BHP Billiton Ltd (ASX: BHP)
Tracking well on annual guidance: BHP Billiton has released its operational review result for the quarter ended 30 September 2017 and has stuck to its FY18 production and unit cost guidance. Particularly, BHP aims to deliver 7% volume growth in FY18. While the progress on major projects as well as latent capacity projects has been tracking well, iron ore production dropped by 3% to 56 million tonnes for the September quarter owing to planned maintenance and lower stockpiles and petroleum production witnessed a slip of 8% at 50 million barrels of oil equivalent (mmboe) with US assets impacted by Hurricane Harvey. This was partly offset by copper output surge of 14% in the quarter to 404,000 tonnes. Particularly, first copper production from the Los Colorados Extension project and the Olympic Dam Southern Mining Area were said to have been achieved in the September 2017 quarter and the Caval Ridge Southern Circuit project is also progressing to plan. Further, Mad Dog Phase 2 and the Spence Growth Option (BHP’s approved growth projects) witnessed commencement of work and both are expected to become operational as their respective markets in oil and copper rebalance.
BHP’s Onshore US operations also reported for an increase in operated rig count from five to nine during the September 2017 quarter, and the group is on track to exit remaining Onshore US assets for value post the divestment of a small portion of the Hawkville acreage. Positive drilling results from Wildling-2 were reported with a sidetrack witnessing oil in multiple horizons. BHP’s Nickel West production also increased by 21%. Overall, the group has provided a mixed result and is putting efforts to track well on its plan. With the above update, BHP stock edged slightly lower on October 18, 2017.
.png)
Quarterly Production Update (Source: Company Reports)
Rio Tinto Ltd (ASX: RIO)
Trapped for falsely inflating value of African coal business: Rio Tinto seems to have come under some pressure with the stock slipping slightly as the group’s former chief executive Tom Albanese and former finance head Guy Elliott have been charged on grounds of a fraud in the United States with regards to inflating the value of RIO’s African coal business (Mozambique coal assets) in which RIO made an unsuccessful investment worth $US3.7 billion. Particularly, Securities Exchange Commission has filed a complaint in a Manhattan court in the United States and has alleged that the duo breached the disclosure obligations and corporate duties by concealing from the board, auditor, and investors that the Mozambique coal assets’ transaction was a failure and by indicating false positive outlook of the project. The duo was said to have not followed company policies and accounting standards, and were trying to hide the weakened Mozambique investment that the group made by acquiring ASX listed company Riversdale Mining. Rio had expected benefits from the coking coal Mozambique acquisition, but it was found later by the company that the quality and quantity of the coal was lower than expected. While RIO was informed that the asset had a value of about negative $680 million, the group failed to disclose the same ahead of raising capital from investors through US debt offerings. Basis this, the group can see a $2.9 billion write-down. On the other hand, Rio aims to defend itself against the allegations and has stated that the SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC’s claims will be rejected. Meanwhile, the group has recently posted a mixed third quarter result with 6% increase in Pilbara iron ore shipments to 85.8 million tonnes (100 per cent basis) in the September quarter over Q3 2016 while mined copper production slipped 3% against the corresponding quarter of 2016. Given the cyclical nature of commodity prices, RIO stock has been recently found to be among the top shorted stocks on ASX.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.auand associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to ourTerms& Conditionshas been provided please go through them and also have a read of the FinancialServicesGuide.On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.