through a full-page advertisement in a Western Australian newspaper today.
Aspiring mineral explorer Mamba Minerals skyrocketed to 54 cents upon its trading debut - up 34 cents on its its offer price of 20 cents.
Oil and gas producer Woodside Petroleum gave away 95 cents to $43.35, and Santos sagged 21 cents to $13.37.
On Wall Street overnight, the Dow Jones industrial average slid 198.94 points, or 1.48 per cent, to 13,266.73 after speculation that the US Federal Reserve would raise interest rates, prompting bond yields to rise.
|Her er en av grunnene til at det er liten sannsynlighet at det Australske aksjemarkedet/eiendomsmarkedet vil gaa mye ner i den naermeste aarene. Disse penegene som naa puttes inn i "super", maa brukes ett eller annet sted.
Warning sounded over empty nesters' super binge
Annette Sampson and Jessica Irvine
June 13, 2007
AUSTRALIANS are plunging up to $80 billion into their superannuation funds just weeks out from the cut-off date for a once-in-a-lifetime tax windfall.
Real estate agents report multimillion-dollar loans are being taken out against property to plough into super, cashing in on the Federal Government changes, which take effect on July 1.
Empty-nesters are trading in the family home for smaller units and shifting the balance into superannuation.
The principal at Raine and Horne Double Bay, Michael Pallier, said he had just sold a $7 million Vaucluse property, on which the owners had taken out a multimillion-dollar loan so that $2 million of the proceeds could be put into super. After a 14-week settlement period the couple would pocket the gain and repay the loan, Mr Pallier said.
Under the changes introduced in last year's budget, investors will be limited to making after-tax super contributions of $150,000 a year, or $450,000 averaged over three years. But transitional rules allow contributions of up to $1 million between May 10 last year and June 30 this year.
The rush to beat the deadline has prompted a warning from the tax commissioner, Michael D'Ascenzo, for people to think twice before selling their assets.
He cautioned borrowers that interest payments on these loans were not tax-deductible. "It's important that people make the most of the changes, but at the same time are not caught out by [capital gains tax] liabilities that could arise down the track."
An analyst with Australian Property Monitors, Michael McNamara, said a sales boom in traditional tree-change and weekender areas of the Southern Highlands showed baby boomers were selling their properties to jump into super.
John Dani, manager of advice development for IPAC Securities, said financial planners were seeing unprecedented interest from investors wanting to beat the deadline, and it was stretching resources to the limit.
ING's head of technical services, Andrew Lowe, said demand for advisers was the highest he had seen during 17 years working in the industry. "I know advisers that quite literally drew down their shutters weeks ago in relation to seeing new clients."
While much of the money is expected to flow into super in the next two weeks, some funds are already reporting a doubling of normal contribution levels.
The executive director of Macquarie Bank, Neil Roderick, said Macquarie had received almost $11 billion in identifiable super contributions to its cash management and wrap accounts over the past three months, of which $2.1 billion came from contributions of $1 million.
A survey of 150 financial planners by Investment Trends in February/March found planners expected to place an extra $100 billion into super over the next three years as a result of the reforms. They said as much as 80 per cent of this money could be in place by June 30.
"People often overestimate and there are capacity issues because most financial planners are fully booked," said the principal of Investment Trends, Mark Johnston. "But what we've seen does suggest a final number somewhere in that [$80 billion] ball park."
AMP's director of savings and retirement, Peter Nicholas, said the biggest interest was coming from people in their 50s and 60s who would benefit most quickly from the Government's move to make super benefits tax-free from the age of 60. "They're switching money from a taxable to a non-taxable environment," Mr Nicholas said.
But Mr D'Ascenzo said: "With July 1 fast approaching, I want to remind people who sell assets to contribute extra money to superannuation to ensure that they have funds set aside to meet any tax liability from selling or transferring assets into super."
These liabilities could include tax on the capital gain made when selling the asset, stamp duty, legal and other fees and possibly GST.
* Research by the Association of Superannuation Funds has found only one in five short-term retirees will benefit from the central feature of the new super system. It estimated average retirement payouts in 2006-07 were $130,000 for men and $45,000 for women. Lump sums of less than $135,590 are already tax-free, so these people will not benefit from the switch to tax-free super payouts.
What you need to know
Two key changes will apply from July 1:
>> Super benefits taken from age 60 will be tax-free - whether taken as a lump sum, or a pension. This means investors who now own investment properties, shares, or other assets can switch those assets into super where earnings will be taxed at a maximum of 15 per cent, or zero once they start to receive a pension.
>> Once they turn 60, they can withdraw the money without penalty.
>> To prevent abuse of the system, super contributions will be limited. After-tax contributions will be limited to $150,000 a year. This means it will take seven years to contribute the $1 million allowed this year.
>> If you sell an asset to contribute to super, you may be liable for capital gains tax, stamp duty, GST and transaction costs.
>> If you borrow to invest in super, interest on the loan is not tax deductible.
[Endret 13.06.07 08:29 av Grey]
|Market in widespread retreat
THE share market has closed sharply lower, pulled down by a weak lead from United States and lower commodities prices that weighed upon resource stocks.
CMC Markets market analyst David Land said about three-quarters of the top-200 stocks on the Australian market were in negative territory today.
"It's not wildy surprising considering the leads that we had (from US markets) in trade overnight and a shift in the price of base metals," Mr Land said.
"That really was the key driver that we've seen for the day.
"So that resulted in a number of the big banks and (market heavyweight and global miner) BHP Billiton in lower territory."
Mr Land said there had been some concerns about the outlook for the US economy for some time, but of late they appeared to be having more of an effect upon the US market.
At the 4.15pm AEST close, the S&P/ASX200 index was down 59.4 points at 6180.7 while the all ordinaries shed 57.6 points to 6210.1.
On the Sydney Futures Exchange, the June share price index contract lost 66 points to 6185, on a volume of 25,159 contracts, according to preliminary calculations.
In the resources sector, BHP Billiton retreated 57 cents to $32.79, while Rio Tinto fell 24 cents to $92.01.
Among the major banks, the National Australia Bank sagged 18 cents to $40.26, Westpac dumped 19 cents to $25.33, the ANZ stepped back 35 cents to $28.67, but the Commonwealth Bank firmed seven cents to $53.82.
On Wall Street overnight, the Dow Jones industrial average fell 129.95 points to 13,295.01 as bond yields shot to their highest level in five years.
|Resources help market recoup losses
THE share market has more than recovered Wednesday's losses, with resource stocks leading the charge back into the black today.
At the 4.15pm AEST close, the S&P/ASX200 index had risen 80.5 points at 6261.2 while the all ordinaries added 78.3 points to 6288.4.
On the Sydney Futures Exchange, the June share price index contract jumped 78 points to 6265, on a volume of 30,275 contracts, according to preliminary calculations.
The major resource stocks leapt by about 4 per cent despite flat metals prices overnight.
BHP Billiton rose $1.11 or 3.39 per cent to $33.90, and rival miner Rio Tinto $3.89, or 4.23 per cent, to $95.90.
ABN Amro Morgans private client adviser Bill Bishop said the resource stocks were "the big success story" of the day, attributing their performance to the booming US market.
In the US the Dow Jones industrial average surged 187.34 points to end at 13,482.35, while Standard & Poor's 500 Index and the the Nasdaq Composite Index had their best day in nearly three months.
The S&P 500 gained 22.67 points to finish at 1515.67, and the Nasdaq shot up 32.54 points to close at 2582.31.
"The American market of course went up substantially, but the London Metals Exchange wasn't all that flash overnight," he said.
"This market is quite emotional, and the American market is moving around, up to two per cent a night this week, and our market is following it.
"Resources have been swept up in the general wave of euphoria. The market would normally follow the price of the base metals, and it hasn't. I think it proves once again how much money is available to invest."
|Shares close stronger on metals, Wall St lead
AUSTRALIAN stocks have continued their upwards procession, propelled by a positive resources sector and sterling performance in the US.
At the 4.15pm (AEST) close, the benchmark S&P/ASX200 index was up 49.6 points at 6343.4, while the all ordinaries added 48.2 points to 6365.3.
On the Sydney Futures Exchange, the June share price index futures contract was 64 points firmer at 6352 on a volume of 58,771 contracts.
Macquarie private client adviser Helen Spencer said the US market was supported by confirmation that inflation ws being kept in check, with a rally that spread to Australian shores.
"It is a bit of a tandem of both the industrials and the resource sectors, with the banks also joining in on that recovery," she said.
Higher commodity prices also helped the miners post gains today, with Rio Tinto hitting the $100 mark for the first time.
"There were a few other contenders in the race, but Rio has certainly been the first to take that," Ms Spencer said.
"Very much the star performer today is the resource sector," Ms Spencer said.
Rio Tinto ended up $2.59, or 2.66 per cent, at $99.99 after bursting through $100 to hit a high of $100.09, while larger rival BHP Billiton improved 68 cents, or two per cent, to $34.68.
Among energy plays, Woodside Petroleum also made solid gains, 95 cents richer at $45.95, and Santos added seven cents to $13.97.
