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Galaxy Resources Limited (GXY) increased the total lithium oxide resource contained at its Mt Cattlin Lithium-Tantalum project by 11% to 172,000 tonnes on the previous resource estimate released in May 2009. The company said the increase would extend the mine life of the spodumene project to 16 years. Galaxy expects that much of this additional measured and indicated category material would be economically mineable by open pit technique and would translate into increased reserves. The company added that the new resource estimate has increased the total tonnes for all resource categories by 10%, or 1.51 million tonnes.

Wesfarmers Limited (WES) reported a 14% drop in coal production at its Premier mine during the December quarter compared to the previous quarter. The company also said production at Curragh fell 1.4% following a 2.3% rise in metallurgical coal and 11.7% decrease in steaming coal. Meanwhile, production at Wesfarmers’ 40% owned Bengalla mine weakened 2.2% to 574,000 tonnes compared to the previous quarter. The company said this was due to operating in a less productive section of the mining sequence. Wesfarmers attributed the drop in production at Premier to lower coal demand from Verve Energy as a result of a plant upgrade at the Muja Power Station. In the year to December 2009 compared to the previous corresponding period, production was down 4.9% at Premier and up 2.1% at Bengalla, while at Curragh metallurgical production dropped 9.1% and steaming production fell 2.6%.

Iluka Resources Limited (ILU) reported a 37.3% drop in mineral sands December quarterly production and 26.3% fall in CY production versus the previous corresponding periods. The company said the lower annual production reflected its response to the global financial crisis and sharply weaker demand, especially in the first half of 2009.

Iluka reported a 34.9% drop in mineral sands sales revenue to $576 million (pre-currency hedging) for CY09 versus the pcp. After currency hedging, the company said sales revenue was down 37.5% to $533 million versus the pcp.

Iluka reported December quarter sales revenue before hedging of $227.3 million, down 19.8% on the pcp and added that sales revenue in the second half increased appreciably from the low first half level.

The company said operational changes announced in the first half resulted in markedly lower second half zircon production as well as ensuring that full year production more closely matched sales.

“In this regard, Iluka’s second half zircon production was 37.3% lower than the first half, with the result that zircon sales in the second half exceeded second half production by approximately 80,000 tonnes,” Iluka said.

“Full year zircon production of 263,000 tonnes declined by 31.7% from the record year of 2008.”

The company said Zircon demand recovered progressively through the second half of 2009, particularly in China, with approximately 80% of Iluka’s annual sales second half weighted and over 50% of the year’s sales being recorded in the December quarter. Iluka said the latter reflected the combination of severe demand retraction and customer inventory draw down evident in the first half of the year.

“Whilst China’s demand for zircon has rebounded strongly and is trending above pre-GFC levels, demand recovery has been more muted in Europe and North America,” the company said.

Iluka reported a 9.3% decline in rutile production year-on-year to 127,000 tonnes, below initial expectations.

The company attributed the decline to delays in the commissioning of the Murray Basin Stage 2 project.

Iluka said synthetic rutile production for the year declined by 13.3% to 405,000 tonnes, due to the company’s decision to idle two synthetic rutile kilns, which occurred during the year.

The company said it has the capacity, through its new production sources of Jacinth-Ambrosia and Murray Basin and through a restoration of full production in Virginia, to increase zircon and rutile production above pre-GFC levels as demand recovers and then grows.

As at 1016 AEDT, Iluka shares were up 2c to $3.51.

 

Orocobre Limited (ORE) shares surged 60c to $2.00 at the open, after saying it had reached an agreement with Toyota subsidiary Toyota Tsusho Corporation, to develop the Salar de Olaroz Lithium-Potash Project in Argentina. The latter would invest $4.5 million to complete the feasibility study and other pre-development work, slated to be completed by the third quarter of this year.

In return the Japanese automaker would acquire a 25% interest in the project, while promising to act as a conduit to inexpensive funding through Japan Oils, Gas and Metals NationalCorporation (JOGMEC), a state-owned entity that provides assistance to Japanese companies in securing supplies of mineral resources.

