Monsters of Rock: Gold and BHP, what else for your Wednesday ASX mining news?

Play the hits, Stockheaders. Pic: Getty Images

Gold hits new all time high
Experts think new support could be found above US$2450/oz
BHP strikes record iron ore and copper production, with more growth on the horizon in FY25

Gold hit an all time high as Donald Trump’s growing US election hopes signal more geopolitical uncertainty and US car repossessions bound higher.

And some experts think a new support level could be set at the never before seen level of US$2450/oz.

Gold futures lifted to almost US$2470/oz, with Aussie dollar spot prices in excess of $3650/oz, while among the closest measures to officially published gold pricing – the London Bullion Market Association PM price – struck US$2443/oz.

That outstripped levels of US$2421/oz seen on May 21 this year.

Joy to the world of ASX gold stocks, most of whom recorded strong lifts into the green.

Northern Star Resources (ASX:NST) was ~3.5%, with Ramelius Resources (ASX:RMS), Westgold Resources (ASX:WGX), West African Resources (ASX:WAF) and St Barbara (ASX:SBM) all up more than 3%.

Recent form stock Catalyst Metals (ASX:CYL) added over 7%, with the bull run for gold pairing with solid recent production results from its Plutonic mine in WA.

ANZ’s Head of G3 Economics Brian Martin said the ‘door is opening for the (US) Fed to begin cutting rates soon’.

In a note today, he made a case for a 25bps cut in September. An end to uncertainty over rate cuts could provide more steam for gold prices, given high interest rates are typically an anchor for non-yielding bullion.

“We are increasingly confident that the drivers of excess growth and inflation in the US are subsiding sustainably, helped by the Fed’s restrictive monetary policy stance, which in real terms has tightened over the past year,” Martin said in a note.

“Our augmented Taylor Rule gauge of neutral interest rates implies that a neutral fed funds range is currently 3.75–4.0%. Policy is restrictive and will remain so for some time, further suppressing demand and inflation. Excess demand for labour has subsided and hiring is slowing.”

OANDA market analyst Zain Vawda said gold was now in unchartered territory, with gold’s run having come despite positive US retail sales data that provided support for the inverse yin to gold’s yang – the US dollar.

“If the $2450/oz continues to hold then further gains are the most likely outcome,” he said.

“Psychological and round numbers are always key for Gold so keep a watch on $2475 and of course the psychological $2500/oz handles.

Alternatively, a break below $2450 brings $2432 support into focus before the psychological $2400 maybe revisited once more.”

BHP beats consensus

If Rio Tinto (ASX:RIO) was a disappointment yesterday BHP (ASX:BHP) had a better run today despite a near 0.9% loss.

It delivered a financial year record of 287Mt of iron ore from the Pilbara on a 100% basis, slightly beating consensus estimates after shipping a record 76.8Mt in the June quarter.

BHP has maintained the same guidance for 2025 of 282-294Mt, but consensus estimates have it creeping higher to 291Mt after a 1% lift in FY24.

The rise in exports came with the South Flank mine ramping up to its full 80Mtpa production rate, while average realised prices rose 9% to US$101.04/wmt for FY24 despite sliding 14% QoQ to US$91.31/t for the June quarter.

Copper pricing improved markedly as spot prices skirted record highs, climbing 19% to US$4.58/lb (US$3.98/lb for FY24), as BHP reported full year production of 1.865Mt (+9% YoY) including 1.125Mt at Escondida in Chile, the world’s largest copper mine.

Its South Australian copper mines were up 39% to 322,000t, with an 8% drop at Pampa Norte to 266,000t the sole slider among its red metal portfolio.

BHP has guided likely higher copper production for FY25 of 1.845-2.045Mt.

Meanwhile, its Mt Arthur thermal coal mine beat production expectations, up 8% to 15.4Mt. The New South Wales coal project is expected to deliver 13-15Mt this financial year, though lower prices will hurt earnings with revenue sliding 49% to US$121.52/t.

1.3Mt was diverted to regional power stations in NSW under a controversial coal reservation policy that capped prices for domestic product.

BHP’s met coal output slid 23% to 22.3Mt (100% 44.6Mt) in its first full year without the Poitrel and South Walker Creek mines sold to Stanmore Coal (ASX:SMR) in 2023, and with Whitehaven Coal (ASX:WHC) assuming its Blackwater and Daunia mines in April this year. Those assets had produced 10Mt in the nine months to April 2.

Without them output will fall to 33-38Mt at the mines remaining in the BHP-Mitsubishi Alliance in FY25, but BHP sees output lifting to 43-45Mt within five years as stripping ratios at the long-life mines improve.

BHP has been mooted as a potential buyer for Anglo American’s met coal assets, which remain on the market despite the collapse of BHP’s scrip bid for the London-listed major and a production-halting fire at its flagship Grosvenor mine.

Nickel output at BHP’s soon to be suspended Nickel West business rose 2% to 81,600t. But it has already flagged a US$300mn loss and further impairment after a 24% dive in prices to US$18,197/t, a situation exacerbated by maintenance at the Kwinana refinery which saw a higher volume of product sold as lower value nickel matte.

RBC’s Kaan Peker said BHP’s results were largely positive with guidance on track (aside from a revised met coal) and iron ore and copper volumes increasing.

“Production guidance hit across all commodities (met coal was revised in 3Q), with record iron ore production,” he said in a note.

“All commodity segments (Copper, Iron Ore, Met and thermal coal and Nickel) coming in better than RBC and consensus, with key assets WAIO and Escondida performing strongly. Also importantly, BHP expects all unit-costs to be within the guidance range.

“On guidance, FY25 production guidance was in-line with RBCe but weaker vs Cons (consensus) for Met coal (which we flagged in preview). FY25 Copper production guidance suggests a 5% increase YoY as Escondida grades lift and Spence hits its straps. We have 6% YoY growth, with the difference namely from Spence (recovery and throughput).

“One-offs disclosures were generally positive, with FY24 capex coming in below guidance, and positive work cap adjustment. Finally, Price realisation was seen to be marginally lower with Iron ore pricing missed despite record lump sales.”

Capex spend came in at US$9.3bn, below the guided level for the full year of US$10bn, though exploration spend lifted from US$350m to US$457m.