Iron ore hopeful Fortescue firmed $1.25 to $36.20 after announcing it would expand production from its emerging iron ore mine in Western Australia to 200 million tonnes a year.
The price of gold in Sydney was up $US7.45 at $US658.7 per fine ounce.
Gold miners were feeling the benefits, with Newcrest up 32 cents at $23.71 and Newmont one cent higher at $4.77.
Banks were also helping the local bourse, with the Commonwealth Bank climbing 80 cents to $55.30, NAB found 46 cents at 41.03, ANZ put on 28 cents to $29.27 and Westpac improved 17 cents to $25.70.
Property developer Westfield Group was one of the few casualties for the day, shedding almost 53 cents, or 2.5 per cent, to $20.30, after coming out of a trading halt, but the stock stopped short of the $19.50 offer price for new securities in its $3 billion equity raising.
On Friday, US stocks rose after lower than expected inflation data cooled fears of a rate rise.
The Dow Jones industrial average added 85.76 points to 13,639.48 and the Standard & Poor's 500 Index climbed 9.94 points to 1532.91.
The Nasdaq Composite Index advanced 27.30 points to 2626.71.
Telecommunications giant Telstra finished eight cents lower at $4.74, despite analysts saying that its failure to win a $958 million government subsidy for the construction of a rural and regional broadband network will not seriously affect profitability.
In the media sector, commercial television broadcaster Ten Network went into a trading halt pending an announcement by the company, after speculation about its ownership prompted a surge in trading.
It last traded at $2.97 down 13 cents on the day.
Elsewhere fortunes were mixed, with PBL losing five cents to $19.15, News Corp dropping 48 cents to $28.15 and its non-voting stock relinquishing 40 cents to $26.20, but Fairfax eked out a gain of four cents to $4.78.
Wesfarmers, which is leading a consortium pressing to take over retailer Coles, lifted $1.11 to $43.50, after denying it had failed to make full disclosures of its bid plans to the market, in response to an inquiry from the Australian sharemarket.
Coles swelled eight cents to $16.78, while larger rival Woolworths increased 28 cents to $27.79 and David Jones was 12 cents richer at $5.32.
[Endret 18.06.07 14:48 av Grey]
|Stocks in remarkable recovery
THE share market experienced a remarkable recovery this afternoon, trading into positive territory after spending most of the day in the red.
At the 4.15pm AEST close, the benchmark S&P/ASX200 index was up 28.6 points at 6372, while the all ordinaries added 28.1 points to 6393.4.
On the Sydney Futures Exchange, the June share price index futures contract was 30 points firmer at 6378 on a volume of 119,140 contracts.
The market had spent much of today below yesterday's close, weighed down by a poor performing US market and mixed commodities prices.
But the market shifted about 2pm, with the resources the stars, CMC Markets markets analyst David Land said.
"From about 2 o'clock the buying momentum really took hold, and we saw that push the market higher," Mr Land said.
"It was pretty broad-based movement, with a number of sectors in positive territory.
"There's a lot of focus again today on the resources, particularly looking at the energy sector, with stocks like Woodside and Santos performing very well. That's a result of the recent strength we've been seeing in the crude oil price."
Mr Land said it was hard to pinpoint an exact spark for the recovery, saying the increased buying seemed to accelerate once the bourse tipped into the black.
"It was interesting just how quickly that momentum shifted," Mr Land said.
"Once it actually got into positive territory, that's when the buying really started to accelerate. Once that selling pressure was removed and the market saw that it was pushing into positive territory."
On the New York Mercantile Exchange last night, July crude rose $US1.09, or 1.6 per cent, to settle at $US69.09 a barrel.
Local energy stocks were were buoyed by the rise in crude price, with Woodside Petroleum climbing 90 cents to $46.85 and Santos 47 cents to $14.44.
However, Oil Search fell two cents to $4.26.
Mixed metal prices on overseas markets initially subdued the miners, with Rio Tinto backing away from the $100 record set yesterday.
But by noon it had again passed the $100 mark, before reaching a high of $102.15 by mid-afternoon.
Rio closed up $1.16 to $101.15.
BHP Billiton finished up 24 cents to $34.92, after the miner declined to comment on media reports that it was considering a takeover bid for either Alcan Inc or Alcoa Inc.
Shares in the major banks were all higher, despite starting the day relatively flat.
ANZ rose 15 cents to $29.42, Westpac 22 cents to $25.92, the National Australia Bank 20 cents to $41.23, and the Commonwealth Bank 10 cents to $55.40.
The telcos were little changed, as politicians, analysts and media commentators continued to pick over the competing plans for the roll out of a faster broadband network.
Shares in Telstra added two cents to $4.76 after an initial slump in the morning.
Optus owner Singapore telecommunication was unchanged at $2.64.
Among media stocks the Ten Network was the story of the day, with Canadian CanWest Global Communications Corp announcing that it intended to take control of the television provider by converting its 56 per cent economic but non-voting stake into a voting stake.
Previously, foreign media companies such as CanWest were limited by law to a 15 per cent voting stake in Australian media companies.
Shares in Ten fell three cents to $2.94.
Rival network Seven gained 18 cents to $11.34, while part owner of Channel Nine, Publishing and Broadcasting Ltd, added 14 cents to $19.29.
Fairfax edged forward five cents to $4.83.
Competing publisher News Corporation relinquished five cents to $28.10, and its non-voting stock 18 cents to $26.02.
|Strong dollar hits junior miners
Scott Murdoch and Kevin Andrusiak
July 04, 2007
THE soaring Australian dollar is squeezing junior resource companies, forcing miners to abandon projects and placing billions of dollars worth of exports at risk.
Perth-based Wedgetail Mining became the latest in a long line of companies to succumb to rising currency, labour and equipment cost pressures when it deferred start-up on its West Australian project because of the dollar's appreciation to above US85c.
Wedgetail wanted to produce 70,000 ounces of gold at its Nullagine project, worth $57 million in annual revenue, and had all necessary approvals before it called a halt yesterday.
Since late February, the Australian dollar gold price has dropped from $870 an ounce to $766. Miners who sell production in $US before converting back to the local currency are most at risk.
The cost and margins squeeze from the rising dollar is offsetting the lure of the China-led commodities price boom, and is one reason analysts expect the Reserve Bank today to reveal that it is keeping its 6.25 per cent cash rate on hold for another month.
In the past year, the dollar has strengthened nearly 20 per cent against the greenback, from US72c to nearly US86c.
Mineral sands miner Iluka Resources loses $8 million in revenue for every cent the dollar rises above US77c, and fellow Perth-based junior Westonia mines has put its key 500,000oz project on hold as it waits for a higher price to justify raising capital.
"The (thrust of) discussions I have had with people today is that the Australian dollar could go as high as US 90 cents," Wedgetail managing director Terry Stark said.
"For us, every cent appreciation impacts about $10 worth of revenue an ounce. The gold industry is under a lot of pressure."
Miners are jumping into the forex market to cover their hedging risks. Analysts said they had been buying the $A since it hit $US80c and their interaction in the forex market has been partially attributed to the run.
Most market analysts now believe the $A will stabilise above the $US86c mark, with no potential hurdles in its path.
The dollar pushed through US80c on March 20c and in early European trade last night the currency was at US85.66c.
The $A dropped nearly 0.3c on the prospect of interest rates in Australia staying on hold after weaker retail sales numbers.
ANZ senior currency strategist Tony Morriss said it appeared resource companies had been active buyers of the dollar.
"Since we've been above US80c, I think a lot of the export industries have started to go out and cover their risk," he said.
"That has added to this buying from the likes of the Japanese retail funds ... it's been speculated that it's one of the (factors) which has helped drive and power this rally. I think it makes it more likely any more pent-up demand could come from resource exports feeling more compelled to increase their cover."
The dollar's run has been fuelled by a sharp depreciation in the $US, which has slumped against the major currencies.
The US Treasury has been unusually silent about the dollar's fall, which is causing other global currencies to rise.
The forex market's attention is currently fixed on the global interest rate environment, as the Bank of England is forecast to raise tomorrow.
The likelihood of a 25 basis point increase has prompted the British pound to track a 26-year high of at least $2.015.
In Australia, the NAB has said one potential risk for the $A was the narrowing of yield advantage against the greenback.
The retail bank tips rates on hold, with a 40 per cent chance of a move in August, and expects the US Fed to retain a tightening bias.
|Tilbake etter lang (vinter)ferie saa faar vi vel begynne aa lime inn litt oppdateringer igjen.
Market stronger at noon
August 13, 2007 - 12:22PM
The Australian sharemarket was higher at noon as investors shook off weaker base metals prices to buy up stock in the big resource companies.
At 12 noon, the benchmark S&P/ASX200 index was up 88.6 points, or 1.49 per cent, to 6024.7.
The All Ordinaries gained 77.5 points, or 1.3 per cent, to 6042.7.
On the Sydney Futures Exchange, the September share price index contract had put on 72 points to 6005 on a volume of 10,993 contracts.
