Canadian stocks hit four-week low as commodity producers drop

Canadian shares fell to their lowest level in almost four weeks, led by material producers and energy companies as commodities stretched losses on bets the Federal Reserve will scale back U.S. bond purchases. 

The resource-heavy benchmark Standard & Poor’s/TSX Composite Index (TSE:OSPTX) sank 1.3 percent to 12,444.92 at 12:01 p.m. in Toronto on Tuesday after touching 12,419.04, the lowest level since July 10. Almost five stocks declined for every stock that advanced.

The 234-member gauge had gained 1.4 percent this year through Friday. The market was closed on Monday for a holiday.

On Monday, Federal Reserve Bank of Dallas President Richard Fisher, one of the most outspoken critics of quantitative easing, said the central bank is closer to reducing the pace of monetary stimulus.

The materials sub-index, which includes mining shares, slumped 3.2 percent, as gold heads for its longest decline in eleven weeks. Barrick Gold Corp. (TSE:ABX) retreated 5.7 percent to C$16.37. Goldcorp Inc. (TSE:G) fell 5.2 percent to C$26.53

Allied Nevada Gold Corp. (TSE:ANV), the operator of the Hycroft mine in Nevada, plunged 20 percent to C$4.89, the lowest since 2008, after reporting a decline in earnings and deferring plans to build a processing plant at the site. Second-quarter net income slid to $4.23 million, or 4 cents a share, from $6.14 million, or 7 cents a share. 

Energy, the main index's second most heavily weighted sector, gave up 1.6 percent as oil, Canada’s largest export, fell for a third day. Canadian Natural Resources Ltd. (TSE:CNQ), Canada’s second-largest energy company by market value, dropped 2.7 percent to C$31.81. Suncor Energy Inc. (TSE:SU), Canada's largest energy company by market value, slid 1.5 percent to C$33.41.

Ensign Energy Services Inc. (TSE:ESI), a land-based drilling contractor, skidded 0.6 percent to C$17.59 after saying second-quarter earnings dropped 82 percent, weakened by foreign-exchange and other charges, and feeble demand for oilfield services. 

Financial shares, the main measure's most heavily-weighted sector, dropped 0.8 percent. Royal Bank of Canada (TSE:RY), Canada's biggest lender, fell 1.1 percent to C$63.72.

Industrial stocks gave back 0.5 percent. Ritchie Bros. Auctioneers Inc. (TSE:RBA), the world’s largest auctioneer of industrial equipment, advanced 2.4 percent to C$19.78. The company said second-quarter earnings fell 4 percent, while auction revenue inched up 1 percent. The Burnaby, British Colombia-based company also upped its quarterly dividend by 6 percent. 

Information technology shares were the only sector that advanced on Tuesday, led by Blackberry Ltd. (NASDAQ:BBRY), the Waterloo, Ontario-based smartphone maker, which extended gains for a fifth day, adding 10 percent to a 52-week high of C$10.24. 

The junior S&P/TSX Venture Composite Index (CVE:OSPVX) lost 1 percent to 913.97 at 12:10 p.m. on Tuesday, stretching this year's losses. The 393-member measure had tumbled 24.4 percent before Tuesday.

In economic news, Canada’s trade deficit shrank in June as exports rebounded from a two-month slump, led by shipments of cars and aircraft. Statistics Canada said on Tuesday that trade gap of the world's eleventh-largest economy dropped to C$469 million during the month, from a revised C$781 million in May. 

In metals, gold futures for December delivery fell 1.5 percent to $1,282.90 an ounce at 10:16 a.m. on the Comex in New York. 

In energy markets, crude for September delivery decreased 1.1 percent, to $105.44 a barrel at 12:21 p.m. on the New York Mercantile Exchange. 

In the U.S., Canada's biggest trading partner, shares dropped on Tuesday as earnings from companies including International Business Machines Corp. and American Eagle Outfitters disappointed and trade data raised concern the Federal Reserve may slash its bond purchases this year. The S&P 500 Index (INDEXSP:.INX) declined 0.6 percent and the 30-member Dow Jones Industrial Average (INDEXDJX:.DJI) fell 0.7 percent at 11:31 a.m. in New York.

