Investors may be leaning towards Goldcorp bid for Osisko |
- Investors may be leaning towards Goldcorp bid for Osisko
- Glasenberg pulls off blockbuster Las Bambas deal
- UPDATE: The Ore Wars after the Flash Crash
- Gundlach on Chinese economic growth: 'How about a minus 7?'
- BHP can't do for coking coal prices what it did for iron ore
| Investors may be leaning towards Goldcorp bid for Osisko Posted: 13 Apr 2014 04:17 PM PDT Against expectations Goldcorp (TSE:G)(NYSE:GG) last week sweetened its hostile bid for Osisko Mining Corp. (TSE:OSK) to $3.6 billion, trumping a friendly proposal by Yamana Gold Inc (TSX:YRI)(NYSE:AUY). Goldcorp raised its hostile offer to Cdn$7.65 per share from about Cdn$6.30. The miner, at $21.5 billion the world's second most valuable gold miner after Barrick Gold, is primarily after Osisko's low-cost Canadian Malartic gold mine in Quebec. The week before Osisko unveiled a complex "white knight" bid by Canadian miner Yamana Gold for 50 percent of its assets, valuing Osisko at about Cdn$3.3 billion, or Cdn$7.60 per share. Investment site Motley Fool argues "if investors were to favor any deal they would most likely go with Goldcorp's offer as it has a few advantages:
Kitco reports a research note by Canadian bank CIBC also believe the Goldcorp bid could be viewed more favourably by investors, even though the new bid is only slightly higher than the value of the Yamana partnership:  Osisko CEO Sean Roosen shows off Canadian Malartic's first gold bar poured at inauguration "We believe the acquisition, if successful, offers meaningful low-risk production growth at acceptable costs to Goldcorp. Given Goldcorp's current cash and available credit on hand, we believe Goldcorp has the financial capability to complete the transaction by the end of April." "Goldcorp's increased offer represents straightforward and superior value to Osisko shareholders," said chief executive officer Chuck Jeannes after announcing the improved offer, adding it also ensures "accretion on key per-share metrics for Goldcorp shareholders."  |
| Glasenberg pulls off blockbuster Las Bambas deal Posted: 13 Apr 2014 02:11 PM PDT Glencore Xstrata has sold its interest in the Las Bambas copper mine in Peru to a Chinese consortium in a $5.8 billion cash deal. Glencore Xstrata (LON:GLEN) confirmed Sunday it is selling the project to a consortium led by Australia-based MMG, the offshore arm of China Minmetals Corp, Hong Kong-based Guoxin International Investment Corp and Citic Metal Co. Glencore will receive about $5.85 billion in cash and in addition, the $400 million tab for all capital expenditure and development costs since the beginning of the year will be picked up the Chinese investors. Glencore said proceeds from the sale will "immediately and materially" deleverage its balance sheet and the Swiss-based firm said it would continue to look for opportunities to reinvest capital and any surplus capital would be returned to shareholders. CEO Ivan Glasenberg indicated that the the company – the world's number one commodities trader and fourth largest miner – was persuaded to sell the "de-risked" project because of the size of the offer: "Our willingness to sell reflects the level of the offer and our conviction that we can utilise the sale proceeds to create additional shareholder value." When Glencore acquired Xstrata in May 2013, China's Ministry of Commerce insisted that it offload some of its copper assets by September over fears that the combined group would dominate the global copper supply chain. Provided the price was right Las Bambas was the obvious choice to placate the Chinese. The size of the deal, expected to close in the third quarter, also reflects Chinese confidence in the copper price and continued domestic demand in the country which already consumes a more than 40% of the world's copper. Glencore has already spent $4 billion on Las Bambas which is now in full construction phase and is set to produce 400,000 tonnes of copper per year starting in 2015, as well as significant amounts of silver and gold. Copper ended Friday at $3.04 a pound in New York trading, down by double digits since the start of the year. Chinese copper imports have been on a tear, rising a whopping 31.4% on year to 420,000 tonnes in March. That's up from 379,000 tonnes in February due to the Lunar New Year holiday, but down from a particularly strong 536,000 tonnes in January this year. China's copper imports are very price sensitive and the red metal fell to a near four-year low in March of $2.92 a pound. |