Chris MacDonald, a senior client advisor at ABN Amro Morgans, said the lack of carnage on Wall Street on Friday was providing investors with some reassurance.
"The market seems to be soothed by the way the Dow finished on Friday night,'' he said.
US blue-chip stocks slipped on Friday, while the broader market edged higher after the Federal Reserve injected cash to shore up the banking system.
The Dow Jones industrial average fell 31.14 points, or 0.23 per cent, to end at 13,239.54, but the Standard & Poor's 500 index inched up just 0.55 of a point, or 0.04 per cent, to finish at 1,453.64.
But Mr Macdonald said there was still nervousness in the market.
"I would suggest to the market to wait on the sidelines until the volatility dies down. If you are looking to add, add at the quality end of the market.''
That meant looking at blue chip resource stocks, like BHP, he said.
"There's long term belief in the commodities story: the demand for commodities will continue to increase, because there's only a finite amount of commodities in the ground.''
At 12 noon, the bellwether resources stocks both were up, with BHP Billiton gaining 59 cents or 1.7 per cent, to $35.25, and Rio Tinto rising $1.31 or 1.55 per cent to $86.08.
In markets news, rail and infrastructure company United Group Ltd posted an 18 per cent jump in net profit after tax (NPAT) over the last financial year, making $92.7 million. Its shares rose 85 cents to $18.52 this morning.
Meanwhile, building and industrial products company Crane Group reported a full year net profit of $47.8 million, a 35.3 per cent decline on last year's result. However, shares in Crane Group lifted 34 cents to $16.74 this morning.
And Boral announced it had made two acquisitions in in the United States, making the company the second largest concrete producer in Oklahoma City.
Boral has acquired the assets of concrete and sand business Schwarz Readymix, and the quarry assets of Davis Arbuckle materials. The total acquisition price is about $US80 million ($94.7 million).
BHP leads market higher
August 13, 2007 - 4:32PM
Australian shares rose 1.3 percent on Monday, led by gains in financial firms and miner BHP Billiton , as moves by central banks to inject funds into money markets eased worries about a global credit squeeze.
Central banks in Europe, Asia-Pacific and North America injected huge sums into banking systems late last week to head off a widening credit and calm financial markets.
And while the Reserve Bank of Australia raised its forecasts for underlying inflation this year, indicating that a further rise in interest rates cannot be ruled out, investors took comfort in an upgraded outlook for the domestic economy.
But analysts said there is likely to be further volatility in the near term as uncertainties about the US subprime mortgage sector crisis continue to roil sentiment.
"It's certainly very reassuring that central banks are providing liquidity but that doesn't repair or make go away any losses that funds have experienced from the subprime sector,'' said Guy Hutchings, chief investment officer at MFS Investment Management.
"From that perspective, there is still a bit of water to flow under the bridge in terms of losses that may come from the credit crunch and the uncertainties that that will create in investors' minds.''
Australia's benchmark S&P/ASX200 index added 75.6 points to 6,011.6, based on the latest available data, after sliding 3.7 percent on Friday in the biggest one-day percentage drop since Sept. 17, 2001.
However, decliners outpaced gainers 1,198 to 849 in the broader market.
The index, which rose as much as 1.8 percent earlier in the session, is now up 6 percent since the start of the year, though it is still 6.6 percent below its lifetime high of 6,436.7 set on July 13.
New Zealand's benchmark NZX-50 Index fell 0.97 percent, or 39.68 points, to 4,070.16. The top stock, Telecom Corp. of New Zealand, was down 1.6 percent at NZ$4.28.
In Australia, top banks all rebounded after falls of around 3 percent on Friday, driving the financial services index up 1.6 percent, or 106.3 points, on the day.
But Macquarie Bank, which earlier this month warned that investors in two of its funds face losses of up to 25 percent amid the fallout from the U.S. subprime mess, reversed early gains to fall 0.8 percent to $71.55.
Among other financial stocks, Babcock & Brown fell 1.9 percent to $23.40 though Challenger Financial Services Group rose 1.4 percent to $5.05.
Steadier industrial metal prices helped shore up shares in the world's top miner BHP Billiton, which rose 1.4 percent to $35.14.
But main rival Rio Tinto shed early gains to end down 0.9 percent at $84.00.
Elsewhere, strong earnings and an upbeat outlook boosted shares in Crane Group, which jumped 5.9 percent to $17.36 after the distributor of plumbing and electrical products reported a 14.5 percent rise in net profit and flagged an improved performance this year.
|Aussie stocks plummet
August 15, 2007 - 11:40AM
The Australian sharemarket was a sea of red this morning after further drops on Wall Street overnight.
At 11.22am, the benchmark S&P/ASX200 index had lost 124.6 points, or 2.09 per cent, to 5840.2 while the All Ordinaries dropped 132.7 points, or 2.22 per cent, to 5849.8.
On the Sydney Futures Exchange, the September share price index contract dropped 118 points, or 1.98 per cent, to 5846 on a volume of 7,660 contracts.
In the US, stocks skidded overnight on fresh signs that global credit markets were seizing up, while a lower profit forecast from Wal-Mart Stores Inc renewed worries about consumer spending.
Wal-Mart's pessimistic outlook and subsequent news that a US investment firm wants to halt redemptions further damaged already shaky confidence.
In the latest sign of a deteriorating credit environment, Sentinel Management Group Inc, which oversees about $US1.6 billion in assets, told clients it wants to stop investors from withdrawing their cash to avoid forced liquidation.
The Dow Jones industrial average tumbled 207.61 points, or 1.57 per cent, to 13,028.92 - its lowest close since April 24.
The Standard & Poor's 500 Index slid 26.38 points, or 1.82 per cent, to 1,426.54, leaving it up just 0.6 per cent for the year. The S&P 500 hit a lifetime high on July 16 and, on that date, it was up 9.7 per cent for the year.
The Nasdaq Composite Index slumped 43.12 points, or 1.70 per cent, to 2,499.12, closing below the 2,500 mark for the first time since April 13.
Industrial metals fell sharply overnight on the London Metal Exchange as persistent worries about tightening credit conditions spread across financial markets.
Mining stocks followed suit. This morning, BHP Billiton shed 91 cents, or 2.6 per cent, to $34.15, while Rio Tinto lost $1.95, or 2.27 per cent, to $84.10.
ABN Amro Morgans private client adviser Bill Bishop said concerns about the US subprime market have taken their toll on the Australian stock market.
"An acceleration in subprime woes in America have floated across the Pacific and the financials are being hit,'' he said.
"Nothing's been left alone. You could really say there have been significant falls across virtually all sectors.
''(But) it was odds on it was going to be a bad day after America's rather precipitous fall last night.''
Mr Bishop said that, with the reporting season going well, the slump was sure to end.
"It will finish,'' he said.
"We've had a volatile market for three or four weeks now and it's probably going to remain that way, but the good stocks are doing well, the reporting season is going well. It's just unfortunately not holding the market up, but that's life.
"Sanity will prevail in the end.''
All the banks were lower, with National Australia Bank down 18 cents to $38.82, Westpac 18 cents to $25.67 and ANZ 32 cents to $27.88.
Despite posting a solid rise in annual net profit this morning the Commonwealth Bank of Australia also followed the market down.
Australia's second biggest bank made a reported net profit of $4.470 billion in 2006/07, up 14 per cent on the previous year. Its cash net profit - the banking sector's preferred measure - was $4.604 billion, up 17.8 per cent.
Shares in CBA had dropped 50 cents to $53.50, though.
On the New York Mercantile Exchange, September crude settled up US76 cents, or 1.1 per cent, at $US72.38 per barrel.
Despite the rise, local energy stocks fell, with Woodside Petroleum dropping 82 cents, or two per cent, to $40.18, Santos 18 cents, or 1.54 per cent, to $11.52, and Oil Search seven cents, or 2.04 per cent, to $3.36.
In other market news, construction and engineering giant Lend Lease Corporation Limited says it's well placed to deliver ongoing growth in shareholder value, on the back of buoyant global construction markets.
The company reported statutory profit of $497.5 million, up 20 per cent on the previous year and net operating profit growth of 26 per cent to $445.9 million.
Shares in Lend Lease dropped 26 cents, or 1.46 per cent, to $17.60.
Australia's largest construction materials company, Boral, has posted a 17.7 per cent fall in 2007 net profit to $298.1 million, with a decline in US earnings and in Australian housing-related earnings.
Boral today reported its full year results, which included an EBIT fall of 7 per cent to $762 million.
Shares in Boral shed 13 cents, or 1.79 per cent, to $7.14.
Embattled building materials company James Hardie Industries has announced first quarter net operating profit growth of 10 per cent, to $US39.1 million ($46.94 million).
The company said, once asbestos provisions were excluded, that equated with profit growth of nine per cent to $US68.6 million ($82.35 million).
Bucking the market trend, shares in James Hardie soared by 36 cents, or 4.8 per cent, to $7.86.
|Funds can no longer shun top 100 novice Fortescue
Kevin Andrusiak | August 11, 2007
AUSTRALIAN fund managers are going to find it even more difficult to ignore Andrew "Twiggy" Forrest's Fortescue Metals after the aspiring iron ore miner was given the green light to enter the prestigious Standard & Poor's/ASX 100 index.
