Arrow Energy
Arrow Energy has been one of our energy favourites ever since the inception of our Mining & Resources Report, and its patient yet deliberate growth strategy now appears to be paying big dividends. We have always been believers in the potential of Arrow’s coal seam gas assets in Queensland, in particular the company’s drive for international growth and value-adding. Well, energy giant Shell appears to have become the latest convert, agreeing this week to pay $776 million for a stake in Arrow’s coal seam gas projects.
Macarthur Coal
Macarthur Coal's share price performance this year has been overwhelmingly bullish. Coal’s price strength, largely caused by supply side issues, has resulted in various miners and steel makers eyeing a stake in the company. The reason is simple: the company is the largest of the few independent coal players left on the Australian share market, at a time when all forms of energy, including coal, are trading at or close to record levels.
Platinum Australia
Platinum Australia has announced that it has boosted its equity stake in its soon-to-be commissioned Smokey Hills platinum project in South Africa. This will not only give the company a greater ownership slice of the project, but also an even greater chunk of cash flows from the project. The company has also announced a capital raising to help fund the project, including the purchase of diesel generators to provide on-site power if required. We anticipate first metal production from Smokey Hills before the end of 2008, allowing the company to take advantage of soaring platinum metal prices.
Rio Tinto
The jostling for supremacy amongst the world’s mining heavyweights has continued, with Rio Tinto management last week hosting an investor briefing in London designed to demonstrate the company’s stand-alone credentials. The company announced major new projects encompassing copper, nickel and iron ore, which could develop into world-class mining developments. Rio is keeping up the pressure on BHP to justify its current bid.
Precious Metals Overview
There have been two reports released recently, covering silver and gold respectively, which are worth examining. What they demonstrate is that the outlook for precious metals remains strong, with the supply side restricted at a time of solid demand. Nevertheless, the strong price spikes experienced since the start of 2008 have caused some degree of demand easing in places like India, although this has almost been matched by a simultaneous increase in Chinese demand.
Portfolio News
Hold SGX, TZN, JML, EPE, Buy OSH