| UPDATE: The Ore Wars after the Flash Crash Posted: 13 Apr 2014 12:05 PM PDT The 8% one-day drop in the iron ore price in March was the result of a new dynamic in the market: panicked selling by traders using stockpiled ore as loan collateral. Here's a quick update to MINING.com's three-minute slideshow on the evolution of the steelmaking raw material from a relic of the industrial age to the engine of global growth and the second biggest commodity trade after crude oil. |
| Gundlach on Chinese economic growth: 'How about a minus 7?' Posted: 13 Apr 2014 10:49 AM PDT The world's second largest economy is slowing down and dragging all resource-based economies down with it. China's leaders want to move the country from an investment-led economy to one based on consumption. But the rebalancing is proving difficult and signs of a slowdown are not hard to find. Consensus forecast for 2014 growth in China is 7.4%, just below the official target rate set by the government. GDP expansion at 7.4% would be the slowest in 24 years. Something that's causing alarm among resource companies reliant on Chinese demand. Jeffrey Gundlach, co-founder and chief investment officer of DoubleLine Capital, last week made some choice comments on the outlook for China and gold. Reuters reports speaking at the $49 billion fund's annual investment conference in New York, Gundlach said that he liked gold, but that China's in deep trouble: "I'm actually sort of fond of gold as a diversifier now," he said, adding however that he isn't convinced gold will reach $10,000 an ounce. [...] "A 23-fold increase in the economy has got to be due for not just a plus 7 – how about a minus 7", he said in reference to Chinese economic growth. |
| BHP can't do for coking coal prices what it did for iron ore Posted: 13 Apr 2014 10:23 AM PDT World's number one miner BHP Billiton under ex-CEO Marius Kloppers deserve (and take) much of the credit for dragging the iron ore market out of the financial stone age. By pushing hard against bigger rivals Vale and Rio Tinto which favoured the old annual negotiated contract system, in 2009 BHP helped double the price of iron ore overnight. Just for good measure, free-on-board pricing were also dropped in favour of CFR which gave Australian producers a huge advantage over South African and particularly Vale's Brazilian ore, reaping billions for the industry. BHP has been working hard to repeat the 2010 move in the coking coal market, but has so far met with little success. The main pushback from steel mills against spot pricing has to with the variability of the coal produced from one mine to the other, which is especially true in number two importer of metallurgical coal Japan. The negotiations are happening during a difficult time for the coking coal trade which this year should amount to some 320 million tonnes. Quarterly benchmark coking coal traded as high as $330 a tonne in mid-2011 after bad weather took much of Australia's supply off the market. The price of the commodity stayed above $200 for two years between September 2010 and September 2012, but has been on a steady downtrend since then. Second quarter 2014 contracts have been inked at $120 a tonne, down 14% from first quarter benchmarks and the lowest since 2008. BHP, the globe's top exporter of coking coal, has put its money where its mouth is and is selling an ever increasing portion on the spot market. Trouble is, BHP is losing big money on its push. According to data supplied by The SteelIndex spot Australian hard coking coal (FOB Australian east coast exports) this week sold at $98 a tonne. That's up just a fraction from the lowest since the price provider started publishing the numbers in January 2013 and down 17.5% so far this year. Premium coking coal was last changing hands for around $113 a tonne after falling to a record low of $108.20 a tonne two weeks ago. The Financial Times times quotes one industry veteran as saying "BHP has this almost religious belief that unless commodities trade on index or there are derivatives then it's not a mature market. But if shareholders wake up to what's happening they may have to stop trying." |
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