Fortescue's entrance into the top 100 club, which comes at the expense of Alinta amid the pending approval of its scheme of arrangement deal with a Babcock & Brown-led consortium, marks another highlight for the company which is yet to sell any iron ore from its $3.7 billion Chichester Ranges project in the WA Pilbara.
The inclusion will force top-tier fund managers, including superannuation managers, to buy Fortescue stock to comply with the weightings of their funds which rely on having some exposure to top-rating indices.
Fortescue has been one of the standout stocks on the Australian bourse over the last 12 months but has largely been shunned by local investors with most of the interest coming from overseas buyers.
Making matters even more complex for fund managers, Fortescue is racing to complete construction of its 260km railway before May next year so that it can ship its first ore and meet customer demands.
Fortescue's vision is to ramp up to 55 million tonnes of ore a year before expanding years down the track to 200 million tonnes to put it on a similar footing with rival producers Rio Tinto and BHP Billiton.
While the rail construction schedule is tight, Fortescue says the mid-May first shipment deadline is still achievable.
Any slip along the way, however, and the market would be expected to savage Fortescue's market capitalisation.
Quarterly financial results show Fortescue is struggling to meet budgeted spending for its Chichester Ranges project, but Mr Forrest was adamant this week this would not affect the timetable to load its first shipment.
"You're right to pick on the rail," Mr Forrest said. "They are not losing schedule. We haven't even started a night shift at some parts."
Meanwhile, Fortescue has announced plans to build 250 houses in Port Hedland to help alleviate the accommodation crisis in the Pilbara because of the booming iron ore industry.
The new homes will be bought and leased back by Fortescue for port and rail employees who will be given the option to buy the dwellings.
HFN Housing Group is expected to deliver the first 100 houses by the end of July 2008.
Mr Forrest said Newman and Tom Price could get similar projects. "The Pilbara is not a short-term quarry ... (but) must host long-term, fully sustainable and high quality ... communities."
Fortescue shares fell $1.96 to $31.29.
|Nervous share market dives
August 16, 2007
THE stock market has fallen further after opening sharply lower and feeling the impact of steep falls on Wall St overnight.
At 12pm (AEST), the benchmark S&P/ASX200 index was down 180.6 points to 5607.4. The All Ordinaries dropped 191.5 points to 5610.
On the Sydney Futures Exchange, the September share price index contract had lost 195 points to 5586 on a volume of 26,800 contracts.
Private client adviser, Bill Bishop, from ABN Amro Morgans, said a "nervous" Australian market was taking its lead from a damaged Wall Street.
"The market is going down because we have taken our lead from the uncertainty surrounding the US sub-prime credit crunch," he said.
"We were overdue for a correction but this is taking our breaths away. It's like you've jumped off a waterfall and you don't know when you're going to land and break your neck."
Mr Bishop said a jittery market was making punters nervous.
"There are enormous amounts of cash out there and people are willing to buy but they haven't started yet because the market is jittery and keeps falling.
"When people are confident again, they will start to buy," he said.
US stocks fell overnight, wiping out the year's gains for the benchmark S&P 500, after Countrywide Financial shares plunged on a brokerage downgrade and rumours that it was having trouble raising money.
The Dow Jones industrial average lost 167.45 points, or 1.29 per cent, to end at 12,861.47 - or 8.4 per cent below its record close. It was the Dow's first close below 13,000 since April 24.
The Standard & Poor's 500 Index fell 19.84 points, or 1.39 per cent, to finish at 1406.70. The S&P is now 9.43 per cent below its record high close and down 0.82 per cent for the year.
The Nasdaq Composite Index dropped 40.29 points, or 1.61 per cent, to close at 2458.83.
At noon, the big miners were down, BHP losing $1.21 to $31.99, and rival Rio Tinto falling $1.80, or 2.17 per cent, to $81.20.
At 12.30pm, all the major banks were down with National Australia Bank dropping 79 cents, or 2.06 per cent, to $37.57, Commonwealth Bank down $1.90, or 3.58 per cent, to $51.10, ANZ 70 cents lower at $26.90 and Westpac down 77 cents, or 3.06 per cent, to $24.37.
Local energy stocks all were down, too, with Woodside Petroleum losing $1.28 to $38.86, Santos falling 38 cents to $11.00 and Oil Search down eight cents to $3.17.
In media, stocks were mixed with Publishing and Broadcasting down 56 cents, or 3.22 per cent, at $16.84 and Fairfax up four cents, or 0.89 per cent, to $4.52.
News Corporation rose 36 cents to $25.76 while its non-voting scrip was up by 10 cents to $23.95.
At 12.45pm, the spot price of gold was $US666.60, up $US0.10 on the closing price in Sydney on Wednesday.
Newcrest Mining lost 82 cents, or 3.26 per cent, to $24.30, Newmont dropped two cents to $4.81 and Lihir shed 17 cents to $2.87.
Stocks in Singapore Telecommunications were down four cents, or 1.49 per cent, to $2.65, while Telstra fell eight cents to $4.27.
In aviation, Qantas was down 23 cents, or 4.36 per cent, to $5.05, after the airline reported a 50 per cent lift in annual earnings, forecast another strong result this year, and said it would return cash to shareholders through an on-market share buy-back of about 10 per cent of its issued capital.
Virgin Blue fell 24 cents, or 11.32 per cent, to $1.88.
The retailers were down this morning with Coles Group falling 14 cents to $13.63 and Coles' suitor, Wesfarmers, down $1.38 cents at $38.12.
Woolworths was down 38 cents to $26.42 and David Jones was down 23 cents to $4.52.
The most traded stock was Empire Oil and Gas, with 226.1 million shares in the company traded at a value of $6.0 million. Its shares were down one cent, or 30.3 per cent, to 2.3 cents.
Total market turnover was 2.107 billion shares, worth $6.06 billion, with 99 stocks up, 1,383 down and 173 unchanged.
[Endret 16.08.07 05:18 av Grey]
|Market rebounding after 300-point drop
16th August 2007, 12:30 WST
The Australian stockmarket suffered one of its most spectacular collapses on record this morning before an amazing recovery that left stockbrokers stunned, although it has done little to allay fears the stock exchange’s four-year bull run has come to an end.
The All Ordinaries index slumped as low as 5490.8 points shortly before lunch today, a intra-day drop of more than 300 points, before a sudden buying surge pulled the benchmark indicator more than 100 points higher to 5633.8 points at 1.10pm WST.
Despite the intra-day clawback, the All Ordinaries is still down 167.7 points, or almost 3 per cent, on the day and 13 per cent since peaking at 6455.5 points less than two months ago.
Perth brokers were at a loss to explain the All Ordinaries’ see-sawing performance, but said the general mood in the market was increasingly negative, amid concerns the credit crisis triggered by problems within the US housing market would spill onto the global stage and seriously affect Australia’s economy.
There were also rumours that an East-Coast institution had tried to sell a $1 billion share portfolio shortly before lunch, triggering the savage slump.
Harleys senior broker Ian Parker, who has been working in financial markets for 26 years, said he had never before seen the market perform the way it did this morning.
“It’s extraordinary,” he said, adding that the mood around Hartleys’ dealing desk was bearish.
“But that’s often a good thing, too,” he said.
“When the (stockbroking) dealing desk are bearish that might well be the time to buy because everyone’s bearish.
“I think there will be a short-term bounce but I think there has been a change to the way people now pick the stock market and it will take some time to get rid of that.”
WA stocks were among the hardest hit, with Wesfarmers plummeting $1.12 to $38.38 despite reporting a $786.3 million full-year profit and an update on its plans for Coles Group, should its takeover be successful. Wesfarmers’ profit was down 25 per cent on last year’s figure but in line with market expectations.
Alinta’s second-last day of trading before its takeover by Babcock & Brown and Singapore Power is completed also resulted in a sea of red, with the utility’s stock off 91c to $13.84, while Woodside Petroleum fell $1.09 to $39.05 and Coventry Group lost 23c to $3.46. WA Newspapers Holdings defied the downward movement, firming 10c to $13.83.
The leading miners were also hard hit, with BHP Billiton off 91c to $32.29 and Rio Tinto down $1.47 to $81.53, while the Big Four banks tumbled led by Westpac, off $1.03 to $24.11.
[Endret 16.08.07 07:28 av Grey]
|Last week probably felt like an eternity full of dark days for investors. No doubt you think the odds are stacked against you. We don't…
Dear Fellow Stock Market Investor,
A week in the stock market can feel like a year.
Rewind to a couple of weeks ago…
China was growing at an annualised rate of 12%, its fastest rate in 12 years, and placing it on-track to surpass Germany as the world's third-largest economy.
Fat Prophets was predicting the commodity boom to last for decades.
World stock markets were regularly hitting new highs.
Fast forward to now…
China is still growing.
Fat Prophets is still predicting the commodity boom to last for decades.
World stock markets have been all shook up.
You might be thinking…
How dare this darling stock market of ours shake?
