AI
Tuesday, May 06, 2003 8:53:53 PM
*** Gold related post ***
Hi ml,
Don't you hate when this happens?
To me it was inevitable after seeing the effects of the surging Rand vs. USD on the SA mining costs which in turn caused a selloff in their share prices.
There's no reason a strong C$ shouldn't impact the Canadian based miners in a somewhat similar manner, depending, of course, on the spread between their dollar and ours. This was prolly the main reason that Glamis' production cost were as high as they where.
Oh well, as I said earlier, A $1000 PoG will cure a lot of ills. <ggg>
Some Canada Mining Cos. Will Feel Sting From C$ Surge
Tuesday May 6, 4:52 pm ET
By Lynne Olver, Of DOW JONES NEWSWIRES
VANCOUVER (Dow Jones)--Mining companies who take in U.S.-dollar revenues but have Canadian operations will see 2003 earnings squeezed by the sharp rise in the Canadian currency, which put on another spurt Tuesday.
The Canadian dollar is trading at 71.8 U.S. cents, a five-and-a-half year high, on widespread U.S.-dollar weakness. The U.S. dollar is trading near C$ 1.39. At the start of the year, one Canadian dollar was worth about 63.5 U.S. cents.
"In general, those companies with Canadian asset bases are negatively impacted by the rising Canadian dollar," said Steve Bonnyman, a mining analyst at CIBC World Markets. He wouldn't discuss individual company earnings expectations.
Base-metals producer Noranda Inc. , nickel company Inco Ltd. and Fording Canadian Coal Trust are most affected by the Canadian unit's appreciation, Desjardins Securities analyst Michael Fowler said in a research note Tuesday. "Inco is almost as sensitive to the exchange rate as it is to the price of nickel," Fowler wrote.
He said every one U.S.-cent change in the value of the Canadian dollar equals a 12-U.S.-cent change in Inco earnings per share; an 8-Canadian-cent change in distributions per Fording unit; and a 5-Canadian-cent change in Noranda earnings per share.
For his 2003 company estimates, Fowler generally used a 67-68 U.S. cent exchange rate. "If the currency trend continues, it's a given that a lot of the earnings (estimates) will be sliced a bit, especially on some of the base-metals companies," Fowler told Dow Jones.
Fowler doesn't own shares in these companies and his firm hasn't done investment-banking work for them.
Dan Roling, a mining and metals analyst with Merrill Lynch in New York, just lowered his 2003 and 2004 estimates for Noranda due to continued higher operating costs and the stronger Canadian dollar.
Roling now expects Noranda to lose 20 Canadian cents a share this year, versus his previous call for earnings of 20 Canadian cents. About half of that shortfall is due to his new foreign-exchange rate assumption: a 73-U.S.-cent Canadian dollar. Roling cut his 2004 earnings estimate in half, to 40 Canadian cents a share.
Inco's earnings this year will also be capped by the rise in the Canadian currency, Roling told Dow Jones. On the other hand, the asset bases of aluminum producer Alcan Inc. (AL) and Noranda affiliate Falconbridge Ltd. are more geographically diversified, he noted.
Roling doesn't own shares in any of those companies. Merrill may seek an investment-banking relationship with any of them.
Golds Seen Less Affected
As for precious metals, many Canada-based gold producers, such as Barrick Gold Corp. and Placer Dome Inc. , re less affected by the Canadian dollar's appreciation, as they either have fewer mines in Canada or have currency hedging programs in place, Fowler of Desjardin Securities said. In addition, gold producers sometimes have larger amounts of shares outstanding than do base-metals producers, which reduces the currency impact on their earnings per share, he added.
According to his research, mid-sized producer Agnico-Eagle Mines Ltd. (NYSE:AEM - News) would feel the most impact from exchange-rate fluctuations, with every one U.S.- cent move in the value of the Canadian dollar affecting its earnings per share by 5 U.S. cents. Agnico-Eagle's sole operating asset is the LaRonde mine in northern Quebec.
Goldcorp Inc. , which owns and operates the Red Lake mine in northern Ontario, would see earnings per share change by 3 U.S. cents for every 1-U.S. cent move in the Canadian dollar, Fowler said.
In Ontario particularly, mining companies have been forced to deal not only with the effects of lower U.S.-dollar revenue, but also with higher local energy costs, said Doug Pollitt, an analyst with Toronto-based brokerage firm Pollitt & Co. While this may be a temporary factor, "costs are going up, but the Canadian- dollar gold price is well off recent highs," he noted.
However, the effect of a strong Canadian dollar on mining-sector earnings may be partially offset if worldwide economic growth picks up.
In a research note Tuesday, National Bank Financial chief economist Clement Gignac noted that his team still expects a global econonomic recovery to unfold in the second half of the year. If that happens, "higher commodity prices as well as a pick-up in volume sales would help offset the drag on profits (for exporters) because of the higher currency," Gignac wrote.
-Lynne Olver, Dow Jones Newswires; 604-669-1595
http://biz.yahoo.com/djus/030506/1652001307_1.html
Regards,
Dan
Hi ml,
Don't you hate when this happens?