However Orocobre Managing Director, Richard Seville said at current estimates additional funding for the project would not be required.

Mr Seville said Toyota Tsusho would have the first rights to lithium off-takes required to develop its car batteries.

“Toyota Tsusho becoming our strategic partner allows Olaroz direct access to Toyota Motor Corporation and its partners such as Panasonic and Sanyo,” Mr Seville said.

“Global demand for lithium across the electronics, industrial and automotive sectors continues to grow and we are very pleased to have secured access to a project of this size and quality,with a strong and focused development partner.”

At the open Wednesday, Orocobre shares had surged 42.9%, or 60c, to $2.00 each.

Lend Lease Group (LLC) this morning said it had snared the development rights the 710 hectare Alkimos community development, 40kms north of Perth. Lend Lease said the agreement with the West Australian government’s Landcorp, would see the first stage alone take seven years to build 2,500 homes with a value of over $400 million.

The company said the final development would take nearly 20 years to complete with around 10,000 new dwellings.

Lend Lease said it expected to invest $20 million to establish the project.

Lend Lease CEO and managing director, Steve McCann said he was delighted to secure the project.

“Lend Lease brings an enviable track record for partnering with governments and landowners to deliver master planned communities that lead the way in community creation,” Mr McCann said.

The company said it expected to take up to three months to finalise the contract.

At the close of business Tuesday, Lend Lease shares were trading at $9.47.

Map Group (MAP), owner of Sydney Airport, said an influx of international tourists into the country led to 8% more passengers passing through the airport in December. As with the November, the US once again led the surge, with 22% more visitors than last year, while Korea, Germany and France also posted double digit growth.

Overall, 3 million passengers passed through the airport, with a 6.5% jump in domestic passengers making up nearly 2 million passengers. Meanwhile international passengers surged 11.4% from December 2008.

Map CEO, Kerrie Mather welcomed the result.

”Sydney, Copenhagen and Brussels all reported their strongest traffic result of the year in December,” Ms Mather said.

”This growth looks set to continue into the New Year, evidenced by recent capacity announcements from Air New Zealand, China Southern and Philippine Airlines.”

Meanwhile, Copenhagen airport reported 3.9% jump in passengers while Brussels airport number dipped 1.1% as fierce snowstorms racked the Belgian capital.

At the close Tuesday, MAp shares were $2.91.

RBS – Round Up – 200110

BHP Billiton Limited (BHP) reported record production for petroleum, iron ore, nickel and zinc for the six months to 31 December 2009. Despite the upbeat results the miner remained cautious on the near term future citing factors such as the winding down of government stimulus packages around the world and Chinese lending restrictions as a cause for volatility.

However, for the last six months, BHP Billiton said the record production levels were also accompanied by strong growth in commodity prices as demand from China and restocking in the developed world continues apace.

Looking at its core iron ore production, the miner benefited from the Rapid Growth Project aimed at increasing capacity at its Pilbara operations. BHP produced 62.5 million tonnes of iron ore for the six months, 6% higher than the previous corresponding period ("pcp"), while quarterly production to 31 December 2009 was 11% higher than pcp at 32.5 million tonnes.

The company noted that since the start of the Rapid Growth Project in 2002 iron ore production has nearly doubled at its West Australian operations

BHP Billiton said that for the six months ended December 2009, 54% of Western Australia iron ore shipments on a wet metric tonne basis were based on annually agreed pricing, with the remainder sold on shorter term reference pricing.

Elsewhere, petroleum production also hit record levels of around 80 million boe across its range of oil, natural gas and other products such as condensate for the six months to 31 December 2009.

The figures are around 17% higher than pcp, however the miner noted that fourth quarter CY09 production was down slightly from the prior quarter.

The miner attributed the result to the ramp up of production at Shenzi in the US, strong performance from its Atlantis reservoir and good weather.