How dare it cause our investments to fall?
How dare it give us sleepless nights, as we lie awake wondering just how far Wall Street will tumble?
How dare it ruin our weekend as we fret how much it will fall next week following an especially chaotic Friday on Wall Street?
HOW BLOODY DARE IT?
A Forgotten Four Letter Word
There is only one word to describe this despicable state of affairs. It's a four-letter word, so for those of you who don't like swearing, look away now.
Until last week, many people hadn't used this word since 2003. It had simply disappeared from their vocabulary.
But now it's back...
Believe It Or Not…
Believe it or not, when you invest in the stock market, you immediately take on a level of risk.
Believe it or not, stocks can go down as well as up.
Believe it or not, private equity is not a license to print money.
Believe it or not, the housing market can go down as well as up.
But here at Fat Prophets, RISK is a word we are very familiar with. In fact, we are so familiar with it that we often think perhaps we are being over-cautious with the stocks we recommend to our Fat Prophets Members.
When we see the latest mining-related Initial Public Offering (IPO) shoot up 30%, 40%, 50% or even 100%, we sometimes think our over-cautiousness is costing them money. After all, wealth creation is our mission.
But we only think like that for about a nanosecond. For those unfamiliar with a nanosecond, it's a billionth of a second.
It's no secret that we are fans of the world's greatest stock market investor, Warren Buffett. When it comes to RISK, he is quoted as saying …
"Risk comes from not knowing what you're doing."
We couldn't agree more. As you'll see a little further down, we think we know what we're doing, and more to the point, continue to find a good supply of stocks to recommend to our members.
In fact, as we said in an email to our Fat Prophets Australasian Report members just over a week ago: "we have a number of new stocks that we have been monitoring with a view to including in the portfolio in coming weeks."
The US Sub-Prime Mess
"We are experiencing home depreciation almost like never before, with the exception of the Great Depression. This is a huge battleship, and we're headed in the wrong direction."
The quote comes from the CEO of Countrywide Financial, the USA's largest mortgage lender.
Why does the US housing market matter to us here in Australia?
It's a good question. Here are some possible answers.
1. It doesn't matter to us.
2. It has some relevance to us.
3. It matters a lot to us.
Certainly in the short-term, it does matter to us, because the US sub-prime crisis caused the Australian stock market to fall around 10% over the past three weeks. Here's why…
Fear has spread into corporate debt market, which has lifted the cost of debt across the board and has had an impact on the buying potential of private equity firms.
It appears that investors are taking profits on recent winners, and that in turn causes stocks to fall. The simple laws of supply and demand dictate that the more selling there is, the more prices will fall.
We've experienced a massive and growing credit bubble in the last few years and the very threat of that unwinding has a big impact on the stock market.
But What Does It All Mean To Me?
It would be easy for us to sit here and say that over the long-term, this downturn will be totally insignificant. But that comment might be viewed as a bit flippant, given that some people may have lost money in the current market slide. No-one likes to lose money, and we don't like it when people lose money.
So instead, we'll refer to another Warren Buffett quote and let you make up your mind about what we think of the events of last week…
"A market downturn doesn't bother us. For us and our long term investors, it is an opportunity to increase our ownership of great companies with great management at good prices. Only for short-term investors and market timers is a correction not an opportunity."
Stock market wobbles happen fairly regularly. In case you'd forgotten, we had one in February this year. We had another one mid-way through 2006. There was another one in October 2005. And there was another one in March 2003.
But if you look at the bigger picture, things might seem a little different…
Can you see the wobbles now? They are there, but just a little harder to see. That's because your eye is focusing on the long-term direction of the chart…. Upwards.
Stock Market Wobbles & Crashes
Stock market wobbles and slides happen regularly.
Big, scary stock market crashes happen rarely.
Over the long-term, history has consistently seen rising stock markets.
The most infamous stock market crash in recent memory happened in October 1987. On one black day, the US stock market as measured by the Dow Jones Industrial Average, fell 23%. The Australian stock market was not spared - for the month of October 1987 it fell 42%.
[Endret 17.08.07 05:17 av Grey]
The year is now 2007. Almost 20 years have passed since the great crash of 1987. And yet people still fear a crash of that scale. People who were still in nappies in 1987 fear a big crash. Bizarrely, even people who have never invested in the stock market think the next great crash is just around the corner. They've been thinking like that since 1987.
If you are sitting on the stock market sidelines waiting for the next big crash before finally taking the plunge, you may be waiting a long time. We just hope you don't grow too old in the interim!
BHP Billiton Is Still A Great Stock
We hope you can see where we are coming from with all these charts and boring statistics.
From a big picture perspective, not a lot has changed between last week and this week.
Sure the market may have slipped a bit, but if like us, you believe the resources boom will run for decades, then you'd still be sticking with BHP Billiton.
If you believe that uranium will account for a much greater share of world energy production over the ensuing decades, as we do here at Fat Prophets, then you'd still be sticking with Paladin Resources.
If you think like Warren Buffett, as we do here at Fat Prophets, you'd be thinking less about the short-term share price pain and much more about the long-term opportunities.
On the other hand, if you'd been buying shares in BHP or Paladin because you'd read in the papers that a private equity company was rumoured to be preparing multi-billion dollar bids for them, you'd be disappointed.
While we don't think there is reason to panic over the recent stock market wobble, we do have concerns about the housing market in the US. Many loans are due to re-set at higher interest rates throughout the remainder of the year and into next year, putting upward pressure on default rates. This is likely to keep the supply of housing historically high and put downward pressure on home prices.
If this happens, we think the US Federal Reserve will step in later in the year and lower interest rates, providing a fresh injection of liquidity into the markets in an attempt to keep the housing market propped up.
With this in mind, we continue to favour gold and oil companies in particular. We concede oil prices have retreated slightly from the recent all-time high of $78.77...but the important fact is that the eight-month upward trend remains completely intact.
We remain firm on the strategic importance of oil. In the months ahead, we anticipate further strength and an extension of the upward trend above $78.77 toward our target of $80.
|Stocks up after volatile morning
17th August 2007, 10:30 WST
After a volatile morning, Australian stocks were firmer at noon, after Wall St made a spectacular recovery shortly before close overnight to end mixed.
At 10am Perth time, the benchmark S&P/ASX200 index had climbed 42.8 points to 5754.3 and the All Ordinaries gained 34.9 points to 5747.1.
On the Sydney Futures Exchange, the September share price index contract had gained 27 points to 5727 on a volume of 27,877 contracts.
ABN Amro Morgans Ipswich manager, Tony Russell, said the market had settled slightly at noon after a volatile morning but that nervousness on the market continued over the US sub-prime issue.
"We are up at the moment, but we've had a very dramatic morning. Things are starting to settle a bit and we are not getting the major gyrations that we've seen, but who knows?"
"Once again there is still a lot of nervousness in the market over concerns on what is going to be happening in overseas markets, particularly the US market tonight."
Mr Russell said that finance stocks were starting to bounce back after an improvement in the US market.
"We saw the financials were one of the better performing sectors in the US last night and we are following suit here."US stocks ended mixed overnight."
The Dow industrials closed lower for a sixth day on fears that credit markets may break down and hurt the economy and profits, but a remarkable late-day surge almost brought them back into the black.
The blue chips recovered 300 points in the last 45 minutes of the day, and the broader benchmark S&P 500 clawed back into positive territory to finish up on the strength of a rebound in beaten-down bank and brokerage stocks.
The Dow Jones industrial average declined 15.69 points, or 0.12 per cent, to 12,845.78.
But the Standard & Poor's 500 Index was up 4.57 points, or 0.32 per cent, at 1,411.27.
The Nasdaq Composite Index was down 7.76 points, or 0.32 per cent, at 2,451.07.
At 10am the big miners were mixed, with BHP up 51 cents to $33.51, and rival Rio Tinto down 27 cents, or 0.33 per cent, to $82.30.
|BHP posts 28pc growth in annual profit
August 22, 2007
THE world's biggest miner, BHP Billiton, has posted a 28.4 per cent rise in annual profit on the back of record production and says commodity prices are likely to remain high.
Net profit for the year ended June 30 rose to a new record of $US13.416 billion ($A16.76 billion), from $US10.450 billion ($A13.06 billion) in fiscal 2006.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 27.1 per cent to $US22.950 billion.
The mining giant also declared a final dividend of US27c for 2006/07, taking total for the year to US47c, up 30.6 per cent.
While commodity prices are likely to stay relatively high, the company also says labour markets remain constrained and that wages are rising.
"The global economy remains robust, driven by solid activity in Asia and Europe," BHP Billiton said.
"Economic fundamentals remain relatively strong. Unemployment remains low and the supply of labour is still constrained. This is resulting in rising wages and increased household consumption."
BHP Billiton said Asian economies, led by China, continue to demonstrate growth, with India's economy continuing to gather pace.
"In Europe, solid growth is being supported by accommodative monetary conditions, rebounding consumption and strong German industrial activity," BHP Billiton said.
