Central Asia Metals Share Discussion Threads

[pol123] 12/8/2019 21:23

Agree Morph, Ive got 6 figs invested. No investment is a one way ticket, but Im comfortable and when the CU market recovers so will the share price My investment is long term and I expect CAML to grow, tight BoD, and provide divis and capital growth

[morph7] 12/8/2019 10:34

*selling-not "seeking"

[morph7] 12/8/2019 10:23

Skep I really wouldn't worry about today's share price. Just think of it as a sale to buy more if you are that way inclined.Zinc and copper prices have taken a hit which is the reason for the downward pressure on the CAML price. Just be happy that you have stumbled across a company whose production costs are in the lowest quartile in the sector. Because of this, CAML can maintain dividends and look for further acquisitions whilst other companies are taking on debt and seeking assets-as highlighted in MT's post below.I have six figures invested here as do some other more frequent posters, and I sleep very well at night. Morph

[skeptic1] 12/8/2019 08:28

Share price still in the doldrums here. Are we expecting an update soon? I am starting to get nervous about my position here...please tell me I'm being ridiculous...!? (And why...?) Thank you

[mount teide] 11/8/2019 18:16

Sign of the times!

Well, well, low copper prices forces the World's largest copper miner to humiliatingly raise debt just four months after telling the market it would not need further Government cash or to raise debt this year or next - the debt will be used to part fund mine upgrade plans totalling $20bn by 2025; required to just maintain existing production at today's level, such has been the fall off in head grades at its major mines over the last decade.

On a Net debt to EBITDA ratio Codelco has a very high debt level compared with other copper miners - Codelco has a ratio between 5 and 10 times higher than that of Freeport, BHP, Anglo American and Antofagasta.



Top Copper Miner Raises Debt After Saying It Wouldn’t - Bloomberg

'The world’s largest copper miner is selling bonds, taking out loans and selling non-structural assets to secure funding for its multibillion-dollar upgrade projects only four months after saying it didn’t need to raise money this year or next.

Codelco agreed to borrow $300 million and sold two bonds for a combined $180 million of funding, the state-owned company said in a statement dated Thursday to Chile’s securities regulator CMF. Earlier this week, it sold a 37% stake in natural gas port terminal GNL Mejillones for $193.5 million.

“Through these financing operations, Codelco ensures an efficient source of funding to invest in its structural projects,” the company said. The sale of the port terminal stake is part of Codelco’s strategy to strengthen its financial position in light of its project pipeline, the company said.

The Santiago-based miner’s moves this week are a departure from the strategy that chairman Juan Benavides outlined in April, when he said Codelco was well financed through 2020 and wouldn’t need government funding or to issue more debt.

One thing that’s changed is the price of copper. In mid-April, prices were near a 10-month high, at around $6,500 per ton. They have since fallen about 12% and this week hit the lowest in two years.

Codelco declined to comment. Chile’s Finance Ministry didn’t immediately respond to emails and calls requesting comment.

The company responsible for over 8% of the world’s copper production needs to invest more than $20 billion over the next decade to prevent a slump in output at its aging mines in Chile. The Chuquicamata mine expansion, the first of a string of so-called structural projects, started ramping up in April and will be officially inaugurated next week.

Codelco had net debt of $14.9 billion at the end of the first quarter, according to information compiled by Bloomberg. At the end of 2018, the company’s ratio of net debt to earnings before items was more than four times higher than that of some of its biggest competitors.

Codelco hands all of its profit to the Chilean state, which then decides how much it will reinvest. In the past, the company relied on a combination of debt and government capitalization to fund its projects. But it received its last funding package from the Chilean government in February, a $400 million payment that was part of a $4 billion package approved under the previous administration, and President Sebastian Pinera hasn’t announced new capitalization for the company.

Moody’s Investors Service assigned an A3 rating to Codelco’s senior unsecured notes due in 2039, which “reflects Codelco’s status as a government related issuer,” the credit agency said in a statement on Friday.'