Across other metals, aluminium production was in line with prior periods at around 626,000 tonnes.

Lead production was also steady, while zinc and silver both saw production increase, largely due to increased grades and production at BHP’s Antamina mine in Peru.

Uranium production was down as a result of previously reported problems involving a lift shaft at its Olympic Dam mine.

The miner also dug up 1.5 million carats of gold.    

At the close Tuesday, BHP shares were trading at $43.31.

Wall Street returned from holiday with a triple-digit rally for the Dow, which reached 15-month highs. Health care and tech stocks led gains as quarterly results continued to filter through.

The Dow Jones climbed 115.78 points, or 1.09%, to 10,725.43, the S&P's 500 advanced 14.2 points, or 1.25%, to 1,150.23 and the NASDAQ put on 32.41 points, or 1.42%, to 2,320.40.

Citigroup rallied 3.5% after posting a US$7.6 billion quarterly loss, which was in line with expectations and largely attributed to the bank paying back US$20 billion in government bailout funds. However, the company did report a fall in consumer credit losses.

Morgan Stanley, Bank of America and Wells Fargo rose 2.6%, 0.4% and 0.7% respectively ahead of the release of their results later in the week.

Another company to report this week, American Express advanced 1.3%.

IBM gained 1.8% ahead of the release of its quarterly report after the close. The company beat earnings and revenue estimates and forecast full-year earnings to be at the high end of previous guidance. 

Apple jumped 4.4% as Microsoft added 0.8%.

Kraft shed 0.6% after Cadbury’s board accepted a US$19.5 billion takeover offer.

Health care stocks rallied as the Obama administration’s healthcare reforms may be placed in jeopardy if it loses an election in the state of Massachusetts. Merck & Co and Pfizer put on 2.9% and 2.6%.

Johnson & Johnson closed 1.2% dearer.

Machinery makers Deere & Co and Caterpillar gained 2.4% and 1.4%.

NYMEX light crude oil for February delivery rose US$1.02 to settle at US$79.02 a barrel.

ConcoPhillips put on 1.3%.

COMEX gold for February delivery rose US$9.50 to settle at US$1,140 an ounce.

European Markets

A second day of gains saw European markets reach 15-month closing highs Tuesday as Cadbury finally accepted a takeover offer from Kraft. Drugmakers were consistently higher, while financials and commodity stocks were mixed.

The UK benchmark FTSE 100 advanced 18.75, or 0.34% to 5,513.14. Germany’s DAX gained 57.93, or 0.98% to 5,976.48, while the French CAC40 rose 32.21, or 0.81% to 4,009.67.

Cadbury accepted an improved US$19.5 billion offer from Kraft Foods, creating the largest confectionary company in the world. Cadbury shares climbed 3.6%.

Among the British banks Royal Bank of Scotland jumped 3%, while Lloyds and Barclays lost 2.6% and 1.8%.

On the continent BNP Paribas and Deutsche Bank added 0.4% and 0.9% as Societe Generale slid 0.8%.

Pharmaceuticals GlaxoSmithKline, AstraZeneca and Sanofi-Aventis added between 1.7% and 1.9% ahead of the election in Massachusetts.

UK retailer Burberry surged 8.3% after beating third quarter sales estimates. The company also forecast fill-year profit would be at the top end of forecasts.

Alstom fell 2.5% after the train-maker missed analysts’ third-quarter sales estimates.

Automakers Daimler and Renault weakened 1.1% and 2.2% after Nomura Holdings downgraded both stocks to “neutral”.

Miners followed a similar pattern to metals prices, which were mixed. Aussie peers Rio Tinto and BHP Billiton added 0.2% and 0.3%.

Total led energy stocks higher with a 1.2% rally.

Japanese Markets

Japan’s Nikkei lost ground as investors locked in profits following the recent rally. Exporters struggled as the yen reached a one-month high against the greenback.