"The US economy continues to soften, with the housing sector acting as a drag on activity. The Japanese household sector is also experiencing weakness, increasing risks of deflation later in the year."
It also said that the rate of growth in the Chinese economy showed no sign of abating, with economic growth expected to be maintained or perhaps accelerate over the second half of calendar 2007.
"Despite moderating US economic growth, global economic fundamentals remain strong and the ongoing strength shown by emerging Asian economies (including China) should support global growth," the miner said.
"Moreover, the competitiveness of open Asian economies is likely to continue to place downward pressure on inflation, which should in turn provide greater flexibility for accommodative monetary policy stances taken by key central banks."
BHP Billiton said 2007 real prices for its major commodities remain at or near the highest levels since the 1970s, driven by continuing Chinese demand for raw materials.
It said the good days are set to continue.
"Recent discussions with our customers have indicated that they do not expect the volatility in the US and European credit markets to have a material impact on raw material demand," it said.
"In particular, our customers in China and India believe domestic supply and demand criteria are much more important factors in their markets. We will continue to assess impacts from this recent volatility."
While the company does expect commodity prices to move towards long run marginal costs of supply, given strong demand and supply side constraints, this is only likely over the medium-term.
In the interim, prices are likely to stay high relative to historical levels, albeit with increased volatility.
In fiscal 2007, BHP Billiton achieved record annual production in natural gas, alumina, aluminium, copper, nickel, iron ore, manganese ore and metallurgical coal.
For this year, it is predicting significant volume growth in oil, copper, iron ore and nickel.
"Our world-class asset suite continues to provide us with an array of value-accretive, growth opportunities," it said.
Its project pipeline includes 33 projects in either execution or feasibility stage, representing an expected capital investment of $US20.9 billion.
"Exploration continues to be an important focus," it added.
"In our minerals businesses we are undertaking exploration in 28 countries, while petroleum exploration is underway in eight countries."
Revenue for the year rose 22.8 per cent to $US39.50 billion.
On the exploration side, the petroleum Neptune Project in the US has had an increase in its estimated budget from July, rising to $US405 million from $US300 million.
Atlantis South, also in the US, has seen another increase, up to $US1.630 billion, from $US1.5 billion in July.
BHP Billiton's annual of $US13.416 billion compared to a consensus analyst forecast of $US13.5 billion.
Its underlying EBITDA result of $US22.950 billion beat the consensus for $US22.6 billion.
Underlying earnings before interest and tax were also ahead of forecast at $US20.067 billion, compared to a consensus of $US19.9 billion.
BHP Billiton shares today closed 10 cents lower at $35.40 each.
[Endret 28.08.07 11:04 av Grey]
|Stellar profits for mid-tier Australian nickel producers
Three of the best performing Western Australian sulphide nickel producers this week showed why they are share market darlings by producing huge profit performances, aided by a buoyant nickel price.
Author: Ross Louthean
Posted: Wednesday , 22 Aug 2007
High flying miner Jubilee Mines NL, which has mining grades in WA's north eastern goldfields that other nickel miners envy, today produced a gross profit margin for 2006/07 of 70.6% by lifting its net profit on the previous year by 67% to $A173.1 million ($US138.8 M).
Also on the mining profit bandwagon were two of Kambalda's leading miners - Mincor Resources NL which had its fifth straight year of earnings growth with a record profit of $A101.33 M ($US81.26 M) up 246% on the previous year, and Independence Group NL which lifted its after-tax profit for 2006/07 by 201% to $A105 M ($US84.21 M)
Jubilee's Chief Executive Kerry Harmanis said that after taking into account ongoing capital requirements for development and exploration, the company's board has declared a record final fully franked dividend of A37 cents per share, increasing the full-year payout to A67¢ (US53.7 ¢).
He said the excellent full-year financial result was achieved during a transition year at the 100%-owned Cosmos nickel operations, though lower nickel production was more than offset by record nickel prices.
At financial year end, Jubilee had record cash and receivables (after adjustments due to re-valuation of some recent nickel shipments) of $A274.5 M ($US220.06 M), and no debt.
Harmanis said this provides a strong financial platform to fund new mine developments and intensive exploration -- including its increased annual search commitment of $A40 M ($US32.08 M). Key development projects include anticipated construction of a new mine and treatment facility at Sinclair, 100 kilometres south of Cosmos - Jubiless's first new mine outside of the Cosmos area; and development of the Prospero mine near Cosmos.
Nickel production for the year was 8,633 tonnes of nickel-in-concentrate, with the lower volume reflecting the transition from ore production solely from Cosmos Deeps to production from the Alec Mairs 1 and 2 deposits and the Tapinos deposit, 4.5km south of Cosmos. This was achieved from processing 219,602 tonnes of ore at an average grade of 4.22% nickel (2005/06: 220,610t at 5.42% nickel). Cash operating costs averaged $A5.14/lb (US$4.05/lb).
Jubilee's targeted base case production for 2007/08 is 12,000t of nickel-in-concentrate with average annualised cash operating costs forecast at about $US3.25/lb.
Independence, which mines the Long shaft at Kambalda and sends its ore like other Kambalda miners to the local BHP BIlliton-owned concentrator, said it was paying a dividend of A18¢/share for the year and had a record nickel production of 9,825t of contained nickel, up 10% on the previous year.
Revenue for the year increased 100% to $A226.5 M ($US181.65 M) and the balance sheet showed at year end cash and equivalents of $A152 M ($US121.9 M), with an additional $A12.5 M ($US10.05 M) in net receivables, and total debt was $A1.9 M ($US1.54 M).
Mincor -- now Kambalda's biggest producer through a joint venture and discovery work on Carnilya Hill and acquisition of mines from a private outfit -- had a record cashflow of $A192.16 M ($US154.11 M), up 269% on the previous year and declared a record full year dividend of A12¢/share (US9.62¢/share).
Mincor's production was 12,927t of nickel in concentrates from four mines and could be producing from six mines this fiscal year.
The company delivered 616,230t grading 2.46% Ni to the Kambalda concentrator and achieved an average nickel price of $A17.28/lb ($US13.85/lb) with an average cash margin of $A10.69/lb ($US8.54/lb).
Mincor's elation about the financial result was dented with the unexpected death a few days ago of the company's Director of Exploration Jim Reeve, considered to be the fount of knowledge on Kambalda's mining history.
Even if there is a softening of the nickel price in the new financial year, Perth analysts believe all three companies will continue to be strong performers.
[Endret 23.08.07 02:54 av Grey]
[Endret 23.08.07 02:53 av Grey]
[Endret 23.08.07 02:54 av Grey]
|Dyno cost blowout
Andrew Trounson | August 24, 2007
EXPLOSIVES marker Dyno Nobel is believed to be facing a cost blowout of more than $100 million on its Moranbah ammonium nitrate plant project in Queensland, triggering a sharp selloff in its share price.
Dyno yesterday warned the $520million project had fallen victim to tight labour and construction markets, but it frustrated investors by not being able to quantify the extent of the cost increases. That has led to speculation that the plant could eventually cost more than $650 million.
The difficulty Dyno faces is that it is still locked in contract negotiations with Thiess and United Group and likely does not want to reveal its hand by putting out a firm number. But that is cold comfort to shareholders. In July, Dyno raised $300 million in a hybrid capital raising.
Dyno shares slumped 16c, or almost 8 per cent, to $1.88.
"We are obviously very disappointed with the increased costs for the Moranbah project," chief executive Peter Richards said, adding: "We are not alone in being caught up in the tight labour and construction market."
"The project remains a strategic priority for the company and the economics of the Moranbah project remain attractive, despite these increases, and are underpinned by long-term customer commitments to ammonium nitrate volumes."
Mr Richards said he was aiming to finalise construction contracts in October, but in the meantime he was confident that the project would still meet Dyno's 9.5 per cent cost of capital, and current funding would be sufficient to cover the cost blowout.
However, the start-up date has been pushed out from the fourth quarter of 2008 to the first half of 2009, which will force Dyno to buy in ammonium nitrate to meet contract customer requirements. Rival Orica would be an obvious source of supply from its recently expanded Yarwun plant in Gladstone, much to Dyno's chagrin.
The Moranbah project has been actively supported by three key coal miners -- Anglo, Rio Tinto and Xstrata -- who are anxious to encourage new supplies to keep spiralling explosives costs down. The prospect of Moranbah coming into production had been expected to create an oversupply in Queensland in 2009-12, but the delay can be expected to keep prices strong, to the benefit of Orica and Dyno.
Dyno also said it would spend a further $US80 million ($98 million) to upgrade its Cheyenne ammonium nitrate plant in Wyoming to take advantage of higher fertiliser demand. The move will make up for the explosives part of the upgrade being delayed from mid-2008 to 2010 after major customer Peabody delayed a coal project.
Earlier, Dyno reported a 1.4 per cent fall in first-half profit to $US43.4 million. But the underlying result was up 22 per cent at $US48.4 million, in line with expectations.