Mineral research lab extension at TAS uni

Newcrest Mining has teamed with the University of Tasmania (UTAS) to build a $3 million extension to a minerals research laboratory.

The gold miner has contributed $2.5 million for the extension at the Australian Research Council Centre of Excellence in Ore Deposits (CODES), with UTAS and the ARC funding the remainder.

The university secured a $2.5 million grant from Newcrest last year to develop the mineral research facility

The two signed an agreement whereby Newcrest would contribute $1 million to the development of the research facility and a further $1.5 million in ongoing support over the next five years.

Other companies supporting the CODES research include BHP Billiton, Rio Tinto, AngloGold Ashanti, Barrick Gold, Vale and Freeport.

The gold research facility was erected to use micro-analytical techniques developed at the ARC CODES to help crack ore definition issues.

Vice-Chancellor of the University Professor Peter Rathjen will open the expanded facility today at 5.30pm.

“This is a major extension to the existing laser analytical facility, which is already considered to be one of the best in the world,” he said.

“CODES is leading the world in the application of laser ablation analysis to sulphide ores and mineral exploration targeting.

“There are very few facilities as well equipped as the Newcrest Laser Analytical Facility to undertake this type of highly advanced and technological research.”

Director of CODES Professor Bruce Gemmell said the expansion shows “a major vote of confidence” in CODES by Newcrest.

He added more than 30 companies are using technology developed by CODES.

“These include companies operating in Canadian Yukon, Peru, the great Witwatersrand Basin in South Africa and here in Tasmania, Western Australia and South Australia.

The facility’s manager UTAS Distinguished Professor Ross Large said the expansion is an opportunity to further develop CODES-led breakthroughs to answer many questions in earth science.

“For example, a CODES team is using the laser technique to track trace element concentrations of gold, nickel, copper, arsenic and other metals in the oceans over the past three billion years.

“A significant breakthrough has also been made in developing a new theory about four of the major mass extinction events on earth over the past 500 million years,” Large said,

Large told Australian Mining last year the facility was erected because CODES had developed new technology for laser ablation in mineral testing and analysis.

“This technology will allow us to look at the full range of gold deportment in sulphide minerals, unlocking previously hidden or unobtainable gold.”

He pointed out gold deposits tend to have “invisible gold”, which are either trapped in other minerals or deposits. They are so tiny they cannot be uncovered.

"With Newcrest's backing we will be able to put into the lab technology that will be able to get right down to a nanoparticle level, and see the gold that may be hidden in silver or copper. 

"The result may be more economic mineral discoveries in a shorter time frame with lower upfront costs."

Suncor delays oil sands mine start-up

Suncor Energy Inc. has pushed back the potential start-up date on the lesser of its two undeveloped oil-sands mines into the next decade, saying it wants to avoid launching two new mines at the same time.

Steve Williams, chief executive officer of Canada’s largest energy concern, said the company will not make a decision on whether to proceed with its Joslyn mine – a project it shares with France’s Total SA– until at least 2017. This means it will not start producing bitumen at the proposed oil-sands mine until at least 2021 or 2022, Mr. Williams said on the company’s second-quarter conference call Thursday. This is the “best case” scenario, he said.

Mr. Williams immediately turned Suncor into a more cautious company when he took over as CEO in 2012. The company had already put Joslyn lower on its priority list compared with other options like the proposed and delayed Fort Hills mine, but had been vague about a timeline. Shoving it back further means Suncor will be able to focus on the Fort Hills project – assuming the joint venture goes ahead – without the distraction of launching another major project at the same time.

“Joslyn is at minimum – it’s moving backwards,” Mr. Williams said. “I don’t see us running two mines in parallel in terms of the execution phase for any significant time.”

Suncor cut its spending plans to $7-billion from $7.3-billion in 2013 because delayed projects meant delayed spending across the company, as well as better performance, it said in its earnings statement.

“This should bode well for the stock,” Canaccord Genuity analyst Phil Skolnick said in a research note. The reduced spending came as a surprise to Mr. Skolnick.

