Monsters of Rock: Who is winning the reporting rodeo today?
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The big miners broadly moved up today as Fortescue Metals Group (ASX:FMG) led the quarterly reporting rodeo by posting record results from its Pilbara iron ore mines.
While the response from the market was broadly positive, Resolute suffered an 8% hit after gold production fell 10% from the previous quarter to 77,450oz with costs rising as well.
Investors also digested the overnight news of Rio’s monster dividend. It went down like custard with Rio shares rising to $134.17, around record highs.
BHP was 1.7% up to $53.35 and FMG closed up 1.7% at $26.26.
Materials was up 1.51% as the ASX200 closed 0.52% higher.
Not a surprise to see some bullish activity from traders around Rio this morning after it announced a whopper US$5.61 ($7.60) a share dividend.
The US$9.1 billion interim half year dividend, 75% of earnings, is more than the miner has ever paid out in total and around 2.5x its richest previous interim payout.
Now the question is whether there are nasties lurking in the fine print that have been masked by China’s voracious demand for iron ore if the price slips.
The Andrew Forrest chaired miner will increase its investment in its new green energy divisions by between 4-5 times by plowing US$400-600 million into Fortescue Future Industries.
It is also likely to pay out a massive dividend in its financial results.
Meanwhile Chris Ellison’s MinRes was one of the largest large cap gains today despite having no news.
It will release its quarterly results tomorrow. With major iron ore and lithium assets in WA it is leveraged to rising prices on both fronts.
Reborn uranium hopeful Paladin Energy has gained more than 10% over the past five trading days and is up around 300% over the past year.
Its rise has tracked the growth of positive sentiment in the uranium sector, where years of low prices has meant a number of mines have remained on care and maintenance.
With supply less than certain, expectations of an uptick in demand are positive for the industry.
Hundreds of millions of dollars have flowed into the sector in the form of physical uranium purchases, with funds and investors like Sprott betting on hopes uranium will be a key aspect of global decarbonisation of electricity.
Paladin owns 75% of the Langer Heinrich mine in Namibia, which was mothballed in 2018.
The mine would cost US$81 million to restart, with 5.9Mlbs of uranium produced during a 7 year peak at costs of US$27/lb and a total mine life of 17 years.
Tim Gitzel, the head of global uranium giant Canada’s Cameco said on an earnings call this week there was a “growing wedge” of uncovered uranium requirements as supply has exited the market since 2011.
Regis has enjoyed just two months of production from the Tropicana gold mine after it bought IGO’s 30% stake in the operations for $900 million.
Tropicana delivered 17,317oz at AISC of $2121/oz, but it was the existing Duketon operations that really shone, posting quarterly gold production of 96,829oz at $1254oz.
While Regis produced 372,870oz at $1373/oz over the financial year, it could finally become a 500,000ozpa miner once it gets a full year of production out of Tropicana, with FY22 guidance of 460,000-515,000oz of gold at $1290-1365/oz.
The $2 billion-capped gold miner has been emblematic of the malaise across the sector, having lost more than 50% of its value in the past year.
Whether today’s 5.65% bump is the start of a rally remains to be seen.