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On the same day China announced fourth quarter GDP had moved back into double digit growth, Fortescue Metals Group Limited (FMG) showed it was a beneficiary of the strong Chinese appetite for resources. Australia’s third largest iron ore producer shipped 9.1 million tonnes of iron ore in the December quarter, exceeding previous guidance.

By comparison, the company, shipped 6.28 million tonnes, or 31% less, iron ore in the December quarter in 2008, although the miner’s output retreated 5% from the September quarter output.

On an annualised basis, the company produced 36.6 million tonnes, while the company also flagged a rise in the contract price of iron ore by as much as 25% to 50% from April 1.

Fortescue also said it was expanding its sales focus outside of China to build growth.

The miner, however, has flagged production would hit 55 million tonnes per annum by early 2011 following the commissioning of new plant equipment at Christmas Creek in Western Australia.

The growth in iron ore output was largely driven by the company’s new Christmas Creek mine where the target production was exceeded by 24%.

Fortescue said the December C1 cash cost was US$27.42 per tonne of ore shipped, 3% higher than the September quarter. The rise was largely due to currency fluctuations, the miner said.

In other news, the company reached a fresh milestone after shipping its 50 millionth tonne of ore from its Herb Elliot port last Monday.

Just prior to the close, Fortescue shares were trading down 13c to $5.01.

Beach Energy Limited (BPT), which changed its name from Beach Petroleum to ‘better reflect current strategy’, reported a 7% hike in sales revenue to $134 million for the December quarter 2009.

Despite the increase there was underlying reduction in the amount of oil and gas produced with 1.9 million barrels of oil equivalent being 5% lower than the previous corresponding quarter.

Beach Energy attributed the decrease to downtime, planned and unplanned, at the BMG project, while the Cooper Basin was affected by natural decline and higher liquid yields.

Looking to the company’s sales revenues, the company said the decline in production was more than offset by higher prices achieved for the oil.

The average oil price was 15% higher at $92 per barrel for the quarter.

During the quarter exploration and development activities included a farmin arrangement to further explore the Cooper Basin and the successful development of a well drilled in the Gulf of Suez, with first production expected in the second quarter of 2010.

At 1442 AEDT, Beach Energy shares were down 2.5c to 93c.

Neptune Marine Services Limited (NMS) anticipates that normalised NPAT for 1H FY10 to be in the range of breakeven to a loss of $1 million. The company said a drop in earnings during the first half of FY10 compared to the previous corresponding period was largely due to a sharper than anticipated decline across both the US and South East Asian markets.

Neptune said contributing factors to the weakness in the US and South East Asian markets included the strength of the Australian dollar, significant decline in drilling and exploration activity in the US, cancellation/postponement of exploration budgets, deferral of projects in SE Asia and lower margins due to deep discounting in some sectors. 

The company said it is confident of a strong turnaround in profit and earnings for the second half of FY2010 and into FY2011.

Managing director and CEO, Christian Lange, said the overall softening of the macro market internationally had a negative impact on margins, but also said the company anticipates a significant turnaround in profitability in the 2H FY10 with market conditions in the US and Asia showing positive signs of recovery and improvement.

“Concurrently the Australian, Middle Eastern and UK markets continue to grow, both of our vessels have been contracted for new work, our level of offshore activity has increased considerably and we have a varied and robust collection of large, multi‐year tendering opportunities in the pipeline,” Mr Lange said.

“Additionally, we also expect to benefit from the strength of our global footprint as we are well placed to secure new projects across a range of markets as opposed to relying too heavily on one.”

Neptune said it has secured approximately $50 million worth of new contracts since November 2009 and has made inroads into new and emerging markets including Qatar where it was recently awarded a three‐year $20 million multi‐services contract.

As at 1253 AEDT, Neptune shares were down 7.5c to 51.5c.

Local shares lost ground Thursday morning following strong declines in international markets overnight. Energy and commodity stocks suffered the most, as news China would curb lending sent base metal prices tumbling.

In economic news the resilience of the Australian economy was reinforced with new figures from the Australian Bureau of Statistics showing new car sales, seasonally adjusted, climbed 3.3% to 89,741 cars in December. This figure is more than 17% higher than the previous December.

