Managing Director Michael A. Sansoterra of Silvant Capital Management LLC says Facebook Inc (FB) is an attractive stock from a traditional growth and secular trend perspective, particularly due to its mobile advertising and mobile penetration rates.
“There was a lot of concern around what the ad rates would look like for mobile versus desktop, but Facebook made the move aggressively,” Sansoterra said. “Once they did it, we saw them look a lot like Google (GOOG) in that they were going to dominate this space and take the lion’s share of mobile advertising.”
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Sansoterra says Facebook has maximized mobile through the social platform, which is a significant change to the way advertisers spend money. Sansoterra is seeing growth in a number of areas and also points to other applications Facebook can monetize.
“We watch in particular the mobile average user hours spent, number of interactions, and we’ve seen that number grow and grow sequentially. We think that’s an upside option for them over time, not to mention the fact that they haven’t really monetized Instagram yet and then have the ability to really have a higher set of operating margins than they are currently carrying,” Sansoterra said.
Sandeep Biswas, Managing Director/CEO Newcrest Mining Limited (ASX:NCM) said he was not satisfied with the current company performance and has initiated a company-wide improvement program. He was speaking at the Denver Gold Forum in Denver, Colorado.
Australia-based Newcrest Mining had a statutory loss of $2.2B AU after a post-tax asset impairments of $2.4B AU. Its EBITDA was $1.514M AU (37% margin) and EBIT of $821M AU (20% margin). Newcrest had an underlying profit of $432M AU, Biswas said. It has operations in Australia, Southeast Asia and West Africa.
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The company’s cash flow from operating activities was $1,037M on an investment expenditure of $904M, with a group free cash flow of $133M AU, Biswas said.
Biswas said gold production was up 14% on a year-to-year basis to 2.4 Moz., with copper production increasing 7% to 86kt. The company was 24% lower on all-in sustaining costs of $976 oz. AU.
The company’s focus for 2014 is removing high-cost production, reducing exploration and capital expenditure, and reducing operating costs. Capital and exploration expenditure was $1.7B AU lower than FY 2013, Biswas said, and headcount was reduced 15% in its permanent workforce, with contractor/project hires down 45%.
For 2015, three key areas were highlighted by Biswas: operating discipline, cash focus, and profitable growth. The goal is creating a culture of accountability and personal ownership, generating a higher return on invested capital, and reducing overall debt, return to paying dividends, and progress growth opportunities, Biswas said.
The company expects to be free cash flow positive in fiscal year 2015, Biswas said.
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Srinivasan Venkatakrishnan, CEO ofAngloGold Ashanti Ltd. (AU), said the South African company will not proceed with a previously proposed restructuring plan that would have placed its international operations into a separate company and raised capital. He was speaking at the Denver Gold Forum in Denver, Colorado.
Discussions with shareholders led to the decision to back off, Venkatakrishnan said. Reports indicate that the company’s large debt-to-equity issues and potential dilution of shares were the chief shareholder concerns about the restructuring plan, which would have allowed the company to eliminate its large debt.
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Instead, Venkatakrishnan said, the company will focus on its management approach, address the needs of a simplified portfolio, align its structure with long-term needs, and create separate listings to allow each business to be appropriately valued. AngloGold Ashanti will also seek to strengthen its balance sheet with debt reduction and portfolio sales with particular focus on its Colombian portfolio.
AngloGold operates in Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania, the United States and Democratic Republic of the Congo. Over 60% of its operations are in Africa.
Significant overhead savings have been realized and maintained, Venkatakrishnan said, with exploration and evaluation costs seeing a total decrease of 74% from Q4 2012 to Q2 in 2014.
Previous investment in projects at the Kibali and Tropicana mines are now delivering competitive ounces, Venkatakrishnan said. Kibali in 2014 has a 550 koz with a total cash cost of $448-$520 oz US. The mines are fueling a return to production growth for the first time in nine years, with Kibali and Tropicana beating guidance.
The company’s greenfield program and underground technology development are also making progress and moving to trial production sites. Exploration is focused on Colombia, Guinea, and Australia.
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Chuck Jeannes, President/CEO of Goldcorp, Inc. (GG), said the company is looking to several new projects to continue its focus on gold in low-risk jurisdictions. Jeannes was speaking at the Denver Gold Forum in Denver, Colorado.
Goldcorp Inc. has operations in Canada, the United States, Mexico, Central America and South America. The company has $2.4B US in liquidity, with its cash flow allocation priorities to fund existing and organic growth, offer flexibility for mergers/acquisitions, plus provide regular dividend growth.
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Goldcorp’s Cerro Negro Mine in Argentina was called a “strong new contributor to growth” by Jeannes. First commercial production is expected in Q4 of 2014. In Mexico, the Camino Rojo Project is expected to commence a pre-feasibility study by year-end, with completion expected in Q1 of 2016.
