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Mining
Despite tumbling 3.46% over the course of a bad week the material sector joined the rest of the ASX 200 in recovery mode today.
The TGIF vibes were palpable as big gains for Rio Tinto (ASX:RIO) and BHP (ASX:BHP) led the big mining stocks to a 1.53% gain.
62% iron ore was trading a little below US$140/t and is up almost 60% since hitting a 12 month low of US$87/t in mid-November with Champion Iron (ASX:CIA) the top large or mid cap performer, up 8.45%.
Expectations of Australian supply risks from potential Covid cases at WA mine sites, responsible for 60% of the world’s iron ore supply, were a major factor in the price increase.
If you were a gold miner you could be forgiven if you just didn’t want to release your quarterly this week.
The all ordinaries gold index tumbled 3.12% today after gold prices flopped US$35/oz overnight to under US$1800/oz on rate rise fears in the USA.
The index was down 15.88% for the week to erode what had been looking like a decent start to the year with gold prices largely holding above the key US$1800/oz mark.
If there’s anyone less popular than gold right now it’s big gold producers, who can’t seem to catch a break with their production reports.
Ramelius (ASX:RMS) was down 8% to lead the mid cap laggards.
Australia’s largest gold miner Newcrest Mining (ASX:NCM) was hit for 6.4% by shareholders after delivering 436,000oz of gold at AISC of US$1127/oz, a margin of US$588 on every ounce sold.
Newcrest is, like many gold producers, promising a second half rush to meet guidance after increasing its production rate from 396,214oz in the September quarter.
The company expects to produce 1.8-2Moz gold and 125-130,000t of copper in FY22, having delivered just 832,298oz of gold and 50,945t of copper in the first half against 1.04Moz and 69,320t at the same period in FY21.
Newcrest says it has not been materially impacted by Covid in its operations but will incur additional costs of US$35-45m in FY22.
Aeris Resources (ASX:AIS) also fell more than 7% after reporting an increase in costs at its Tritton copper mine in New South Wales, revising guidance after Covid cases hit the site in December, something expected to continue for the next two months.
Aeris produced 4880t of copper at Tritton at $4.86/lb in the December quarter, reducing its guidance from 21,000-22,000t at $4.10-4.45/lb to 18,500-19,500t at $4.60-4.85/lb.
The company said lower copper grades and higher costs were to blame, but production is likely to be similar in the second half with work underway to bring down its AISC base.
Production guidance has also been reduced at the Cracow gold mine in Queensland, which delivered 15,869oz at $1563/oz in the December quarter.
While that was an improvement on the September quarter, Aeris has lowered guidance from 67,000-71,000oz to 64,000-66,000oz at $1650-1700/oz.
The Savage River magnetite mine is truly ageing like a fine wine down in Tasmania under the watchful eye of Grange Resources (ASX:GRR).
Now into its mid-50s, the project produces an ultra high grade pellet concentrate that is adored by the niche steelmakers prepared to pay well over benchmark prices for a taste.
While the Pilbara iron ore miners were seeing prices collapse and discounts rise in the December Quarter, Grange was humming its own tune.
Its realised prices increased from US$153.09/t ($206.80/t) in the September quarter to US$164.14/t ($226.71/t) in the December quarter.
However, Grange did see its costs rise from $95.01/t to $103.69/t and production fall from 687,000t to 666,000t.
“Despite the short term drop in the iron ore prices seen in the fourth quarter of 2021, we are happy to report a very strong operating quarter where our costs have been on budget and further capital being spent on the mine,” Grange CEO Honglin Zhao said.
“This has enabled us to report a strong operating finish for the financial year and the company declaring a fully-franked special dividend of 10 cents per share in the quarter.
“We continue to see strong demand for our high-grade, low-impurity iron ore pellets.”
Grange is progressing studies on a 10 year underground mining option at Savage River and a second operation at Southdown in southern WA.
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