Monsters of Rock: Iron ore bounce delivers a dream day for ASX miners
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Iron ore prices have been just a touch volatile in 2021, sending ASX 200 listed mining stocks on some wild swings.
A rebound last night was good news for the majors this morning, with BHP (ASX:BHP), up 1.25%, FMG (ASX:FMG), up 2.63%, RIO (ASX:RIO), up 2.6%, and Mineral Resources (ASX:MIN), up 3.51%, all among the notable large cap gainers.
Lynas Rare Earths (ASX:LYC) was the best performer among the large cap resources stocks on no news, while $7.4 million capped copper-gold miner OZ Minerals (ASX:OZL) continued a solid week with a 3.93% rise.
Materials rose 1.47%, trailing only the Wisetech-driven information technology sector as the ASX 200 closed up 0.33%.
Meanwhile, Seven Group Holdings, owner of mining equipment supplier Westrac, announced WA powerbroker and media baron Kerry Stokes would be stepping down as chairman at the company’s AGM in November.
No worries though, the octogenarian billionaire will still be paid $475,000 a year for the next three years to stick around as an advisor and remain chairman of Seven West Media (ASX:SWM) and Australian Capital Equity Group.
A handful of miners released their annual or half-year financials today. These were some of the big ones.
It’s hard to say a bad thing about lithium right now and even a US$89.5 million loss after tax was not enough to sour investors on Orocobre.
The lithium miner, which now splits its time between its world class Argentine brine operations at Olaroz and the Australian hard rock lithium mine Mt Cattlin after sewing up the $4 billion Galaxy Resources merger, said lithium prices are improving “reflecting strong end market and customer demand”.
The merger will make the combined entity “a top 5 global lithium chemicals company”.
It is being rebranded as Allkem.
While losses were up on the $67.2m loss in 2020, the bulk of that came from a US$74.9m worth of Argentine tax rate changes.
Operationally, Olaroz turned around a difficult 2020 with costs dropping 12% to US$3860/t and cash margins of 23% at US$1123/t despite the impact of low prices in the first half of the financial year.
““The merger consolidates the combined group’s position in Argentina and provides an opportunity to build on a strong platform there and in our other key jurisdictions globally, including Australia, Japan and North America,” Orocobre MD Martin Perez de Solay said.
“It will give us significant operational, technical and financial flexibility to deliver the full value of our combined portfolio.
“Our operating strategy retains a focus on safety, quality and productivity which combined with disciplined cost management will deliver further improved operating results ensuring we remain a lowcost producer of lithium carbonate.”
After almost a year as a merged entity with Saracen, Northern Star is on the way to a 2Mozpa production profile, a level that could see it challenge Newcrest (ASX:NCM) to the title of Australia’s biggest gold digger by 2026.
According to new MD Stuart Tonkin organic growth can get it there, with the Super Pit and broader Kalgoorlie region on a path towards a 1.1Mozpa production profile.
For now its aims are a touch more modest. Northern Star produced 1.6Moz of gold in 2020-21, up 13% on FY2020, at all in sustaining costs of $1483/oz (up from $1350/oz a year earlier).
Northern Star sold its gold at a record average price of $2277/oz, with prices having risen to record levels early in the financial year.
That generated a statutory NPAT of $1.03 billion and underlying NPAT of $372m, powering Northern Star to a cash position of $799m before $400m from the sale of the Kundana mines to Evolution is taken into consideration.
Northern Star estimates it will produce 1.55-1.65Moz of gold at $1475-1575/oz in FY22, with $570m to be spent on capex including $140m on exploration.
WA’s Iluka Resources is best known for its world-leading position in producing mineral sands like zircon and rutile.
But it is transforming also into a rare earths force with construction of the second phase of its Eneabba development in its home state to wrap up in the first half of 2022.
It is also looking to complete a feasibility study into a third stage, which it says would be Australia’s first fully integrated rare earths refinery, early next year.
In its operating businesses Iluka saw the benefits of a turnaround in the mineral sands market post-pandemic, with revenue up 61% year on year from $456.6m in the first half of 2020 to $735.6m in H1 2021.
EBITDA was 69% higher at $299.2m, with free cash flow 288% better at $179.3m and net cash 338% up from $50.2m at December 31 to $220.1m at June 30.
Both increased prices and sales volumes drove a 14% rise in NPAT to $129m.
Having waived an interim divided in its half year results last year Iluka will make a fully franked 12cps payout to shareholders.