The Nikkei 225 shed 90.18, or 0.83% to 10,764.90.

Automakers Honda and Toyota fell 2.1% and 1.2% as electronics companies Panasonic and Canon weakened 2.6% and 1.4%. 

Semiconductor related stocks slid as a result of a fall in chip prices for the sixth consecutive day. NEC Electronics Corp., Advantest Corp and Elpida Memory lost 1.7%, 1.3% and 4.5% respectively.

Among financials Mitsubishi UFJ Financial and Sumitomo Mitsui Financial dropped 2.4% and 3.1%.

Japan Airlines was unchanged at the end of the day despite being heavily traded. The company has lost over 90% of its market capitalisation since the beginning of the month and is set to file for bankruptcy.

Hitachi rallied 2.7% on the back of a broker upgrade to “buy”, citing the company’s stronger financial position as a result of a recent equity raising.

Hong Kong Market

The Hong Kong stock exchange halted a five-day slide, adding over 1%. The rally, while other Asian markets lost ground, was spurred by the speculation of new rules that would allow investing abroad.

The Hang Seng climbed 217.97, or 1.02% to 21,677.98.

The banks were beneficiaries of the news with Bank of China surging 4.1% and heavyweight lender ICBC putting on 3.1%.

Europe’s largest bank HSBC shed 0.6%.

The shippers also gained. China Cosco surged 3.6%, while container line Orient Overseas put on 6.2%.

Clothes manufacturers Yue Yuen and Li & Fung put on 3.9% and 1.2% respectively.

It wasn’t all positive news with Tencent Holdings, an online game operator shed 5% after its stock was downgraded by a broker.

Foxconn, the world’s largest third-party mobile, shed 6% for the same reason, this time from Australia’s Macquarie Group.

Flight Centre Limited (FLT) upgraded its FY10 pre-tax profit guidance today from $125 million – $135 million to $160 million – $180 million following a stronger than expected first-half. The company posted a result of $99.8 million in FY09.

Flight Centre expects pre-tax profit for the first half to be 13% -19% higher than the previous corresponding period at between $70 million – $74 million.

Managing director, Graham Turner, said the first half result was particularly pleasing given last year’s result included a record first quarter profit.

“Assuming global conditions continue to gradually recover, we are well placed to record stronger profit growth during the second half, as results during the corresponding period of 2008/09 were heavily affected by the global financial crisis,” Mr Turner said.

“Trading conditions have stabilised globally during the first half, although the rate of actual improvement has varied from country to country.” 

Mr Turner said the company had started to witness some improvement in the global corporate travel sector, along with a strong performance from the leisure and wholesale travel businesses.

Flight Centre said losses in the USA are currently in line with initial expectations, while stronger results are expected in the second half due to it being the peak booking season for the region.

Meanwhile, the company said it has entered into an agreement to resolve its disputes with corporate travel joint venture partner, Rahul Nath.

Flight Centre said the agreement remains the subject to the satisfaction of a number of conditions and, if completed, would see Flight Centre take full ownership of FCm India by acquiring Mr Nath’s 44% interest.

As at 1420 AEDT, Flight Centre shares were up $1.58 to $19.28.

Aussie shares lost 0.7% to lunchtime Tuesday, on track to snapping four straight sessions of gains. Investors in the banks booked profits, while the miners, heavily sold in recent days, held their ground.

At midday, the All Ords was down 28.3 to 4,907.8, while the ASX/200 retreated 31.0 to 4,880.1. About 1.5 billion shares worth around $1.7 billion had changed hands.

The big four banks all lost ground. NAB and ANZ both shed 0.9% after strong gains yesterday.

Westpac shares retreated 34c, or 1.3%, $25.67. Commonwealth Bank of Australia slumped 93c, or 1.6% to $57.12.

The broader Banks and Financials sector gave up 1.1%.

Insurers drifted lower, with the exception of Suncorp-Metway which rose 16c, or 1.8% to $9.01.