At midday, the All Ords was down 27.1 to 4,868, while the ASX/200 lost 20.4 to 4,847.8. About 1.3 billion shares worth around $2.4 billion had changed hands.

Losses were widespread among the miners, led by BHP Billiton, which lost 59c to $42.82. Rio Tinto slumped $1.66 to $76.38. Despite the sell-off on these stocks losses were more muted than their London listings which sank 3.6% and 4.3% respectively.

The Materials and Resources sector lost 1.5%. One notable exception was OZ Minerals, which added 2.2% to $1.175 as it said annual production of gold and copper from its Prominent Hill mine exceeded expectations.

Macarthur Coal was among a raft of coal miners that were heavily sold Thursday, its shares tumbled 46c, or 4.2% to $10.53.

Newcrest and Lihir paced the decline in the price of gold in New York, shedding 2.8% and 2.4% respectively.

Alumina has lost 6.5c to $1.74. The aluminium producer has lost nearly 16% of its value in the last 10 days.

The Energy sector was down 1.6%. Losses were broad with Origin the only significant stock to make ground. Its shares were up 9c, or 0.5% to $16.85.

Woodside Petroleum gave up 51c, or 1.1% to $45.99.

Whitehaven Coal continued its horror run, down 24c, or 4.7% to $4.89.

Uranium specialists Extract Resources and Rio Tinto controlled Energy Resources were down 4.2% and 3.7% respectively.

Santos, which announced a 21% slump in sales last year, was down 21c, or 1.5% to $13.42.

The Banks and Financials sector gained 0.2% on strength shown from the two largest banks in the country.

Westpac and CBA added 25c and 64c to $25.73 and $57.20.

AMP jumped 19c, or 3% to $6.62. AXA Asia Pacific retreated just 1c, despite its directors suggesting its post-tax profit, at around $675 million, would beat expectations.

Macquarie climbed another 76c, or 1.4% to $53.45 after the second day of bullish comments from brokers.

The Property Trust sector came off opening lows, with Westfield down just 7c, to $12.51 at lunch.

Mirvac slumped 5.5c, or 3.5% to $1.495 as the sector retreated 1% overall.

Woolworths and Wesfarmers were either side of the gain line though the Consumer Staples sector was down 0.4% at lunch.

Graincorp slumped 27c, or 4.4% to $5.87 after the grain handler announced the resignation of its CEO.

Among the Consumer Discretionary sector, which fell 0.5%, media stocks were soft. Fairfax gave up 2.5c, or 1.3% to $1.845, while West Australian News retreated 17c, or 2.1% to $7.76.

Retailers were softer with David Jones and Myer losing 1.4% and 0.9% respectively.

Qantas added 3.4% to be just above $3.00 per share for the first time since October to make it the standout performer among the Industrial stocks.

Macquarie Infrastructure Group was off 0.3% despite reporting an increase in revenue in the December quarter.

The broader sector retreated 0.2%, despite Leighton and Brambles adding 47c and 13c to $39.19 and $6.90 respectively.

Transpacific Industries was flat despite predicting a drop in first half earnings.

Telstra defied the gloom on the stockmarket, surging 8c, or 2.4% to $3.43. The Telecommunications sector put on 1.7%.

The Healthcare sector rose 0.1% on the growing expectations the Obama administration would be unable to pass a sweeping healthcare reform.

Vaccine producer CSL dipped 4c, or 0.1% to $31.17 per share. Sonic Healthcare added 33c, or 2.3% to $14.53.

Around the region, the Nikkei 225 dipped 1.1 to 10,736.4, while the Straits Times Index edged 7.6 lower to 2,885.5. Meanwhile, the NZSE50 shed 9.6 to 3,217.6.  

Spot gold was trading at US$1,114.73 per ounce, and the Aussie was buying US$0.9125.

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AXA says profit will exceed expectations
AXA Asia Pacific said it was expecting full-year post-tax profit to 31 December 2009 to come in at around $675m, beating analysts’ current forecasts for the insurer. The final figure includes $57 million in non-recurring items, including the profit on the sale of its 50% stake in AXA Asia Pacific’s Indian interests and the resolution of a 17-year-old tax dispute.

