Gold Road Disappoints... M&A?

Rio's divvie comes in below expectations, while FMG shareholders look around

The Pre-Start

  • Rio’s half year saw FCF of US$2.84b after spending US$4b on PP&E. It finished June 30th with US$5b in net debt (RIO) Divvie missed estimates

  • Champion Iron produced 3.9Mwmt, sold 3.4Mdmt, had revenue of $467m & EBITDA of $181m. $154m spent on DRPF project to date (CIA)

  • Red produced 109koz (Koth’s AISC was $2,216/oz), after the first full Q with SLR integrated. Cash & bullion of $454m, with $93m spent afterwards closing a loan facility (RED)

  • Gruyere produced 63koz at $2,441 AISC in a disrupted Q. Gold Road’s sales were 31koz for $10m in FCF (GOR) Credit to GOR for reporting a Corporate All In Cost

  • Nickel Industries RKEF ops produced 32kt Ni for the Q at a cash cost of US$10k/t, with EBITDA of US$42m. HPAL & mining ops added US$13m & US$25m in EBITDA respectively (NIC)

  • Westgold produced 53koz at $2,041 AISC, closing with $263m in cash & bullion. Karora merger closes tomorrow (WGX)

  • Peninsula updated on the Lance project, with production targeted for late 2024. All major equipment has been ordered (PEN)

  • Emerald did 114koz at US$818/oz AISC for FY24. $162m cash & bullion on hand at year-end, with a Sprott facility balance of US$19.5m (EMR)

  • WAF’s maiden grade control drilling from Kiaka saw hits including 30m at 4.1g/t, supporting stage 1 (WAF)

  • Galena, while in VA, produced 27kt of Pb-Ag con, up significantly, while mill performance also improved (G1A)

  • Calidus (still in admin) had a record quarter at Warrawoona and met H2 guidance, producing c. 32koz. Macquarie closed out the entire hedge book, now owed $148m (CAI)

  • Lotus has signed a Mine Development Agreement with a 10-year stability period, fixing fiscal terms in Malawi (LOT)

  • Atlantic Lithium delivered an updated resource at its Ewoyaa lithium project to 36.8Mt at 1.24% Li2O (A11)

High Grade It

  • Canadian global fertiliser giant Nutrien vowed to counter any competition from BHP with a boost to potash supply from its mine network (BHP)

  • Rio Tinto have said that Guinea’s Simandou will be a big contributor to its de-carb efforts (Bloomberg)

  • Fortescue was fortunate to have such a sticky institutional backer for as long as it did. Now, it needs to find broader support (AFR’s Chanticleer)

  • Saudi Arabia sees Codelco as a good candidate to develop lithium deposits despite challenges facing the state-owned miner (Bloomberg)

  • India's gold demand fell 5% this quarter (yoy), but consumption in 2H 2024 is set to improve following a reduction in import taxes (Reuters)

  • $3b deal shows how BHP dusted itself off and tried again (AFR’s Chanticleer)

  • Rio Tinto shareholders will receive the fourth-biggest interim dividend in the miner’s 151-year history (AFR)

  • Fundies have closed out more than $20b in bullish copper bets since mid-May, with mounting worries about Chinese demand (Bloomberg)

  • Senior employees of Vitol were paid US$6.4b last year (FT) Not a bad pot to share amongst 450 people 

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Wheelin’ n Dealin’

  • Brightstar and Alto Metals are both in trading halt pending a corporate transaction (BTR, AME)

Rattlin’ the Tin

  • Brightstar have a capital raise associated with the Alto Metals transaction (BTR)

  • Zambian copper hopeful Prospect Resources are in trading halt for a raise (PSC)

Word on the Decline

  • We heard that Northern Star Resources may have experienced a significant rock fall late last week at Jundee resulting in a Jumbo being buried, but thankfully no-one was hurt. And like the fire last month, we’re unlikely to hear about it from them until the quarterly…

Do you have some Word on the Decline? Reply to this email or shoot a message to [email protected] directly. We will always take your privacy seriously.

In the Weeds

  • Allan Trench and John Sykes investigate how mining companies can preserve value and mitigate the Lassonde curve (MiningNews)

  • Wyloo’s Luca Giocovazzi says there is a global shortage of nickel sulfide concentrate, a high-grade product prized by battery makers (S&P)

  • Oil Billionaires Bet on Trump’s Energy Agenda (WSJ)

  • China unveils its new economic vision (Economist) How long can it remain “ambivalent” about the role of the market?

  • Here’s a cool 9-min history on the discovery of Escondida (Youtube)

  • Chinese brands captured 11% of the European electric car market in June, notching record registrations (Bloomberg)

China EV Chart

Chinese EV market share in Europe grows

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Devil’s in the Detail

Do the math on last year’s profit of US$6.5 billion distributed to Vitol’s 450 employees. That’s an average of US$14.4 million per employee.

Convert that to Australian dollars and we’re talking A$22 million on average.

Which is more than all but 4 CEOs in Australia according to AFR’s highest paid list. Pipping 5th placed Mike Henry of BHP taking home $19.6 million.

And if you consider Switzerland has a maximum income tax of only 11.5%, the commodity traders (on average) might be topping the CEO after-tax.

Why on earth does anybody want to be a professional-class CEO again?

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