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Summary
- Rio Tinto closed the smelter at Kennecott mine in Utah for maintenance.
- Rio Tinto reported underlying EBITDA of USD 9.6 billion in H1 FY2020.
- Rio Tinto is expected to ship iron ore in the range of 324 to 334 Mt in FY2020.
- Resolute Mining produced 107,183 ounces of gold in the quarter ended June 2020.
- Resolute Mining sold 110,660 ounces of gold in the quarter ended June 2020.
- Resolute Mining expects to produce close to 430,000 ounces of gold in 2020.
Rio Tinto PLC (LON:RIO) & Resolute Mining Limited (LON:RSG) are two basic materials stocks. RIO and RSG had a market capitalization of around £81.21 billion and £559.77 million, respectively. RIO was down by about 2.04 percent, whereas RSG was up by around 0.03 percent from their previous closing price (as on 20 August 2020, before the market close at 2:30 PM GMT+1).
Rio Tinto PLC (LON:RIO) – Declared the interim dividend of USD 1.55 per share for H1 FY2020
Rio Tinto is a UK based metal and mining conglomerate. The Group deals in exploration and mining of metals such as iron ore, copper, bauxite, aluminium and diamond. Rio Tinto is included in the FTSE 100.
Recent events
- On 19 August 2020, Rio Tinto reported delay in the restart of the smelter at Kennecott mine in Utah due to some faults experienced during the planned maintenance. It expects the smelter to be operational in two months. The Group has lowered the copper production guidance for FY20 to 135 - 175 kilotonnes from previous guidance of 165 - 205 kilotonnes following the closure of the smelter.
- On 4 August 2020, the Group submitted details related to the destruction of rock shelters at Jukkan Gorge to Australian Parliamentary Inquiry. The rock shelters at Jukkan Gorge were situated in Pilbara region in Australia.
H1 FY2020 results (ended 30 June 2020) as reported on 29 July 2020
(Source: Group website)
In H1 FY20, the Group reported revenue of USD 20.3 billion, which declined by 7 percent year on year from USD 21.8 billion in H1 FY19. The underlying EBITDA was USD 9.6 billion in H1 FY20 down by 6 percent year on year. The cash flow from operations and free cash flow were USD 5.6 billion and USD 2.8 billion, respectively in H1 FY20. The underlying earnings during the reported period were USD 4.8 billion, with earnings per share of USD 2.94. The return on capital employed was 21 percent. In H1 FY20, the Group declared the interim dividend of USD 1.55 per share that improved from USD 1.51 per share in H1 FY19. The Group had a dividend payout ratio of close to 53 percent in H1 FY20. Capital expenditure in H1 FY20 was USD 2.7 billion. As on 30 June 2020, Rio Tinto had net debt of USD 4.8 billion.
Performance by Business Activity
The Group shipped 159.6 Mt (metric tonne) of iron ore in H1 FY20 at an average price of USD 85.4 per tonne. The bauxite production increased by 8 percent year on year to 28.4 Mt in H1 FY20. The aluminium and alumina production was 1.6 Mt and 4.0 Mt, respectively. The mined copper production was 266 kt in H1 FY20.
Share Price Performance Analysis
1-Year Chart as on August-20-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Rio Tinto PLC's shares were trading at GBX 4,693.00 and were down by close to 2.04 percent against the previous closing price (as on 20 August 2020, before the market close at 2:30 PM GMT+1). RIO's 52-week High and Low were GBX 4,991.00 and GBX 2,954.00, respectively. Rio Tinto had a market capitalization of around £81.21 billion.
Business Outlook
The Group is focused on generating improved shareholder return through its business performance. Rio Tinto highlighted that the total capital expenditure would be close to USD 6 billion in FY20. The iron ore shipment is expected to be around 324 to 334 Mt (metric tonne), bauxite in the range of 55 to 58 Mt, alumina in the range of 7.8 to 8.2 Mt and mined copper production to be around 475 to 520 kt. The Pilbara iron ore cost per wet metric tonne is expected to be in the range of USD 14 to 15 per tonne based on free on board (FOB).
Resolute Mining Limited (LON:RSG) – Gold recovery from sulphide operations improved
Resolute Mining Limited is an Australia based mining company that is engaged in exploration, development and marketing of gold. The Company currently owns Syama Gold Mine in Mali, Mako Gold Mine in Senegal and Bibiani Gold Mine in Ghana.
Recent event
- On 19 August 2020, the Company reported normal operation at its Syama Gold Mine in Mali where it has been operating since 2003. President Ibrahim Boubacar Keita resigned from his position, and the military of Mali is resolving the political turmoil. Resolute Mining is monitoring the developments and their impact on the business.
- On 12 August 2020, the Company sold shares of Mako Gold Limited and Oklo Resource Limited and ceased to be a substantial shareholder of both companies.
Financial Performance for the quarter ended June 2020 as reported on 22 July 2020
During the quarter, operating cash flow was USD 64 million, and capital & exploration expenditure stood at USD 18 million. As on 30 June 2020, Resolute Mining had cash & bullion of USD 88 million and net debt was USD 220 million. It had an undrawn borrowing facility of USD 45 million. Resolute Mining had gold in circuit inventory of 82,506 ounces that had a market value of close to USD 146 million.
Operational Performance for the quarter ended June 2020
(Source: Company website)
During the quarter, the Company produced 107,183 ounces of gold at all-in-sustaining cost (AISC) of USD 1,033 per ounces. It sold a total of 110,660 ounces of gold at an average price of USD 1,446 per ounces. Syama Gold Mine produced 63,705 ounces of gold in the quarter ended 30 June 2020 that increased significantly from 57,531 ounces of gold produced in the quarter ended 30 March 2020. At Syama Gold Mine gold recovery was 80 percent through sulphide operations and 35,248 ounces of gold was produced through sulphide operations and 28,457 through oxide operations. Mako Gold Mine produced 43,478 ounces of gold during the quarter. AISC at Syama and Mako was USD 1,113 per ounces and USD 821 per ounces, respectively for quarter ended 30 June.
Share Price Performance Analysis
1-Year Chart as on August-20-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Resolute Mining Limited's shares were trading at GBX 62.20 and were up by close to 0.03 percent against the previous closing price (as on 20 August 2020, before the market close at 2:30 PM GMT+1). RSG's 52-week High and Low were GBX 99.20 and GBX 29.50, respectively. RSG had a market capitalization of around £559.77 million.
Business Outlook
Resolute Mining expects to produce close to 430,000 ounces of gold in 2020 at a group level AISC of USD 980 per ounces is expected that includes Ravenswood production March quarter. Syama Gold Mine is expected to produce 260,000 ounces of gold at an AISC of approximately USD 960 per ounces, whereas Mako Gold Mine is expected to produce 160,000 ounces at an AISC of USD 800 per ounces. The total capital expenditure, including non-sustaining, sustaining and exploration & development, would be close to USD 70 million.
