FT : Barrick could ‘swap’ copper mines for gold, chairman says

Barrick Gold’s executive chairman John Thornton has said the miner could swap its copper assets for gold mines with companies in Saudi Arabia and China.

Mr Thornton, a former Goldman Sachs banker who has cultivated close ties with China, said the company was engaged in “slow-motion long-term conversations” with companies in those countries about possible asset-swaps.

The talks come as Barrick, the world’s second largest gold miner, is set to merge with London-listed rival Randgold, in an effort to build an “industry-leading gold investment vehicle.”

The merger could lead to up to $5bn in mine sales as the combined company focuses on its lowest cost and largest gold mines, according to analysts at BMO Capital Markets. Barrick shareholders will vote on the deal next month.

Barrick owns the Zumwana copper mine in Zambia as well as a 50 per cent stake in the Zalidvar copper mine in Chile. In Saudi Arabia it has a joint venture with Ma’aden on the Jabal Sayid copper mine.

The Lumwana mine could be worth $1.26bn, according to estimates by BMO.

“The question still to be addressed is how do we take our copper assets and use them with potential partners around the world who may want to build serious copper companies?” Mr Thornton said.

“It could also be used in that manner in trading for gold assets . . . our partners in Saudi Arabia and China, we’re engaged with both of them in slow-motion long-term conversations about how to maximise the value of those things for them and for us.”

In August Mr Thornton said in a town hall address that China had “got an appetite for copper for as long as the eye can see.”

Shares in Barrick have risen by 25 per cent since the deal with Randgold was announced last month.

>>> Tesla: Color on Quarter --> +11% Pre-Market (550k shares traded)

Tesla: Color on Quarter (288.50)
  • Needham notes TSLA posted its first quarterly profit and positive free cash flow in over two years fueled by higher-margin Model 3 sales. They had highlighted that the GM could improve in the 2H18 as TSLA exhausts its high-end backlog of AWD and performance versions (blended ASP of $65K). However, they remain concerned that overall margins will decline in the 1H19 due to an unfavorable mix shift of Model 3s, decline in ZEV sales, service margins stay in -35-40% and pricing pressure on Model S/X. Moreover, we remain cautious on how fast and, more importantly, profitably it can produce the $45K, not to mention the $35k version, in order to match the backlog of orders. Given the lead time data, they contend that the majority of the 455k net reservation list are for individuals who reserved for the base model.
  • Oppenheimer raises tgt to $418 from $385. With TSLA delivering positive cash flow in 3Q18 well ahead of expectations at $740M in FCF (vs. consensus at $180M), all eyes now turn to the 2019 debt maturities, capital needs for its China capacity expansion, and depth of demand for Model 3. With ~$890M in convertible notes due March 2019 with a strike price of $359.87 and ~$525M due November 2019 at $759.36, they expect TSLA to hope shares trade above the March 2019 conversion price and pursue a new fixed income instrument to address capex and the November 2019 converts. TSLA also highlighted its remaining 300k+ Model 3 reservations indicating it expects strong sales as it introduces Model 3 in Europe in early 2019. They remain bullish.
  • Guggenheim reiterates $430 tgt; Cowen raises tgt to $250 from $200; Piper Jaffray raises tgt to $396 from $389; Canaccord Genuity to $32

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • ALGN -19.9%, AMD -19.7%, WPP -18.8%, EFX -9.8%, BUD -9.5%, KRA -8.8%, LUV -6.7%, CURO -6%, ABEV -5.2%, AAN -4.3%, FAF -3.3%, CLB -3.2% (also COO is leaving), JAKK -3.1%, ENTG -3%, TRN -2.9%, FNF -2.9%, WM -2.5%, ADT -2.3%, BANC -2.3%, SWK -2.3%, HSY -2.3%, AX -2% (also to acquire WiseBanyan), SRPT -1.7%, RJF -1.6%, CX -1.3%, GG -1.1%, AHL -1.1%, ORLY -0.9%

Other news:

  • ELGX -13.7% (commences a registered underwritten public offering of $20mln worth of common stock)
  • NVDA -2% (following AMD earnings/guidance)
  • AAP -0.8% (following ORLY earnings/guidance)

Analyst comments:

  • HIBB -1.8% (downgraded to Neutral from Positive at Susquehanna)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • KN +15.2%, TWTR +14.6%, XLNX +12.3%, TSLA +10.3%, ECHO +9.3%, CVRR +8.8%, MLNX +7.9%, SNBR +7.9%, FTI +5.7%, FFIV +5.2%, ELY +4.2%, LYG +4.2%, CMCSA +4.2%, IRM +3.9%, CPG +3.8%, AAL +3.8%, F +3.7%, WHR +3.6%, ICLR +3.6%, PS +3.3%, RTN +3.2%, VLO +3.2%, VALE +3.1%, MSFT +2.9%, IP +2.7%, CELG +2.7%, UBS +2.6%, AEM +2.5%, VC +2.3%, NOW +2.2%, CEO +2.2%, SHOP +2.1%, V +2%, SAVE +1.9%, CTXS +1.9% (also authorizes $750 million increase to share repurchase program), NRZ +1.9%, BMY +1.7%, DLB +1.5%, AXTA +1.4%, MRK +1.4%, COP +1.2%, HPE +1.1%, VRTX +1.1%, MANH +1.1%, IRDM +1.1%

Other news:

  • NDLS +13.4% (elects to not pursue offering of up to 10,062,500 shares of its Class A common stock at this time due to market conditions)
  • MRVL +3.3% (Starboard increases active stake to 5.9% (Prior 5.2%), releases presentation given at Capitalize for Kids Investors Conference )
  • NOG +2.6% (continued weakness - down 16% on the week)
  • INCY +2% (FDA accepts for Priority Review the sNDA for ruxolitinib for patients with acute graft-versus-host disease)
  • TWLO +1.6% (names Khozema Shipchandler as CFO effective Nov. 12, 2018; note stock closed 8% lower on the day)
  • KLAC +1.3% (plans to establish a research and development center in Ann Arbor)
  • REGN +1.2% (announces Phase 3 PANORAMA trial evaluating EYLEA injections met one-year primary and key secondary endpoints; provides regulatory update on EYLEA pre-filled syringe)
  • DXC +1% ( continued volatility on well above-average volumes amid rumors of the exit of a member of co's management; co subsequently made a statement affirming guidance at high end of prior)

Analyst comments:

  • YPF +6.3% (upgraded to Outperform from Neutral at Credit Suisse)
  • HLT +5.1% (upgraded to Buy from Neutral at B. Riley FBR)
  • TOL +3.5% (upgraded to Outperform from In-Line at Evercore ISI)
  • CHGG +2.9% (upgraded to Buy from Neutral at Citigroup)
  • NSC +1.8% (upgraded to Buy from Hold at TD Securities)
  • OC +0.7% (upgraded to Overweight from Equal Weight at Barclays)

>>> Hilton: Bill Ackman's Pershing Square Capital Management (PSHZF) announces n

Hilton: Bill Ackman's Pershing Square Capital Management (PSHZF) announces new investment in Hilton (63.82)

PSCM has acquired 10.9 million shares of Hilton, representing a 3.7% stake in the company. At its current market value, this investment represents approximately 13.9% of the Net Asset Value of Pershing Square Holdings, Ltd. (LN:PSH) (LN:PSHD) (NA:PSH), and a substantially smaller percentage of the PSCM private funds' portfolios. Pershing Square intends to discuss this investment in greater detail in its third quarter letter and investor call.