BHP Billiton Limited
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BHP Details
BHP Billiton Limited (ASX: BHP) has approved $184m to start work at its South Flank project as production at its Yandi 80-million-tonnes-per-year operation in the Pilbara begins to wane. The board of the Melbourne-based company is expected to consider approval for the $3.2 billion project in mid-2018 and first ore would be targeted in 2021. The capital cost for South Flank is expected to be in the range of $30 to $40 per ton, with expenditure fitting within the company's Western Australia iron ore divisions previously indicated average sustaining capital expenditure of $4 per ton over the next five years. Recently, the BHP Board has elected Ken MacKenzie to succeed Jac Nasser as Chairman. Mr. MacKenzie will assume the role of Chairman effective 1 September 2017, following Mr. Nasser’s retirement as both Chairman and a Non-Executive Director. The stock declined by 10.0% in the last one month owing to fluctuations in commodity prices, while it was up 27% in the last one year. Given the ongoing projects progress and cost controls measures, we maintain a “Buy” recommendation on the stock at the current market price of $23.48
BHP Daily chart; (Source: Thomson Reuters)
Rio Tinto Limited
RIO Details
Rio Tinto (ASX: RIO) shareholders approved the sale of a suite of Australian coal assets to China-backed Yancoal Australia (ASX: YAL) for $2.69 billion, ending a bidding war with commodities trader Glencore PLC (LON: GLEN). The sale was approved by 97% of shareholders of Rio Tinto's UK and Australian-listed shares. Funds from the sale had yet to be allocated within the company amid some calls by shareholders to use the money to boost dividends or buy back shares. Rio Tinto, which has dual primary stock listings in Australia and Britain, confirmed Yancoal as the preferred buyer on June 26 after Yancoal topped Glencore's offer of $2.675 billion. Yancoal is a 78% owned subsidiary of Yanzhou Coal Mining Co, which is 56% owned and controlled by a Chinese state-owned enterprise, Yankuang Group. Further, Rio Tinto has successfully completed its bond tender and redemption exercises announced on 22 May 2017 and has reduced gross debt by a further $2.5 billion. Notably, since the start of 2016, it has reduced the nominal value of outstanding bonds from approximately $21 billion to about $9.5 billion.
As announced on 8 February 2017, Rio Tinto plc and Rio Tinto Limited is conducting a $500 million share buy-back program to repurchase Rio Tinto plc's ordinary shares of 10 pence each, which commenced on 1 March 2017 and will end before 31 December 2017. The purpose of the Program is to reduce the share capital of the Company and accordingly all shares repurchased will be cancelled. Although, the stock has moved up by 38.8% over the last one year, given the robust balance sheet, improving production efficiencies and world class portfolio, we maintain a “Buy” recommendation on the stock at the current price of $ 63.39
RIO Daily chart; (Source: Thomson Reuters)
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