[mount teide] 11/8/2019 17:05

Fall in Copper Prices Threatens to Drive Metal Shortages - Wall Street Journal

'Copper is about 14% below the $3-a-pound level believed to make many long-term projects viable"


'The recent slide in copper prices threatens to limit investment in new mines, a trend that industry analysts and executives say could lead in coming years to sizable shortages of the material critical to manufacturing and renewable-energy projects.

Prices fell to two-year lows recently on fears that trade tensions will weaken the global economy and crimp demand. Because copper is heavily used in construction and manufacturing, its price movements are closely tied to momentum in the world economy, and particularly in China, which accounts for about half of global demand.


Some investors say the downturn in prices could actually lead to an even bigger rally years from now because of the time needed to extract metal from new projects. Many of those mines also require capital commitments to finish and are located in risky operating jurisdictions around the world.

Ore grades also decline over time, potentially leading to lower usable supply than expected as demand from electric vehicles and new technologies is likely to ramp up in the mid-2020s, analysts say.

Copper is now about 14% below the $3-a-pound level that investors say makes many long-term projects viable. It last closed above that level in June 2018, when President Trump approved tariffs on about $50 billion of Chinese imports.

“We have this great inventory of opportunities, but like other projects in the industry, they require prices higher than today’s price to develop,” Richard Adkerson, chief executive of copper miner Freeport-McMoRan Inc., said in an interview. “If global growth turns down, then we won’t be in a position to invest in these resources.”

Copper fell to $2.54 a pound on Monday, its lowest level since May 2017, before rebounding to $2.58 on Friday.

Jefferies projects a 1 million metric ton deficit in 2024 without more capital commitments from miners. Commodities consultancy Wood Mackenzie recently forecast a roughly 4 million metric ton supply gap by 2028, based on annual production of about 25 million metric tons at that time.

Driving those projections is a belief that copper will be critical to long-term shifts toward electric vehicles and cleaner technologies in transportation and energy storage. Electric and hybrid cars use more copper than conventional vehicles, and analysts project hefty demand increases from the implementation of EV charging stations. Fast-growing countries such as India also are expected to continue investing in copper-intensive infrastructure projects.

Another reason some investors remain confident that prices will eventually rebound: Operating mines in places such as Indonesia continues to come with a high degree of risk.

Many expect Freeport-McMoRanR17;s success in the coming years to be defined by its ability to transition a giant copper and gold mine in Indonesia into an underground operation. Late last year, the Indonesian government took a 51% stake in the mine—Grasberg—by paying nearly $4 billion to Freeport and Australian miner Rio Tinto RIO -3.69% PLC. While the transition underground continues, Freeport is posting lower revenue and higher capital costs.

In another sign of the challenges facing miners, Rio Tinto last month said it will take much longer than expected and cost more to complete a mine in Mongolia’s southern Gobi Desert.

The difficulties ahead for industry leaders Freeport and Rio Tinto could portend delays in the years ahead for other companies pursuing complicated projects, analysts say. While there are plentiful opportunities in countries such as Chile and Australia, extracting the metal could prove trickier than expected.


“These projects take a long period of time to bring on line,” said Christopher LaFemina, a metals and mining analyst at Jefferies. “The market should be very, very tight as long as we don’t have a recession.”

Still, many investors say it is difficult to invest in the metal and shares of companies that produce it as trade uncertainty continues to hammer copper prices. They have fallen 13% from a peak in April. Shares of Freeport are down 36% in the past year following a nearly 4% drop on Friday. Other mining stocks such as Southern Copper Corp. have also taken a beating.

Hedge funds and other speculative investors pushed net bearish bets on copper to their highest level since November 2016 during the week ended Tuesday, Commodity Futures Trading Commission data show.

“Investors continue to be reticent about our sector,” Mr. Adkerson said. “That’s likely to be the case until there’s some clarity on the direction of this trade issue.” '

[joan of arc] 10/8/2019 17:38

Not sure what either of the last 2 posts mean for CAML.I thought they just sold sheet copper.