At noon, AXA shares were unchanged at $6.60.

OZ Minerals production exceeds expectations

OZ Minerals this morning reported copper production of 96,310 tonnes for the year to 31 December, ahead of the previously expected 90,000 tonnes, while gold production of 75,500 ounces was also ahead of expectations of between 60,000 and 70,000. Meanwhile the company said it had in excess of $1 billion in the bank following its sell-off of assets last year as it sought to avoid bankruptcy.

At lunch, OZ Minerals shares were up 3c to $1.18.

Santos full year revenue drops 21%
Santos said CY09 production of 54.4 million barrels of oil equivalent was within the company’s guidance range of 53 to 56 mmboe and in line with the previous corresponding period. However, the company said sales revenue of $2,181 million for the same period was 21% lower than 2008 primarily due to lower international oil prices.

At midday, Santos shares were down 22c to $13.41.

MIG sees modest revenue growth
Macquarie Infrastructure Group reported a jump in revenue growth for the December quarter across its toll-road portfolio. The announcement was made ahead of the tomorrow’s shareholder meeting to vote on the previously proposed splitting of the company and demerging from Macquarie Group.

At lunchtime, Macquarie Infrastructure shares were unchanged at $1.495.

Transpacific predicts 1H earnings drop
Transpacific Industries Group forecast first half FY10 operating EBITDA result between $197m and $200m and operating EBIT between $115m and $118m. The provider of integrated total waste management solutions said this result is above the 2H FY09 operating EBITDA of $191.9m, but below the 1H FY09 operating EBITDA of $255.7m.

At noon, Transpacific Industries shares were unchanged at $1.385.

Origin JV begins commissioning of 2nd stage
The joint venture between Origin Energy and ConocoPhillips, known as Australia Pacific LNG, announced it had commenced commissioning of the second, high-pressure stage of its Talinga coal seam gas development in Queensland. The JV started-up the low pressure stage one in November last year.

At lunch, Origin shares were up 4c to $16.80.

Graincorp CEO resigns
GrainCorp became the second high-profile company, after Lihir Gold, to lose its CEO in less than a week after announcing the immediate resignation Mark Irwin, who was also the company’s managing director. The company said Mr Irwin would walk out the door with $750,000 in cash and share rights.

At midday, Graincorp shares were down 26c to $5.88.

CBH Resources Limited (CBH) said an offer it received from Toho is superior to the Nyrstar proposal. As a result, the zinc miner advised Nyrstar that it does not intend to have substantive discussions with Nyrstar, based on the existing proposal. CBH said the binding Heads of Agreement with its major shareholder Toho Zinc Co., Ltd includes the sale of its 50% interest in the Rasp Project at Broken Hill to Toho for $57.5 million and to establish a 50/50 joint-venture for the ownership and development of Rasp. The company said it would also be required to raise $10 million by placing 50 million CBH shares to Toho at 20c each. Following this CBH intends to make an offer of $500 in cash and 1,800 CBH shares per convertible note for all of its outstanding convertible notes, before which Toho would tender all of its Notes into the proposed Note offer. If all are accepts CBH said its interest bearing debt position would be reduced by $98.8 million.

Medusa Mining Limited (MMS) reported record gold production of 21,108 ounces at an average grade of 18.68 g/t gold and average cash cost of US$184 per oz. In the previous quarter the company produced 18,054 ozs of gold. Medusa said it received an average gold price of US$1,111 per ounce for the quarter. The company said Phase II of its expansion programme is on schedule and is set to raise production to 100,000 ozs per annum in early 2010. Medusa also revised gold production for FY10 upwards from 86,000 ounces to 89,000 ounces at an anticipated average cash cost of US$190 per ounce.

Iron Ore Holdings Limited (IOH) said two mining leases covering the Phil’s Creek Project have been granted by the Department of Mines and Petroleum. The company said the announcement marks further progress towards its planned production at Phil’s Creek, which is expected by end 2010. IOH said a conventional open pit mining operation at Phil’s Creek would supply up to 1.5Mtpa of iron ore over a project life of five years to Rio Tinto Limited (RIO) under a mine gate sale arrangement.