In today’s briefing:
- OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
- CPMC Holdings (906 HK): Good Time to Re-Visit
- Freeport-McMoran Inc: New Mining Technologies & Other Drivers
- Southern Copper Corporation: Diamond Drilling Reconnaissance In San Lorenzo & Other Drivers
OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
- Six+ weeks ago, BHP Group Ltd (BHP AU) approached OZ Minerals Ltd (OZL AU) with a bid of A$25/share. Oz very quickly rejected it and said it was worth more.
- The back and forth immediately post-rejection was not conciliatory. My expectation was that if they came back quickly, they’d have to pay A$30. But coming back quickly was tough.
- There are hints now that may be the price. But it may not be. It will take time.
CPMC Holdings (906 HK): Good Time to Re-Visit
- Underpinned by higher ASP and sequentially lower input costs, CPMC Holdings (906 HK) should achieve better margin in 2H22. Its 17% fall in share price YTD makes it appealing.
- Average aluminum price was down 14% so far in 2H22, vs. 1H21, good to its costs. Well-controlled selling and administrative costs will help to support profitability recovery.
- New two-piece can capacity will grow by 54% over the next three years as 5 production lines are expected to be added. Most of them already have demand lined up.
Freeport-McMoran Inc: New Mining Technologies & Other Drivers
- Freeport delivered a disappointing result and failed to meet Wall Street expectations on all counts but the future outlook remains optimistic.
- The company is increasing production year over year, and controlling expenses in a difficult environment and benefits from a highly favorable macro for copper.
- With an expected rise in demand for copper with respect to energy conservation especially in EVs, the company benefits from a positive future macro.
Southern Copper Corporation: Diamond Drilling Reconnaissance In San Lorenzo & Other Drivers
- With an improving outlook for copper given its critical role in energy storage and transport, Southern Copper is expected to be a major beneficiary in the long run.
- Southern Copper did have an interesting set of developments despite a rather disappointing result.
- The company has signed an agreement with the Michiquillay copper project at the cost of $400 million in Cajamarca, Peru.
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