Anglo American Share Discussion Threads

[eggbaconandbubble] 26/5/2023 08:45

Thanks Fuji, Good article. Not unusual for projects to encounter unexpected issues and costs. Expect more but in the long run this will be a supersized cash cow.

[fuji99] 26/5/2023 08:16

Here it is -
.

Anglo American takes $1.7bn writedown on Yorkshire fertiliser mine
Mining group extends cost and timeframe estimates for bringing Woodsmith project into production by 2027

Harry Dempsey in London FEBRUARY 23 2023
19
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Anglo American has taken a $1.7bn impairment on the North Yorkshire fertiliser project it saved from collapse three years ago, as the group announced a higher budget and extended schedule for the UK’s largest new mining development in decades.

The FTSE 100 group recorded the writedown after estimating that it would cost $1bn a year to bring the Woodsmith mine into production by 2027, both higher expenditure and a longer timeframe than previously expected.

Anglo rescued Woodsmith’s parent Sirius Minerals, which had been struggling to raise the billions of dollars needed to build the mine by 2024, for £405mn in 2020.

Woodsmith is a complex project involving the sinking of two 1.6km shafts to access a deposit of polyhalite — a mineral that can be used as fertiliser but is not yet commercially proved — and the construction of a 37km tunnel to transport material to a port on Teesside.

Anglo has earmarked $6.1bn of capital expenditure for the fertiliser project — with $1.35bn already spent and a further $4.8bn planned by the end of 2027 — on top of the $1.4bn Sirius spent on the project.

The company in December flagged a potential writedown on the carrying value of Woodsmith, which has now been reduced to $900mn, as it seeks to produce larger volumes of material.

Anglo aims to produce 5mn tonnes of polyhalite by 2030 but has increased the design capacity for the mine from 10mn tonnes a year to 13mn, with a possible mine life exceeding 50 years.

The company could reach maximum production capacity in the early 2030s if demand for its product is strong enough. The capital expenditure intensity for that stage is expected to be a third of what it will take to get to 5mn tonnes.

“We have taken a writedown on it now as the timeline and budget have been extended,” said Anglo’s chief executive Duncan Wanblad. “Be in no doubt we are setting Woodsmith up to generate cash flows for many, many decades.”

Tobias Wagner, senior credit officer at Moody’s Investors Services, said the “meaningful investment” in Woodsmith adds to “already significant investment plans” at Anglo but the company’s balance sheet would remain solid.

Even though polyhalite is a new product to the fertiliser market, Wanblad said it was modelling the project economics on a price of $190 a tonne versus more than $300 a tonne for similar products on the market.

Alex Pearce, analyst at BMO, said the writedown was not a huge surprise but “there are still a number of uncertainties that need to be addressed, including the eventual market for the product, to lower the risk profile of the asset going forward”.

Wanblad told the Financial Times the company had secured supply agreements with mainly US and Brazilian customers covering future polyhalite production of more than 5mn tonnes a year and that there were also “big opportunities in China and India”.

“It’s not a traditional fertiliser today,” he said. “But it has all the traditional components of a fertiliser with four of the six core nutrients that crops need.”

Anglo on Thursday reported a 30 per cent fall in full-year underlying earnings before interest, tax, depreciation and amortisation to $14.5bn on revenues of $35.1bn, driven by lower production, as well as inflation and higher energy costs.

Its South African platinum and iron ore businesses have been roiled by the country’s energy and logistics crisis, while copper production in Chile was hit by lower water availability.

Christopher LaFemina, analyst at Jefferies, described the writedown as “unhelpfulR21;.

“Anglo had not expected the challenges it has encountered in designing this project,” he said. “It is important that the company gets this project right from this point forward.”

Spending on the project will be approved by the board annually and it would be “another two or three years” before a feasibility study is put to the board for final approval, according to Wanblad.

[eggbaconandbubble] 26/5/2023 08:13

Please can you copy and paste the article. Thanks.

[fuji99] 26/5/2023 07:42

Could be the Woodsmith write-down that took effect coupled with the diamond lower sale and of course the negativity surrounding all miners.

[fuji99] 24/5/2023 09:31

US debt ceiling may be the main cause for all markets to drop:
AAL is a class stock to own in any portfolio.
.

[tuftymatt] 24/5/2023 08:38

I know what you mean VAS!!

To be honest I think today is all about UK inflation dropping but not by as much as expected. Added with the US debt ceiling / China soft growth it equals down for here and most of UK listed companies.

For me companies like AAL are long term holds that pay a divi higher than you can get in cash. I never buy big to start with and drip feed in / average down when required to do so in order not to find myself in a massive hole. That said this is almost 20% off my average right now but I will add further once the US debt ceiling has some sort of clarity.

