Amidst Multiyear Index Highs, Resource Stocks-PRU, AWC, and S32 Announce Quarterly Report

  • Jan 16, 2020 AEDT
  • Team Kalkine
Amidst Multiyear Index Highs, Resource Stocks-PRU, AWC, and S32 Announce Quarterly Report

Resource stocks on the exchange are back in action with stocks such as Perseus Mining Limited (ASX: PRU), Alumina Limited (ASX: AWC), South32 Limited (ASX: S32) surging post announcing the quarterly highlights.

The Resource sector is among the top revenue generator of Australia, and with a solid performance in the recent past, the sector is gaining momentum in the market. The S&P/ASX 200 Resources Index, which tracks the resource players in the domestic market is on a bull run over the higher production volume by mining companies and reasonable commodities price at the marketplace and a favourable currency.

To Know More, Do Read: Resource Sector Continues To be the Strongest Pillar of GDP in 2020-21?

S&P/ASX 200 Resources Index

Post tumbling to 2,191.93 in early 2016, the resource index is on a continuous surge and the index is presently trading at a multi-year high of 5,132.80 (as on 16 January 2020 2:31 PM AEDT, 12:31 PM AWDT), which underpinned an appreciation of ~134.16 per cent.

ASX Sectoral Indices (Source: Thomson Reuters)

On comparing the significant sectoral indices, the S&P/ASX 200 Resources Index (AXJR) has relatively outperformed other major sector in the market and had closely tracked the S&P/ASX 200 index (AXJO) since inception.

Such an impeccable performance requires a tantamount performance from individual companies of which the index is composed of, and the resource players (energy and mining players) have not disappointed investors, which could be clearly inferred from the performance of the index.

Many resource companies such as Perseus Mining Limited (ASX: PRU), Alumina Limited (ASX: AWC), South32 Limited (ASX: S32) have recently notified stakeholders about their quarterly performance.

PRU, S32, AWC, and AXJR Returns Over the Last One Year (Source: Thomson Reuters)

Perseus Mining Limited (ASX:PRU)

PRU is an ASX-listed gold miner with exploration and gold evaluation projects in Ghana, Cote d'Ivoire and Burkina Faso, in West Africa.

The company produced 69,155 ounces of gold during December 2019 quarter at a production cost of USD 843 per ounce. The all-in site cost for the production remained at USD 962 per ounce, and PRU managed to sell 61,176 ounces of gold at an average realised price of USD 1,145 per ounce.

Gold production for the December 2019 half-year stood at 134,980 ounces of gold, which remained under the guidance range of 120-140,000 ounces of gold, and the combined half-year AISC stood at USD 942 per ounce, which also remained under the guidance cost range of USD 850-1,000 per ounce for the December 2019 half-year.

The gold production of the company witnessed a quarterly increase of 5.05 per cent while marking an increase of 2.8 per cent against pcp for the December 2019 half-year.

PRU generated a notional cash flow of USD 31.3 million through operations, which brought the total 2019 calendar year cash flow to USD 109.4 million.

PRU targets a gold production of 275-295k ounces for the June 2020 half-year with an AISC of USD 850-950 per ounce.

As on 31 December 2019, PRU held cash and bullion of USDD 80.6 million with an outstanding corporate debt of USD 50 million with USD 10 million drawn during the December 2019 quarter.

The stock is trading around the upper range of 52-week low-to-high range of $0.355-$1.175 at $1.055 (as on 16 January 2020), down by 2.31 per cent against its previous close on ASX with a return of 52.11 per cent over the last six months.  

Alumina Limited (ASX:AWC)

AWC is an ASX-listed bauxite miner with refining and smelting operations and conducts its business activities mainly through its joint venture- Alcoa World Alumina & Chemicals (or AWAC).

Alcoa Corp’s 4Q 2019 Bauxite and Alumina Performance

Alcoa Alumina segment generated an EBITDA of $133 million during the fourth quarter of the year 2019, which remained ~40.35 per cent below the EBITDA of $223 million during the third quarter of the year 2019.

  • The fall in the Alumina segment was mainly due to the lower API pricing

Alcoa Bauxite segment performed relatively stable to generate an adjusted EBITDA of $132 million, down by ~1.50 per cent against the adjusted EBITDA of $134 million in 3Q 2019. Albeit, bauxite prices demonstrated a slight recovery, a small increase in other production cost pulled down the performance.

AWAC refining business produced 3.2 million tonnes of alumina, which remain unchanged as compared to the previous quarter., while AWAC mining business produced 11.4 mbdt, which remained slightly less against 11.5 mbdt in 3Q 2019.  

AWAC incurred a cash cost of $200 per tonne of alumina production, slight below the cash cost of $203 per tonne in 3Q 2019. However, the realised price of alumina took a major hit during 4Q 2019 to stand at $284, down by ~8.68 per cent against the realised price of $311 in 3Q 2019.

The stock of the company last traded at $2.300, up by 0.43 per cent against its previous close on ASX with a return of 1.33 per cent over the last six months.

South32 Limited (ASX:S32)

S32 is an ASX-listed metal miner with business segments including Worsley Alumina with bauxite mine and alumina refinery in Western Australia. The company mainly deals in alumina, metallurgical coal, Manganese, and base metals such as lead, nickel, and zinc.

S32 alumina production witnessed a quarterly growth of 1 per cent to stand at 1,327k tonnes in December 2019 quarter, which took the overall first-half alumina production to 2,635k tonnes, up by 4 per cent against the previous corresponding period (or pcp).

 

  • The aluminium production remained largely unchanged on a quarterly basis as well on a half-yearly basis to stand at 248k tonnes in December 2019 quarter, and 496k tonnes during 1H 2020 (year-end 30 June).
  • The energy coal production slumped by 12 per cent on a quarterly basis to stand at 5,898k tonnes in December 2019 quarter and 2 per cent on a half-yearly basis to stand at 12,621k tonnes (1H 2020).

The production summary of the quarter and 1H 2020 is as below:

S32 last traded at $2.850, unchanged against its previous close on ASX with a negative six-month return of 5.32 per cent mainly due to weak alumina prices in the global market; however, the last three-month return delivered by the stock stands at 15.38 per cent in the wake of recovery in base metal prices.


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