Mr. Williams expects Suncor and Total to make a final decision on whether to proceed with Fort Hills, a mine the Canadian company considers better than Joslyn, later this year. Suncor expects to allocate no more than 15 per cent of its annual budget to constructing Fort Hills, which it shares with Total and Teck Resources Ltd., Mr. Williams said.

Mr. Williams was enthusastic about the company’s North American transportation prospects, even as the energy industry frets about a pipeline crunch in North America. Access to markets, he said, is not an issue for Suncor, and it will be able to ship more than 600,000 barrels a day to its refineries and other markets buying oil at global prices. Suncor, he said, is a “significant” potential shipper on TransCanada Corp.’s so-called Energy East pipeline, which could reach New Brunswick.

Suncor earned $680-million or 45 cents per share in the second quarter, up from $324-million or 21 cents per share in the same period last year.

Its operating earnings totalled $934-million or 62 cents per share, down from $1.25-billion or 80 cents per share in the second quarter of 2012. The company attributed the dent in its earnings to planned maintenance in the oil sands and refining and marketing divisions, as well as pipeline constraints caused by the floods that swept Alberta in June.

Cash flow, which the market uses to gauge a company’s ability to finance growth, dropped to $2.25-billion from $2.35-billion, with Suncor saying the same problems that plagued its operating earnings hit its cash-flow results.

Orion Marine Group Reports Second Quarter 2013 Results

Orion Marine Group, Inc. (NYSE:ORN) (the “Company”), a heavy civil marine contractor, today reported net income for the three months ended June 30, 2013, of $0.2 million ($0.01 diluted earnings per share).

These results compare to a net loss of $5.4 million ($0.20 diluted loss per share) for the same period a year ago.

“During the second quarter we had strong utilization on our construction equipment and improvements in dredge utilization,” said Mike Pearson, Orion Marine Group’s President and Chief Executive Officer.

“Significant improvements in our year over year results indicate a gradual improvement in market conditions, along with our ability to operate profitably with the right mix and volume of work. As we begin the second half of 2013, we are continuing to see pockets of pricing improvement with continued high demand for our services.”

Financial highlights of the Company’s second quarter 2013 include:

Second Quarter 2013

Second quarter 2013 contract revenue was $84.1 million, an increase of 25%, as compared with second quarter 2012 revenue of $67.1 million.

The Company self-performed approximately 82% of its work as measured by cost during the second quarter 2013, which was the same in the prior year period.

Gross profit for the quarter was $7.8 million, which represents an increase of $8.0 million as compared with the second quarter of 2012. Gross profit margin for the quarter was 9.3%, which was higher than the prior year period of negative 0.3%. During the second quarter of 2013, gross profit margin improved as a result of improved equipment utilization as compared with the prior year period. Margin in the prior year period was also driven down due to idle crews and equipment following project completions.

Selling, General, and Administrative expenses for the second quarter 2013 were $7.8 million as compared to $7.5 million in the prior year period. The increase is primarily related to additional overhead expenses as a result of the acquisition made in late 2012.

The Company’s second quarter 2013 EBITDA was $5.7 million, representing a 6.7% EBITDA margin, which compares to second quarter 2012 EBITDA of negative $2.4 million, or a negative 3.5% EBITDA margin.

Backlog of work under contract as of June 30, 2013 was $243.9 million, which compares with backlog under contract at June 30, 2012 of $193.7 million. Additionally, the Company is currently the apparent low bidder on approximately $67 million of work.

The Company reminds investors that backlog can fluctuate from period to period due to the timing and execution of contracts. Given the typical duration of the Company’s projects, which generally range from three to nine months, the Company’s backlog at any point in time usually represents only a portion of the revenue it expects to realize during a twelve-month period. Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress and not yet complete, and the Company cannot guarantee that the revenue projected in its backlog will be realized, or, if realized, will result in earnings.