[pol123] 10/8/2019 16:06

Interesting implications that will sit below many traders radar at the moment

hxxps://agmetalminer.com/2019/08/08/copper-mmi-how-a-boeing-trade-case-could-cause-global-copper-prices-to-skyrocket-give-wieland-metals-a-guaranteed-monopoly/

[mount teide] 10/8/2019 10:59

There is nothing the commodity hungry Chinese economy likes more, than bargain prices!


China Goes Big on Commodities Purchase Amid Shifting Trade War - Hellenic Shipping News today

Commodity purchases by China rebounded strongly in July. Imports of soy to coal and crude oil gained, signaling demand in the world’s biggest buyer remains solid even as a trade spat with the U.S. escalates.

The increase comes as the nation’s overall imports shrank less than forecast while export growth rebounded, signaling some recovery in trade before new tariffs threatened by the U.S.

The nation’s total imports “look surprising,” with the strong commodity component driven by both rising prices and volumes, said Betty Wang, senior China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “Coal and crude oil volumes also held up, which could be seen as signs of rising energy demand,” she said, adding that higher iron ore prices year-on-year also boosted the value of imports.

Soy
Soybean shipments jumped in July to the highest level in almost a year as Chinese crushers boosted volumes from South America, and before halting U.S. purchases. Imports rose to 8.64 million tons last month, from 6.51 million tons in June and 8 million a year ago. The strength may persist through August and September, which could raise inventories and slow future purchases.

Coal
Coal imports surged to the highest in six months as companies brace for tougher import controls in the second half. Shipments jumped 13% in July from a year ago to 32.89 million tons, handing authorities further impetus to clamp down as they aim to keep annual volumes at levels similar to last year’s.

Crude Oil
The end of a peak maintenance period saw China’s crude oil imports recover in July as state refiners rebuild stockpiles. Purchases climbed 14% on-year to 41.04 million tons. Additional crude oil quota to private refiners should keep imports upbeat in the second half, according to a note from ANZ.

Iron Ore
Iron ore sees yet more evidence of rebounding supply. Chinese imports soared to 91 million tons in July from 75 million a month earlier as output disruptions in Australia and Brazil ease. Purchases were also up slightly from a year ago.

Copper
Chinese buying of overseas copper concentrates rose to a record amid an ongoing push to boost domestic refining capacity. And while inbound cargoes of unwrought copper and products fell from a year earlier, they were up from the prior month as import premiums rose.

[pol123] 08/8/2019 17:34

Think Zinc is pegging us back a little. Not sure what our BE costs are for Zinc, but looks like we are heading for $2000/T, April this year Zinc hit $3000/T

[garycook] 08/8/2019 04:47

andyj,Agree its 7.5% at 193p, if the dividend is maintained !

[andyj] 08/8/2019 01:54

The dividend yield appears to now be above 7%. Does anyone else get that calculation?

[mount teide] 06/8/2019 19:45

Lower metal pricing forces shutdown of the worlds largest Cobalt and Copper mine - Glencore's Mutanda Mine in the DRC - It produced almost 200,000 tonnes of copper last year and more than 27,000 tonnes, or a fifth of global supplies, of cobalt.

From the FT late today:

'Glencore PLC is to halt production at the Cobalt/Copper Mutanada mine in the Democratic Republic of Congo at the end of the year, following a "significant decrease" in metal prices.

According to a letter to employees of the mine, the Swiss commodities miner and trader will shut down the cobalt and copper mine due to being "no longer economically viable".

Mutanda will continue production until the end of 2019, after which it is expected to be placed on "care and maintenance".'

[jimmywilson612] 06/8/2019 10:41

Here was my ramblings on CAML:
hxxps://jimmywilson612.wixsite.com/ukstockwatch/post/central-asia-metals-caml

CAML is affected by macro events and ongoing trade war with China won't be helping with the copper price. However, we all know the resource sector goes through cycles and CAML can ride through these cycles by paying a good div, paying down their debt, and looking at mines to take on.

Type of share to buy and tuck away and wait until the macro climate swings around to CAML favour once again.