Hang in there as the world still needs what the likes of ALL pull from the ground and over 3000 will be seen again one day 👍🏻

[vas007] 24/5/2023 07:25

Tuffy -when are we going to get off this rollercoaster ride.

[fuji99] 17/5/2023 08:09

As expected hard times are showing everywhere, particularly in luxury businesses.

"Anglo American said Wednesday that the value of rough diamond sales for De Beers' fourth sales cycle of 2023 fell to $480 million from $604 million in the prior-year's fourth cycle."

[tuftymatt] 12/5/2023 09:02

Yeah I agree it's worth north of 3200 but having chased it down a few times already I am holding back right now.

Happy to pay a bit more if sentiment shifts in favour of the sector but also happy to keep my powder dry for a better price.

Good luck all 👍🏻

[csmwssk12hu] 12/5/2023 08:47

Just checked the forward eps estimate for these and it’s £3.32 per share putting these at seven times forward earnings, so me this is now a screaming buy, historically it’s traded at 9.8 times forward earnings which leaves 40% upside to get to its average pe obviously there are times when it’s above and below that but with the average 40% above todays price which would make it 32.83 I can’t help but have a dabble

[tuftymatt] 05/5/2023 12:22

It's a positive I guess and we need as many of them as we can get right now!!

[philanderer] 05/5/2023 09:33

Barclays raises Anglo American price target to 3,300 (3,250) pence - 'overweight'

[pander45] 04/5/2023 16:32

It's ok, doc browns on my side mate.

[casket1] 04/5/2023 16:19

Won't you be 23 years too late ?

[pander45] 04/5/2023 16:04

Think I'll wait until 2000.

[fuji99] 04/5/2023 15:51

With the never ending turbulence in the banking system still going on, there will be a lot of instability and volatility in the markets.

[pander45] 28/4/2023 08:31

As astounding as my last one, which was also correct. And your analysis market master?

[casket1] 28/4/2023 08:29

Your level of analysis for this price prediction is astounding

[pander45] 27/4/2023 07:03

2000 on the cards

[tuftymatt] 26/4/2023 06:17

Yeah the whole sector is getting whacked again right now.

Buy for the longer term and get paid to wait for the recovery from the divi is my plan.

[philanderer] 25/4/2023 23:25

Market Report...

Anglo American saw its production increase by 9 per cent in the first three months of the year compared to the same period in 2022.

The miner attributed the improvement to higher copper production from its new Quellaveco mine in Peru. Shares fell 3.4 per cent, or 86p, to 2426p.

The slump was felt across the sector amid lower metal prices.

Glencore shed 3.6 per cent, or 17.35p, to 469p, Rio Tinto fell 3 per cent, or 156.5p, to 4984.5p and Antofagasta slipped 2.6 per cent, or 39p, to 1478p.

Daily Mail

[1knocker] 25/4/2023 10:53

My last post should have read 24.75, but the top up still looks distinctly premature. With recession on everyone's breath, those who are patient should have opportunities to buy under 23, and perhaps much lower. Keep some powder dry, folks.

[tuftymatt] 25/4/2023 09:38

I agree 1knocker that long term all will be ok here.

Coal will climb in value if we get a cold winter outlook later this year and the mix in metals is encouraging too as you mention.

Yes the ups and downs of miners are not for everyone but the World needs what they pull from the ground and that isn't going to stop anytime soon.

[1knocker] 25/4/2023 09:24

Topped up with a few at 25.75. A limit order I placed a couple of months ago, when it was well below the share price Perhaps should have pulled it and waited for the down trend to reverse.Time will tell. It seems a hell of a long time ago that £35 seemed like a decent entry price!

One just has to be patient with miners. I comfort myself that when I bought RIO at 22 years ago there was hardly a commentator who seemed to think they were worth buying at almost any price - certainly not at £22. It was soooo tempting to take some profits wen they rose into the 30s. Hanging on to them has certainly paid off.

The metals mix here looks good to me, especially for anyone (like me) heavy in oil and gas. If the green revolution does happen, and sufficiently dramatically to hurt O&G, the electrical metals here should do well. I also like the coal in the mix. More coal was mined and burned (8bn tons) last year than any year in history. I don't believe coal is going away any time soon. For me, the most encouraging part in the results was that costs seem to be under control.

[tuftymatt] 25/4/2023 08:16

And still it drops.

I am keeping some powder dry ready to top up here when the dust settles.
I know recession fears are growing but long term this is a good home for some of my ISA portfolio I think.

Good luck all 👍🏻