Among established properties, the Penasquito Mine in Mexico, the largest gold mine in that country, will produce 297,200 ozs in H1 2014A, heading toward a 2014E of 530,000-560,000, Jeannes said. Goldcorp is also in pre-feasibility studies advancing on CEP and pyrite leach projects, with mine operating earnings of $131M in Q2 2014, Jeannes said.
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Jim Gowans, Co-President of Barrick Gold Corporation (ABX), said the company will focus on operations and cost reductions this year to create a stronger, more flexible company. He was speaking at the Denver Gold Forum in Denver, Colorado.
Barrick is looking to cost reductions achieved through rapid spend reductions via improved contracts, more in-sourcing, and reductions to inventory and working capital, Gowans said. The company has adjusted net earnings in the first half of 2014 of $397M US (0.34 per share), but a net loss of $181M ($0.16 per share) because of a charge for its investment in the Jabal Sayid JV operation in Q2. Barrick agreed in July 2014 to form a joint venture with the Saudi Arabian Mining Company to operate the Jabal Sayid copper project. The transaction is expected to close in Q4 2014, with first production is expected in late 2015.
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The company also operates in the United States, Argentina, Chile, Australia, Africa, Canada, Peru, Papua New Guinea, and the Dominican Republic. Gowans said the company’s five cornerstone mines – Cortez and Goldstrike in Nevada, Lagunas Norte in Peru, Veladero in Argentina and Pueblo Viejo in the Dominican Republic – are expected to generate 60% of 2014 production at all-in sustaining costs of $750-$800 per ounce.
Barrick has an operating/adjusted operating cash flow of $1.1B US and is maintaining a 2014 production guidance of 6.0-6.5 Moz of gold and 410-440 Mlbs of copper.
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Mark Bristow, CEO of Randgold Resources Limited (GOLD), said the company is on track for record production in three successive quarters from its Loulo-Gounkoto complex in Mali. He was speaking at the Denver Gold Forum in Denver, Colorado.
Gold production at the Loulo-Gounkoto complex in Mali is driven by underground mines developed at Yalea and Gara, Bristow said. A pastefill plant was completed at Yalea, while a pastefill at Gara is scheduled for commissioning in Q3. Randgold financed and built the Loulo operation, which started as two open pit mines in November, 2005.
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Randgold is an African-focused gold mining and exploration company with listings on the London Stock Exchange and NASDAQ. It controls West Africa’s most productive gold belt in Senegal and Mali, the Senegal Malian Shear, Bristow said. He pointed to several ongoing successful ventures there, including the Legend JV, the Loulo Permit, the Gounkoto Permit, and the Bakolobi JV.
To date, the company has developed a 7.5Moz Morila deposit in southern Mali; a 7Moz Yalea deposit and the 5.5Moz Gounkoto deposit in western Mali; the 4Moz Tongon deposit in the Côte d’Ivoire; the 3Moz Massawa deposit in eastern Senegal.
Bristow also talked about the company’s explorations at Massawa, where geologic remodeling is being used to point to new options; new targets and new permits in Cote d’Ivoire; and resource conversion programs at Loulo, Gounkoto and Kibali. Three exploration joint ventures have expanded the company’s footprint in its target areas.
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Peter Marrone, the Chairman/CEO of Yamana Gold Inc. (AUY), said the company’s focus is on cash flow and operational optimization at its key assets, noting that while production growth is important, it can’t come at the expense of costs and cash flow.
The Canadian gold producer has gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Canada.
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Yamana has eight key operating ventures, including Cerro Moro, Jacobina, Minera Florida, Canadian Malartic, Gualcamayo, Mercedes, Chapada, and El Penon. Marrone said a focus on optimizations at them are expected to contribute to the majority of production and cash flow increases for the overall company, with Canadian Malartic expected to make a significant contribution, Marrone said. The management focus on so-called “cornerstone” operations will provide a balanced approach to growth, he said.
“The integration of Canadian Malartic into our portfolio and the expected continued performance from our cornerstone operations has us well positioned to deliver significant value to shareholders as we maximize cash flow and ultimately free cash flow,” Marrone said.
Marrone also noted that Yamana Gold has recently delivered an updated Cerro Moro Feasibility Study, completed its acquisition of Osisko, and experienced a 30% quarter over quarter production increase at several key assets.
Marrone said the company has obtained two investment grade ratings and BB+ with a positive outlook. It has also issued $500 million US in senior debt, with proceeds repaying a term loan used to finance a cash portion of an acquisition.
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Sean Boyd, President/CEO of Agnico Eagle Mines Ltd. (AEM), said the company expects 45% production growth through 2016. He was speaking at the Denver Gold Forum in Denver, Colorado.
Citing gold production of 692K oz., with total cash costs of $579 U.S./oz (better than its $678 U.S./oz guidance), Boyd also said that production guidance has increased to 1.35M oz to 1.37M oz. of gold, with cash costs forecast to be between $650-$675 U.S. per ounce. All-in sustaining costs are unchanged at $990 U.S./oz.