Relocation of Processing Plant to Chemical Industrial Area in Pahang, Malaysia
On 24 August 2007 the company received advice from the federal office of the Malaysian Industrial Development Authority (MIDA) stating "the Malaysian Government would like to seek your kind consideration for an alternative location for the project. Given the nature of your project and with the presence of dedicated industrial areas for petrochemical and chemical projects in the State of Pahang, where the required supporting facilities and infrastructure are in place, you may wish to consider relocating the project to this state".
The request was received following high level consultations between the federal Government of Malaysia and the Government of the State of Terengganu.
Click here to read the announcement
[Endret 28.08.07 07:26 av Grey]
|New focus on old Western Australian uranium
A junior explorer with experienced geoscientists on its board has had an independent study that shows enormous scope to advance the Thatcher Soak project that was a 1970s discovery.
Author: Ross Louthean
Posted: Tuesday , 28 Aug 2007
Eleckra Mines, EKM, says that data review on past exploration work at Thatcher Soak and recent encouraging results in the area for Uranex NL in the area highlights the potential for significant calcrete uranium mineralisation in Eleckra's own Thatcher Soak tenements.
"These developments coupled with positive conclusions from an independent experts report has resulted in the company's decision to plan aircore drilling on its Thatcher Soak prospect," said executive chairman Richard Harris. The drilling was expected to start in the October-November period.
Eleckra commissioned RSG Global Consulting Pty Ltd to undertake an independent review of its uranium prospects. Harris said RSG concluded that "Eleckra had accumulated a substantial uranium exploration portfolio that is based on sound research and strong technical merit.
"The Thatcher Soak project hosts a portion of a uranium deposit identified during the 1970s and competitors holding adjacent tenements are actively exploring the western portion and potential extensions of this deposit. Eleckra is well placed to rapidly redefine the deposit and explore for possible extensions."
Better historic results included near surface assays by BP Minerals including 2m at 540 ppm U and 1m @ 440 ppm U, and two holes by Ausminex that produced 1.4m intervals of 660 ppm U3O8 and 430 ppm U3O8. Two recent holes by Eleckra included 3m @ 204 ppm U and 2m @ 206 ppm U.
Harris said that uranium calcrete mineralisation appears to be present, open and untested in a number of positions and directions within Eleckra's tenements.
Eleckra's tenements take in three projects in the Yamarna region in the North Eastern Goldfields and cover about 2,000 square km of calcrete-associated uranium targets within the Thatcher Soak, Lake Rason and Lake Wells drainage systems.
RSG said in its report that the prospects are predicated on their potential to variously host valley-fill calcrete uranium mineralisation similar to the Yeelirrie, Lake Way and Centipede deposits in the Wiluna area of WA; sedimentary uranium mineralisation similar to the Mulga Rocks deposit near Kalgoorlie; and gold and base metal mineralisation in the Archaean basement greenstone successions that are present beneath superficial cover."
Eleckra holds a significant portion of the Thatcher Soak airborne uranium channel anomaly along the Thatcher's Soak drainage channel.
[Endret 28.08.07 11:04 av Grey]
|THE Australian sharemarket opened in a sea of red this morning, following a more than two per cent tumble in New York overnight.
At 1015 AEST, the benchmark S&P/ASX200 index retreated 137 points, or 2.22 per cent, to 6039.3 and the all ordinaries lost 136.4 points, or 2.21 per cent, to 6040.9.
On the Sydney Futures Exchange, the September share price index contract slipped 136 points, or 2.2 per cent, to 6033 on a volume of 7,350 contracts.
US stock indices tumbled more than two per cent on Tuesday after Merrill Lynch warned that ailing credit markets will hurt bank profits, while reports showing eroding consumer confidence and falling home prices added to concerns about the economy.
Sentiment worsened late in the day after the release of the Federal Reserve's minutes, which noted growing concern among Fed officials about the housing market.
The Dow Jones industrial average dropped 280.28 points, or 2.10 per cent, to 13,041.85, while the Standard & Poor's 500 Index dropped 34.43 points, or 2.35 per cent, to 1,432.36.
The Nasdaq Composite Index tumbled 60.61 points, or 2.37 per cent, to 2,500.64.
ABN Amro Morgans director of equities Bill Chatterton said the market was getting used to a high level of volatility.
"We've got used to days being up two or down two, or up three even. I suppose markets gets used to volatility," he said.
"Whereas these kind of movements a couple of years ago would be very, very substantial ... they still are, but we're getting used to them."
Mr Chatterton said the subprime worries in the US were dictating the market's movements.
"There were some issues in the US in terms of their housing ... and some inflation concerns in the US, as well, and that's impacted on their market overnight and that knocked it down," he said.
"There's going to be some other shake-outs or ramifications of the credit crunchers, as people are calling it, that will play themselves out and it will take a little while for that process to go through and then we'll get back on an even keel.
"But we're going to have a reasonable amount of volatility over the next few months and this is just part of it."
On the local market, shares in BHP Billiton dropped 91 cents, or 2.43 per cent, to $36.60 and Rio Tinto shed $2.72, or 2.95 per cent, to $89.61.
The big banks all were down with ANZ giving up 49 cents to $28.82, the Commonwealth Bank 92 cents lower at $53.70, NAB reversing 77 cents to $39.23, and Westpac dipping 37 cents to $26.38.
Stock Move Price AMP -0.140 10.210 ANZ Bank -0.480 28.830 BHPBilton -0.890 36.620 CBA -0.820 53.800 NAB -0.720 39.280 NewsCorp -0.450 26.350 Rio Tinto -2.660 89.670 TelstraCp -0.080 4.230 WestpacBk -0.390 26.360 Woolwrths -0.330 28.170.
In media news, Macquarie Media Group expects the looming federal election to give it a solid first half of the new financial year, following a 1,266 per cent rise in net profit in the year just ended.
Macquarie today reported a net profit after tax for 2007/06 of $37.758 million, on the back of a 120 per cent rise in revenue to $416.354 million.
At 1024 AEST shares in Macquarie Media were down three cents to $4.37.
In other media stocks, shares in Fairfax fell 19 cents, or 4.09 per cent, to $4.46 while Publishing and Broadcasting lost 31 cents to $17.65. News Corp shed 39 cents to $26.41 and their non-voting scrip slipped 35 cents to $24.69.
In aviation news, discount regional airline Regional Express Holdings Ltd expects a ten per cent increase in earnings this year after posting a 46.8 per cent jump in full year net profit after tax (NPAT) for 2006/07.
Rex said group NAPT was $23.1 million in the year just ended, while revenue increased by 29 per cent to $225 million.
Shares in Rex were steady at $2.27.
In other aviation stocks, shares in Qantas dropped three cents to $5.44 and Virgin Blue was one cent down at $2.06.
In other market news, global packaging company Amcor Ltd today announced an on-market share buy-back of $350 million, after reporting a rise in annual profit.
Amcor reported a bottom line net profit of $533.7 million for 2006/07, up 51.9 per cent.
Excluding significant items, its underlying net profit was $397 million, down 2.2 per cent from $405.9 million in the previous year.
Shares in Amcor gained 18 cents, to 2.56 per cent, to $7.20.
Coates Hire Ltd has reported an eight per cent fall in annual profit, and says it has rejected approaches to take over the company.
Australia's largest equipment hire firm also said it expects earnings this financial year will be some 15 per cent above last year.
Coates made a net profit of $92.38 million in 2006/07, down from $100.04 million in the previous year.
Shares in Coates dropped 35 cents, or 6.33 per cent, to $5.18.
Gas transmission pipeline group APA Group has reported a decline in bottom line annual earnings, and says it expects to grow pre-tax earnings by 30 per cent this year.
Net profit for 2006/07 was $56.76 million, down from $62.6 million in the previous year.
But operating earnings before significant items rose 6.4 per cent to $64.53 million.
Shares in APA fell by seven cents to $3.84.
On the New York Mercantile Exchange, NYMEX October crude settled down 24 cents or 0.3 per cent at $71.73 per barrel, moving between $71.20 and $72.25.
Local energy stocks followed the market down. Woodside Petroleum fell 70 cents to $43.00, Santos was down 38 cents, or 2.95 per cent, at $12.48, and Oil Search lost 11 cents, or 3.06 per cent, to $3.49.
|Australia's WildHorse on Paraguayan uranium quest
Perth-based WildHorse Energy, which has institutional backers including the Packer media family, has been awarded a big concession in Paraguay. This is the first venture into South America for the company.
Author: Ross Louthean
Posted: Tuesday , 28 Aug 2007
WildHorse Energy (ASX: WHE) will set up an early exploration programme on its new 3,500 square kilometre concession in Paraguay's Parana Basin which is within a region with a history of uranium mining.
Managing Director, Richard Pearce, said today that WildHorse pursued the Paraguayan asset because -- like its other assets in the United States and Hungary -- it has a substantial set of targets with extensive drilling and other data.
"The region of South America also has a history of uranium mine operation with established mines in nearby regions of Brazil and Argentina, and a nuclear power industry that is set to expand rapidly," he said.
"Company's such as Cue Capital (TSX: CUE) and Crescent Resources (TSX: CRC) are already active in Paraguay and Globe Uranium and Mega Uranium have extensive exploration programs in Argentina in the same geological region."