Outlook

“Demand for our services remains robust as we track over $6 billion worth of opportunities,” said Mr. Pearson. “Activity from the private sector continues to be strong. Lettings by both state agencies and local port authorities also remain a steady source of bid opportunities. Corps lettings for dredging services have continued to remain uncertain. With only two months remaining in the federal fiscal year, our attention has now turned to the budgeting process for the upcoming federal fiscal year beginning October 1st.”

“The second quarter was very successful in terms of winning new work,” said Mark Stauffer, Executive Vice President and Chief Financial Officer. “In the period we bid on approximately $440 million worth of opportunities and were successful on approximately $177 million. This represents a 40% win rate or a book-to-bill ratio of 2.12 times for the quarter. This success pushed our backlog at the end of the second quarter to $243.9 million; its highest level since the first quarter of 2010.

Currently, we have over $180 million worth of bids outstanding, including approximately $67 million on which we are apparent low bidder. The current level of bid activity, coupled with encouraging long term end market drivers gives us optimism for the future. We also continue to see pockets of pricing improvement; however, this trend has not yet become widespread. As the results of this quarter have shown, profitability can be achieved at current bid margin levels with the right volume and mix of projects.

As we look ahead, it is not unreasonable to expect profitable results for the full year given the current backlog levels and bid market opportunities. However, we still have gaps to fill in both the third and fourth quarters, as much of the recently booked backlog will extend into 2014. As always, we remain committed to managing a conservative balance sheet, maintaining strong project execution, and increasing shareholder value.”

Senwatec Delivers „Dredge King“ to Slovakia

PROGROUPE extending technical park to „Dredge King“ from Senwatec for sediment removal in Slovakia.

This dredger is equipped with the 8/6 inch armored pump, mounted below deck, with capacities of 520 m³ (680 cubic yards) of slurry/hour and 55 to 220 m³ (72 to 288 cubic yards) of solids / hour, 6-cylinder Caterpillar Diesel engine, 168 kW/225 HP, 1,800 RPM, liquid cooled, mounted below deck with monitoring system for coolant/engine temperature and engine oil level/pressure (auto shut down system). Infinitely variable drive speed regulation forward up to 6 knots, reverse up to 3 knots. Dredging working depth of 6 meters with smooth swing range up to 175° each left- and right hand (350° total range).

The maximum lenght of material transport thru pipeline is 1500 meters.

Crane arm is equipped with cutter-suction dredge head, excavating bucket (up to 700l), rake (with hardened teeth) and discharge line.

Read more:  India: DCI to Commission New Dredger

The second of its three 5,500 cubic meter trailer suction hopper dredgers will be commissioned today by the Dredging Corporation of India (DCI), reports indiatimes.com.

According to DCI chairman-cum-managing director D K Mohanty, after the commissioning ceremony at Chennai Port this vessel will be sent to undertake a dredging program at Ennore Port.

DCI already has one dredger working at Ennore Port, and with the arrival of another, this dredging project is expected to be completed by October.

The new dredger will be an alternative for one recently decommissioned dredger V.

P. V. Ramana Murthy, director, finance, DCI, recently stated that the new dredgers would help the company increase productivity, thereby improving the margins.

Yamana announces $7.9m 2Q loss but no writedowns

As Yamana lowered its production guidance and reported a net loss of $7.9 million or one cent per share for the second quarter, the company announced it was planning to lower its already low-cost structure by $115 million.

“We are focused on our programs initiated earlier this year to push costs down to reclaim a portion of the margin per ounce lost to the declining metals prices,” said Yamana CEO Peter Marrone. “We are committed to our production and production growth although initially we believe it is prudent to focus on costs.”

“While we will show significant volume growth in production, it will be at lower levels than initially planned until we are confident that the new cost structure we are implementing will be sustainable at the initially planned production levels,” he advised.

In financial results published Wednesday, Yamana said it has concluded “there are no impairment charges in respect of its mineral interests as at June 30, 2013. The company believes that adverse changes in metal prices assumption would partially be offset by other inputs that would result in lower costs and updated mine plans.”

See also: Top 10 gold miners: Shaky earnings and more billion dollar write-downs

“The company will reassess potential impairments from time to time particularly at higher risk operations including Alumbrera.”