Property Trusts slumped 1% in the face of broad losses in the sector. Lend Lease and Westfield were both down 0.9%, while Mirvac retreated 2.5c, or 1.6% to $1.56.

The Materials and Resources sector lost 0.1%.

Market heavyweight BHP Billiton added 17c, or 0.4% to $43.61. Rival Rio Tinto shed 20c, or 0.3% to $78.12.

OceanaGold surged 7.9% 24 hours after the gold producer said that its reserves in New Zealand had increased.

A number of resource stocks barely moved from their overnight close, including Fortescue, Newcrest and metal recycler Sims Group.

Lihir Gold stretched gains to a third day as investors reacted positively to the resignation of CEO Arthur Hood. The company's shares added 4c to $3.36.

The Energy sector lost 0.9%.

Karoon Gas spiked 26c, or 3.4% to $8.00. The gas producer said it would retest the Poseidon 2 well that last week produced ‘inconclusive’ results.

Whitehaven Coal led the sector lower, down 20c, or 3.8% to $5.12.

Oil Search, Santos and Woodside all retreated between 0.7% and 1%.

The Industrials sector slumped 1.2%. Brambles and Toll fell 11c and 25c to $6.85 and $8.98 respectively.

Leighton also lost ground, though a more conservative 10c, or 0.3% to $39.40.

Softness from the retailers saw the Consumer Discretionary sector down 0.9%.

David Jones lost 5c, or 1% to $4.99. Myer continues to disappoint to be down another 3c, or 0.9% to $3.52, 14% below the $4.10 per share initially paid for the shares in October.

Kathmandu shares were down 1.5c, or 0.9c to $1.60. The retailer's shares have lost 6% from their initial listing price in November.

Among the media stocks, Fairfax lost 4.5c, or 2.4% to $1.815 and Newscorp retreated 24c, or 1.4% to $17.00.

Consumer Staples was down 0.3% on the back of a 27c, or 1% decline in Woolworths' shares.

Wesfarmers edged higher, although was easily countered by a 1.5% loss from Foster's.

Computershare surged $1.05, or 9.2% to $12.51 after the share registry company announced EPS had spiked 20% in the last six months.

The broader Information Technology sector rose 5.9%.

The Telecommunications sector lost 0.2% on the back of a 1c, or 0.3% loss from sector heavyweight Telstra.

Around the region, the Nikkei 225 fell 21.2 to 10,833.8, while the Straits Times Index gained 7.3 to 2,919.3. Meanwhile, the NZSE50 edged 14.1 points lower to 3,233.0.

Spot gold was trading at US$1,137.47 per ounce, and the Aussie was buying US$0.9264.

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Kingsgate gold remains on track
Kingsgate Consolidated said it had produced 40,224 ounces of gold in the three months to 31 December. Looking ahead, the gold miner said it expected production would come in at the higher end of the 120,000 – 140,000 ounces previously offered as production guidance for the year to 30 June 2010.

At midday, Kingsgate shares were 15c higher at $9.58.

Minara quarterly output increases
Minara Resources said it achieved production of 8,675 tonnes of nickel and 512 tonnes of cobalt at its 60% owned Murrin Murrin operations for the December 2009 quarter, up from 7,836t of nickel and 506t of cobalt in the pcp. The company said production levels for both nickel and cobalt reached record levels for the calendar year at 32,977t and 2,350t respectively.

At lunch, Minara shares up 1c to 81.5c.

OZ Minerals to exercise anti-dilution rights
IMX Resources said OZ Minerals would exercise its anti-dilution rights for the proposed placement to the Hong Kong subsidiary of Sichuan Taifeng Group Co Ltd, Taifeng Yuanchuang International Development Co Ltd. IMX said OZ Minerals has a one-off right to maintain its shareholding interest in IMX for a period of 12 months by participating in future placements on the same terms and conditions.

At noon, IMX shares were unchanged at 47c, while OZ Minerals shares were down 1.5c to $1.17.