Pearce said over the next six months the company would evaluate the extensive historical data on the Paraguayan concession.
From 1978 until 1981, a private Denver-based, American company, Anschutz acquired exploration rights to the eastern third of Paraguay for the purpose of exploration for sedimentary-hosted uranium deposits.
Pearce said Anschutz selected the huge Parana Basin of Paraguay as it had the same characteristics as Wyoming's uranium-bearing basins, where WildHorse has its advanced projects at Sweetwater and Bison Basin. These sedimentary basin environments are favourable for roll front deposits. Wyoming has produced about 190 million pounds of uranium since the late 1950s and still has substantial reserves of hundreds of millions of pounds.
In partnership with Korea Electric Company, Anschutz carried out exploration over three years that identified redox fronts and, finally, after spending about $US25 million it identified an area with the potential to host "a brand new uranium province with the possibility of containing several 20 million pound roll front style deposits."
Pearce said seven 7 km roll front zones were identified and each reportedly contained 2 M lbs of U3O8 per km, at a grade of 0.05% U3O8 and 640,000 lbs of U3O8 per km of roll front at a grade of 0.14% U3O8.
The majority of the Parana Basin is located in eastern Brazil and extends southerly into Argentina and Uruguay.
What's new? With the Aussie dollar soaring to multi-decade highs, companies that source much of their earnings from offshore markets are beginning to feel the pinch. Billabong is no exception. At the company's recent annual general meeting, management reduced its earnings guidance because of the weaker US dollar. Billabong generates nearly 45 per cent of its operational earnings from the US.
Billabong designs, produces and distributes surf and extreme sports wear and accessories. The company, established on the Gold Coast in 1973, sources, brands and distributes products to its own retail locations as well as other retail outlets around the world.
The company's own retail footprint is important from the perspective of branding awareness but the majority of Billabong's revenues come from wholesale sales to independent retailers. For example, in the US Billabong sells wholesale to the country's largest boardsports clothing retailer, Pacific Sunwear, which then onsells the company's products. The US market accounts for nearly half of the company's operational earnings, with Australasia making up 35 per cent and Europe nearly 20 per cent. In addition to the core Billabong brand, the company has acquired other brands in the boardsports category, in Element, Von Zipper and Honolua.
The outlook The near-term outlook remains firm despite currency pressures. Following the release of the company's full-year earnings in August, management expected a 15 per cent earnings per share growth in "constant currency terms". This suggests it was concerned about the impact of a strengthening Australian dollar back in August.
Such concerns were warranted. At the AGM in late October, management stated that currency effects were likely to reduce earnings per share growth for 2008 between 5 and 10 per cent, with most of the growth coming in the second half of the year.
Other comments at the AGM suggest that the underlying business remains firm. Momentum in all three major regions continues and, importantly, there are no signs of a slowdown in the US business given strong sales throughout August and September. But this doesn't mean there won't be a slowdown. Higher energy prices, weaker house prices and tougher access to credit will have a slow and debilitating effect on the US consumer over the next 12 months and beyond. Therefore, continued caution over the outlook is warranted.
Price Over the past five years Billabong has been a strong performer, with its stock price rising from a low of about $5 in early 2003 to more than $18 just a few months ago. However, since the market turmoil in August, the stock has struggled and at present trades about the $15 mark.
Worth buying? While there is no doubt Billabong is a quality global brand, the value proposition is less than favourable. With a cloud hanging over the strength of the US consumer, Billabong's biggest market, experts don't think paying a growth multiple for the stock is smart investing. According to Bloomberg consensus earnings forecasts, the company trades on a price-to-earnings multiple of 17 times 2008 earnings and a fully-franked dividend yield of 3.7 per cent. These numbers are not compelling enough to warrant investment.
What's new? The old adage that those selling picks and shovels profited the most from the great American gold rush certainly seems to apply to Orica.
The explosives giant has benefited greatly from the global mining boom, delivering a solid full year result.
After adjusting for the impact of last year's asset sales, net earnings of $498 million for the 12 months to September 30 were up 31 per cent on the year before.
The core mining services division was the main growth driver, expanding earnings by 18 per cent - even after removing the contribution from recent acquisitions.
This is good news for management, which has been under pressure after knocking back a private equity approach earlier in the year of $32 a share. But can the growth continue?
With some $90 million of savings expected to be realised this year from the ongoing integration of the old Dyno Nobel businesses and UK firm Minova, the earnings momentum certainly looks set to continue through the year ahead.
Furthermore, the recent addition of US firm Excel Mining Systems should provide an additional boost.
As with Minova, Excel provides structural services to the coal and underground mining industries and its rock bolts and support plates combine with Minova's specialist resin glues to strengthen mine shafts and roofing.
The combined product line-up strengthens Orica's exposure to the growing underground mining sector.
Underground mining is becoming more prominent as the world's miners work on increasingly challenging deposits and should prove a valuable source of growth for the company.
The outlook Orica's future prospects are firmly hitched to mining services.
Accordingly, management may choose to divest other divisions to fund further acquisitions in the core business.
Certainly, chief executive officer Graeme Liebelt has said that more acquisitions are likely, although his focus will remain on successful integration of the latest purchases.
More immediately, with more than half of the company's earnings generated overseas, the direction of the Australian dollar could play a significant role in Orica's fortunes. Management estimates that for every 1 per cent rise in the domestic currency, the company's earnings fall by about $3 million.
Over the past year, currency movements affected earnings to the tune of $17 million.
Price Orica's stock price has made slow but steady gains over the past few years; that is until May's private equity approach saw the stock leap towards $35.
Following the bid's rejection, the stock price drifted to a low of $23.55 in August. However, Orica has since returned to about the $30 mark and the long-term upward trend remains intact at this stage.
Worth buying? At current price levels, Orica trades on a forward price earnings ratio of about 14 times.
However, the market appears to be questioning the sustainability of the mining boom and the potential impact of any slowdown on Orica's main business.
At these levels, we view the company as hold.
|Building booms as skills demand
November 23, 2007
THE boom in Australia's construction industry looks unstoppable, with a survey of 100 of the nation's construction companies predicting another two years of record growth, rising by 7.4 per cent to $82 billion in 2009, which is more than double the level of 2005.
The survey warns of continued cost pressures. The survey, conducted by the Australian Industry Group and the Australian Constructors Association, also warns that the industry faces continued cost pressures due to skills shortages and supply difficulties in the hiring and purchasing of equipment.
It says the construction boom, which is forecast to increase 10.8 per cent in 2008 and 7.4 per cent in 2009, will be underwritten by infrastructure projects and mining-related construction.
Road projects are estimated to rise 15.4 per cent, rail projects are expected to jump 22.2 per cent, water supply projects by 24.8 per cent, electricity generation and supply by 19.3 per cent and telecommunications 15.1 per cent.
Mining construction is another big area of growth, with expectations of a 12.3 per cent annual growth rate. Other areas of growth include civil projects, such as the construction and upgrading of freight and port facilities, to ease export bottlenecks.
Scott Charlton, chief financial officer of the country's biggest construction company, Leighton Holdings, said this was the first report that reflected what the company was seeing.
"A lot of the industry reports, such as BIS Shrapnel, see the sector flattening off. We have good visibility two to three years out and we see still see growth," he said.
In a separate study, Deutsche Bank analyst Sameer Chopra has identified at least 54 infrastructure/mining projects valued at $90 billion, each costing more than $500 million and set to come on stream in the next three to five years.
These include Origin Energy at Darling Downs in Queensland, Mount Piper Power in NSW, the North South Underground rail line in Victoria, valued at $6 billion, and the Sydney Western FastRail, valued at $2 billion.
Mr Chopra said Leighton Holdings had a strong record of winning such mega-deals. Based on previous projects, Mr Chopra estimates Leighton has an 85 per cent success rate of winning projects costing over $500 million and a 65 per cent success rate of projects costing over $200 million.
Australian Constructors Association secretary Jim Barrett said he was surprised at the industry's ability to respond to the challenges of skills shortages.
The Construction Outlook survey for November revealed that 79.4 per cent of the 100 respondents reported operating at busy or very busy levels of activity during the six months to June - virtually on par with the level recorded in the previous six months, and is one of the strongest readings over the past 15 years.
Mr Barrett said current capacity was the highest recorded in the past 11 years.
Nevertheless, the survey found that over the six months to March 2008, firms expect no respite from cost pressures.
During this period, 74.2 per cent of companies expect major or moderate increases in direct labour costs, 77.4 per cent expect upward pressure on subcontractor rates and 77.4 per cent expect a rise in the prices of construction materials.
Engineering construction is forecast to be the major driver of growth, with total turnover predicted to rise by 14.2 per cent in 2007-08 and 9.7 per cent in 2008-09 to $51.9 billion.
Non-residential building, or commercial construction, is forecast to expand further to generate $30 billion of work in 2008-09, although the pace of growth is expected to moderate to 7.1 per cent in 2007-08 and 3.5 per cent in 2008-09.
[Endret 23.11.07 05:56 av Grey]