Instead, Yamana announced that it is “committed to reducing all-in sustaining co-product cash costs” by a combined total of $150 per gold equivalent ounce.

Yamana lowered its 2013 guidance from 1.41 million GEO to between 1.32 million and 1.37 million, adding that in 2015, it expects production to be in excess of 1.55 million GEO compared to the previous guidance of ~1.75 million GEO.

Production expectations include more than 8 million ounces of annual silver production and 130 million pounds of yearly copper production for 2013 through 2015.

Among the reductions Yamana will undertake are reducing jobs for employees and contractors, as well as modification of existing supplier contracts. Power, fuel, and consumables will also be impacted.

The company has begun implementing reductions and deferrals in both sustaining and development capex spending for this year.

For the first six months of the year, Yamana reported 586,858 GEO, up from 567,530 GEO for the first half of last year. The gold equivalent ounces include 505,846 ounces of gold and 4.1 million ounces of silver for the first half of 2013, compared to 577,233 gold ounces and 4.5 million silver ounces during the same period of 2012. The company produced 57.5 million pounds of copper during the first half of this year, down substantially from 70.7 million pounds of copper for the first six months of last year.

For the second-quarter 2013, Yamana reported GEO production of 295,545 GEO, up from 288,700 GEO for the same period of last year. GEO output for the second quarter of the year included 257,608 gold ounces and 1.9 million silver ounces, compared to 242,692 gold ounces and 2.3 million ounces of silver for the same quarter of 2012.

The increase in gold production was mainly due to increased production from El Peñon, Mercedes, Minera Florida and Fazenda Braileiro, partly offset by a production setback at Jacobina and lower production at Chapada, Gualcamayo and Alumbrera. Lower silver production was due to planned lower silver ore grades and lower recovery rates at El Peñon.

Copper production for the second quarter of the year dropped from 40.4 million pounds in second-quarter 2012 to 30.1 million pounds. Chapada copper production was lower as a result of anticipated lower copper grade, recovery rate and lower throughput.

FINANCIALS

All-in sustaining cash costs for the first six months of the year were $982 per GEO on a co-product basis. Co-product cash costs per pound of copper average $1.82 per pound from the Chapada Mine during the same period.

During the second quarter of the year, Yamana reported a net loss of $7.9 million or one-cent per share, compared to net earnings of $42.9 million and earnings per share of 6-cents. Adjusted earnings were $50.2 million or 7-cents per share in the second quarter, compared with $134.9 million or 18-cents per share in the second quarter of 2012. “Lower net earnings and adjusted earnings were attributed mainly to lower realized commodity prices combined with inflationary impacts on costs and equity losses from the company’s 12.5% of interest in Alumbrera,” said Yamana.

Net earnings for the first half of 2013 were $94.2 million or 13-cents per share, down from net earnings of $212.9 million or 29-cents per share for the same period of 2012.

The company’s third and fourth quarters are expected to be stronger as new mines ramp up.

First Quantum Q2 profit falls as metals prices drop

Canadian base metal miner First Quantum Minerals Ltd reported a drop in second-quarter earnings on Wednesday as realized copper and nickel prices fell.

Production in the quarter was boosted by First Quantum's takeover of smaller rival Inmet Mining Corp, which it completed in early April, winning access to one of the world's biggest untapped copper deposits, the Cobre Panama project in Peru.

First Quantum is betting its hands-on approach to procurement and construction can dent development costs for Cobra Panama that Inmet had pegged at $6.2 billion.

On Wednesday, First Quantum said it has already "considerably" slowed cash outflow at the project and plans to give a full update in the fourth quarter.

Cash costs per pound fell for both copper and nickel in the second quarter, but average realized prices also dropped.

Net earnings attributable to shareholders fell to $71.9 million, or 12 cents a share, from $142.0 million, or 30 cents, a year earlier.

Excluding unusual items, earnings fell to $106.1 million, or 18 cents a share. Revenue rose to $869.3 million from $722.3 million.

Analysts, on average, had been expecting earnings of 23 cents a share on revenue of $937.2 million.