To me it was inevitable after seeing the effects of the surging Rand vs. USD on the SA mining costs which in turn caused a selloff in their share prices.
There's no reason a strong C$ shouldn't impact the Canadian based miners in a somewhat similar manner, depending, of course, on the spread between their dollar and ours. This was prolly the main reason that Glamis' production cost were as high as they where.
Oh well, as I said earlier, A $1000 PoG will cure a lot of ills. <ggg>
Some Canada Mining Cos. Will Feel Sting From C$ Surge
Tuesday May 6, 4:52 pm ET
By Lynne Olver, Of DOW JONES NEWSWIRES
VANCOUVER (Dow Jones)--Mining companies who take in U.S.-dollar revenues but have Canadian operations will see 2003 earnings squeezed by the sharp rise in the Canadian currency, which put on another spurt Tuesday.
The Canadian dollar is trading at 71.8 U.S. cents, a five-and-a-half year high, on widespread U.S.-dollar weakness. The U.S. dollar is trading near C$ 1.39. At the start of the year, one Canadian dollar was worth about 63.5 U.S. cents.
"In general, those companies with Canadian asset bases are negatively impacted by the rising Canadian dollar," said Steve Bonnyman, a mining analyst at CIBC World Markets. He wouldn't discuss individual company earnings expectations.
Base-metals producer Noranda Inc. , nickel company Inco Ltd. and Fording Canadian Coal Trust are most affected by the Canadian unit's appreciation, Desjardins Securities analyst Michael Fowler said in a research note Tuesday. "Inco is almost as sensitive to the exchange rate as it is to the price of nickel," Fowler wrote.
He said every one U.S.-cent change in the value of the Canadian dollar equals a 12-U.S.-cent change in Inco earnings per share; an 8-Canadian-cent change in distributions per Fording unit; and a 5-Canadian-cent change in Noranda earnings per share.
For his 2003 company estimates, Fowler generally used a 67-68 U.S. cent exchange rate. "If the currency trend continues, it's a given that a lot of the earnings (estimates) will be sliced a bit, especially on some of the base-metals companies," Fowler told Dow Jones.
Fowler doesn't own shares in these companies and his firm hasn't done investment-banking work for them.
Dan Roling, a mining and metals analyst with Merrill Lynch in New York, just lowered his 2003 and 2004 estimates for Noranda due to continued higher operating costs and the stronger Canadian dollar.
Roling now expects Noranda to lose 20 Canadian cents a share this year, versus his previous call for earnings of 20 Canadian cents. About half of that shortfall is due to his new foreign-exchange rate assumption: a 73-U.S.-cent Canadian dollar. Roling cut his 2004 earnings estimate in half, to 40 Canadian cents a share.
Inco's earnings this year will also be capped by the rise in the Canadian currency, Roling told Dow Jones. On the other hand, the asset bases of aluminum producer Alcan Inc. (AL) and Noranda affiliate Falconbridge Ltd. are more geographically diversified, he noted.
Roling doesn't own shares in any of those companies. Merrill may seek an investment-banking relationship with any of them.
Golds Seen Less Affected
As for precious metals, many Canada-based gold producers, such as Barrick Gold Corp. and Placer Dome Inc. , re less affected by the Canadian dollar's appreciation, as they either have fewer mines in Canada or have currency hedging programs in place, Fowler of Desjardin Securities said. In addition, gold producers sometimes have larger amounts of shares outstanding than do base-metals producers, which reduces the currency impact on their earnings per share, he added.
According to his research, mid-sized producer Agnico-Eagle Mines Ltd. (NYSE:AEM - News) would feel the most impact from exchange-rate fluctuations, with every one U.S.- cent move in the value of the Canadian dollar affecting its earnings per share by 5 U.S. cents. Agnico-Eagle's sole operating asset is the LaRonde mine in northern Quebec.
Goldcorp Inc. , which owns and operates the Red Lake mine in northern Ontario, would see earnings per share change by 3 U.S. cents for every 1-U.S. cent move in the Canadian dollar, Fowler said.
In Ontario particularly, mining companies have been forced to deal not only with the effects of lower U.S.-dollar revenue, but also with higher local energy costs, said Doug Pollitt, an analyst with Toronto-based brokerage firm Pollitt & Co. While this may be a temporary factor, "costs are going up, but the Canadian- dollar gold price is well off recent highs," he noted.
However, the effect of a strong Canadian dollar on mining-sector earnings may be partially offset if worldwide economic growth picks up.
In a research note Tuesday, National Bank Financial chief economist Clement Gignac noted that his team still expects a global econonomic recovery to unfold in the second half of the year. If that happens, "higher commodity prices as well as a pick-up in volume sales would help offset the drag on profits (for exporters) because of the higher currency," Gignac wrote.
-Lynne Olver, Dow Jones Newswires; 604-669-1595
http://biz.yahoo.com/djus/030506/1652001307_1.html
Regards,
Dan
Dan 
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