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Mining
The production numbers are flying in thick and fast for the ASX’s mid-tier miners.
And it’s a mixed bag today with Aeris Resources (ASX:AIS) copping a massive hit from shareholders after pulling its earnings guidance for FY23 just weeks before the release of its June quarter activities report.
It’s a big hit for a miner which should have tailwinds from the enormous interest flowing into copper, the commodity every major and market watcher is keen on right now, even if (or potentially because) prices are a little stagnant.
A big wave of demand from a growing EV production pipeline could be coming in 2024, Capital Economics said this week, projecting that prices will lift from US$8500/t at the end of this year to US$9250/t by the end of 2024.
Miners will still have to hit the mark when it comes to output though.
Aeris had already revised its EBITDA down to $50-70m at its March quarter report from $80-110m in February on the release of its half year results, itself down from $140-170m earlier in the financial year.
The Tritton, Jaguar, Mt Colin and Cracow mine owners finally waived the white flag on those projections, falling almost 15% today.
It’s down over 32% in the past six months.
Among the issues are lower than expected zinc production at Jaguar in WA, where three ‘mining induced seismic events’ in its lower level have interrupted production and delayed access to higher grade stopes, potentially impacting FY24 mine plans as well.
Jaguar delivered 3057t of copper in FY23 and 22,479t of zinc, the latter below its 24,000-29,000t guidance range.
Its Mt Colin mine in Queensland saw production fall below guidance as well, at 7110t against 8000-9000t for FY23 after Evolution Mining (ASX:EVN) delayed a processing run at the Ernest Henry processing plant to July.
At 17,205t copper and 48,220oz gold the Tritton mine in New South Wales and Cracow operation in Queensland did meet guidance, through Cracow’s output was down from 53,920oz in FY22 and 73,685oz in FY21.
On the flip side, Regis Resources (ASX:RRL) rolled out a record gold production result for FY23, pulling 458,000oz out of the Duketon operations in WA and its 30% share of the Tropicana JV.
That came in around the lower end of its 450,000-500,000oz gudiance range after an 18% increase quarter on quarter in the June term.
Cash is up $39m as well.
It has one of the gold miner’s regular believers RBC hooting. The investment bank’s mining analyst Alex Barkley, who has an outperform rating and $2.60 price target on the $1.5b capped goldie, says the strong quarter at 122,000oz of gold produced “should partially ease” concerns about the quality of Regis’ operations.
“After a weak Q3 it is reassuring that RRL has hit production expectations. Group and both sites were all within 2% of (RBC estimate),” Barkley said in a note.
“This sees RRL reach original FY23 gold production guidance for the group (458koz vs guid: 450-500koz) and at both Duketon and Tropicana, albeit towards the respective lower ends.
“AISC was not provided, but we expect the lower end of revised FY23 guidance could be tested (RBCe A$1790/oz, guid: A$1795-1845/oz).
“Cash has risen by A$39m as RRL exits an investment heavy period, with Garden Well Underground (Duketon) and Havana Open Pit (Tropicana) both entering commercial production.”
It sets up Regis well for the potential investment decision coming on McPhillamy’s, its long delayed 2.2Moz gold project in New South Wales and its famous Lachlan Fold Belt mineral district.
RBC is not the only investment bank keen on Regis, named as one of Goldman Sachs’ three producer buys in an initiation note this week on Aussie gold miners.
We are deep in the red pretty much everywhere today, making Regis’ 1.8% odd rise all the more impressive.
Gold was punished while copper and other base metals stayed mellow after strong US labor data which has markets fearful of further rate hikes from the US Fed. Even with tighter monetary policy the US labour market is on track to have added jobs for 30 consecutive months in June, with the ADP National Employment Report showing a 497,000 job lift in private payrolls.
If the official US Jobs Report similarly outperforms expectations, more rate rises could be on the horizon.
Strong gas flows into European reserves also hurt coal prices, down 3.3% to around US$140/t for 6000kcal high CV Newcastle thermal.
These are, of course, terrible conditions for commodities in both the metals and energy space. Materials fell 1.58% while energy stocks were down 1.59%, largely pacing the market.
Mining
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