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Highlighting Agnico’s 2014 H1 is the joint acquisition with Yamana Gold of Osisko Mining Corporation of the Canadian Malartic mine, a deal completed in June. Agnico has a 50% share of production from the mine. A 43-1010 reserve and resource update was recently completed, and studies are underway to optimize the mine plan. Boyd said the company expects those plans to be completed by the end of Q3 this year.
Boyd also pointed to the IVR discovery near Meadowbank in Canada, which continues to expand; a new deep intersection at Kittila; and technical studies progress at Meliadine and Akasaba West projects.
Boyd also talked about the potential acquisition of Cayden Resources, which provides “an opportunity to establish a new operating base in a home jurisdiction.” Agnico has offered Canadian $3.79 per Cayden share, a $205 million Canadian equity value. The potential acquisition would make Agnico Eagle the owner of a suite of high potential exploration projects in Jalisco State and Guerrero State in Mexico.
Boyd said there is the potential for numerous deposits at its El Barqueno, Mexico location and a large exploration program will be implemented in 2015, with first maiden resource expected thereafter. The potential acquisition fits Agnico’s strategy of acquiring early-stage projects and adding value through focused exploration, Boyd said.
Cayden shareholders are expected to vote in late October or early November of this year on the proposed offering, with closing expected before year-end if Mexican government, regulatory and court approvals are passed.
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Paul Rollinson, CEO of Kinross Gold Corporation (KGC), said that the existing Tasiast, Mauritania mine could become the largest company mine, with costs among the lowest in the portfolio, if a mill expansion is undertaken. He was speaking at the Denver Gold Forum in Denver, Colorado.
The Tasiast mine has an 8,000 tpd mill originally designed to process ore from a series of small open pits. Although the company will not decide until next year whether to proceed with a mill expansion at the site, Rollinson said the projection for average annual production from 2018 to 2022 is 848,000 oz. The life of the mine is expected to extend to 2029.
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The site is a “relatively low-risk brownfields project,” Rollinson said, with Kinross able to capitalize on an existing operation, a highly trained local team, infrastructure already in place, an established relationship with the government, and most major permits and concession rights in hand.
The company is exploring project finance options, but expects to fund the balance from existing cash balances and operating cash flow.
Kinross Gold Corp. operates in Russia, North America and South America (the U.S., Brazil and Chile) and West Africa. The overall company produced 1.34M gold equivalent ounces in H1 2014, with a 2014 cost of sales guidance of $730-$780/oz, with a 2014 all-in sustaining cost guidance of $950-$1,050/oz.
Rollins noted operational improvements as a key to continuing growth, highlighting several locations as success stories.
Kinross’s Maricunga, Chile operation has implemented changes that resulted in higher production and lower costs, Rollinson said. It is expected to produce 64,290 gold equivalent ounces in Q2 2014, with a declining cost of sales per ounce of $874 in Q2.
Rollinson also cited the La Coipa project in Chile as a growth opportunity. Kinross is in a pre-feasibility study focused on the Pompeya deposit, where drilling has outlined higher average grades than previously processed at La Coipa. The company is also conducting a scoping study to focus on processing options for known near-surface sulfide mineralization in the district, and is exploring other targets.
The company has a strong liquidity position, boasting $2.3 billion as of June 30 in cash, cash equivalents, restricted cash and undrawn credit facilities. The company has a net debt of $1.3 billion as of June 30, 2014.
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Gary Goldberg, President/CEO of Newmont Mining Corp. (NEM), said the company’s key Batu Hijau mine in Indonesia is on track for a restart. The location has been tied up in a dispute over exports with the Indonesian government and was temporarily shut down.
Goldberg, speaking at the Denver Gold Forum in Denver, Colorado, said a memorandum of understanding was signed with the Indonesian government on September 3, with export shipping expected to begin upon receipt of the export permit. The mine and mill is expected to be operating at full capacity within eight weeks of that, Goldberg said.
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Newmont Mining Corporation is one of the world’s largest gold producers, with assets or operations in the United States, Australia, Peru, Indonesia, Ghana, New Zealand and Mexico. Founded in 1921, it is the only gold company included in the S&P 500 Index and Fortune 500.
Goldberg also highlighted securing the rights of exploitation to the Merian mine in Suriname, with an anticipated start date of late 2016. The Merian agreement covers 500,000 hectares for exploration, and provides a government option to acquire a 25% fully-funded equity stake.
Goldberg also pointed to the on-schedule and on-budget production of 113,000 ounces of gold at its Akyem mine in Africa, and an increase in production by 53% at its Tanami mine in Australia/New Zealand.
Newmont has $5 billion US in cash, marketable securities and revolver capacity as of the end of June, 2014, with no significant debt due until 2019.
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