[the deacon] 06/8/2019 08:18

Yes warranty. Definitely keeping some powder dry. Will add more if it gets silly

[warranty] 06/8/2019 07:50

I’m not for adding just yet, it may be that the market fall has only just begun. I’m staying with cash on the sidelines at the moment to see which way things go as I’m already overweight here.

[the deacon] 05/8/2019 10:59

I've added twice today. 198 and 195. Very happy with that..

[mount teide] 05/8/2019 10:56

Current metal pricing relative to the Q1/2016 eight year copper market cycle low:

+ 25.7% / Lead
+ 60.8% / Zinc
+ 30.1% / Copper

when CAML put out its 2015 Full Year Results which included the following overview:

'At IPO, the Company raised $60 million and soon thereafter started construction of the Kounrad SX-EW plant which was completed on time and under budget. Since production commenced in April 2012, the plant has produced 40,302 tonnes of copper at an average C1 cash cost of $0.63/lb based on the industry definition as explained in the Financial Review section below. This low cash cost of production has enabled the Company to pay back to shareholders via share buy-backs and dividends over $73 million including the proposed 2015 final dividend of 8 pence per share. This was a notable milestone for the Company and one of which we are extremely proud.

It is all the more pleasing that these achievements have been made in the current challenging market conditions where the copper price fell to a six-year low of approximately $4,500/t during 2015. Whilst the commodity price environment is outside our control, CAML's low cash costs at Kounrad gives us the resilience to weather a prolonged commodity downturn. The current market conditions are challenging for all mining companies, many of whom, we note, have cut or suspended dividend payments.

Group EBITDA margins throughout 2015 remained in excess of 50% and with $42.0 million of cash and no debt, the Company is well positioned to both maintain its dividend policy and continue its plans for growth.

The combined strength of CAML's balance sheet and its low cost operations at Kounrad will enable the Company to withstand any prolonged downturn in the commodity markets.'


Likewise, the cash flow generation and profitability of SASA is only marginally behind that of Kounrad due also to extremely low production costs.

Have taken profits at a long term holding in Dubai Port World to increase my holding here - over 3 year outlook i currently rate CAML as one of the best risk/reward investments in the portfolio.

[pol123] 04/8/2019 20:18

Thanks MT

It will be interesting to see where CU bottoms. There are a number of cross currents, but the trade situation is currently winning out and keeping a lid on CU. CAML downside must be limited if divi is held at or near last years level.

[mount teide] 03/8/2019 21:15

pol123 - according to research carried out by the CME Group the average total cost of production and net cash cost for the copper mining industry in H1/2016 when the previous copper market cycle bottomed, was $2.10/lb and $1.65/lb respectively.

Copper bottomed at $1.98/lb in H1/2016 - at that point in time it was estimated that around 20-25% of the world's copper mining production was loss making.

All-in production costs have since been on a gently lowering trend - so it would be reasonable to assume that the average total cost of production for the industry is probably now round $2.00/lb. At the current $2.59/lb copper price, somewhere in the range of 2% to 5% of current production is probably loss making.

[pol123] 03/8/2019 12:29

Anybody got any idea what the cut of point is, when mining CU becomes non profitable for the big producers.

Could we get to a point soon when miners just start to stockpile to squeeze the price higher or just stop further investment.

I know we are a low quartile producer. However Im just trying to get a handle on how far CU may drop. How long before CU is not effected by the current China trade spat / conditions? When does market tightness take over as the fundamental price driver?

Few ?? in there but interested on peoples views / insights

[eeza] 03/8/2019 08:08

At this rate it will be CAML that'll be the morsel.

[lauders] 03/8/2019 04:42

Unless I am reading slide 11 incorrectly it looks like CAML are down to 3x potential acquisition opportunities and with Cu weak at the moment we could be hearing something sooner rather than later.

[serratia] 02/8/2019 22:56

Visualising trends -

[zangdook] 02/8/2019 16:20

I'm taking the view this is fill yer boots time. I hope it doesn't turn out it was Phil McCavity time.