Mining Profits....

May 4th, 2010  by Bryden Elssmann

Closing Data

	Current	Change	%
Dow Jones	11,151.83	143.22	1.3%
NASDAQ	2,498.74	37.55	1.5%
S P 500	1,202.26	15.58	1.3%
FTSE 100	5,553.29	0	0.0%
Nikkei 225	11,057.40	132.61	1.2%
ASX 200	4,785.50	-21.9	-0.5%
COMEX Gold - Dec 09	1,182.20	1.5	0.1%
COMEX Silver - Sep 09	18.84	0.201	1.1%
COMEX Copper - Sep 09	328.7	-6.65	-2.0%
WTI Spot	85.98	-0.17	-0.2%
AUD-USD	0.9262	0.0027	0.3%
Aluminium	2,184.00	-11.5	-0.5%
Copper	7,365.00	-30	-0.4%
Lead	2,176.00	-53	-2.4%
Nickel	25,810.00	110	0.4%
Tin	18,095.00	-355	-1.9%
Zinc	2,256.00	-59	-2.5%

US stocks staged a solid comeback on Wall Street, with Caterpillar, Boeing and American Express leading broad gains, following reports of improving auto sales, consumer spending and factory activity.

The Dow Jones Industrial Average climbed 143.22 points, or 1.30 per cent, to 11,151.83, its biggest one-day gain since February 16 and fourth-best day this year. The market rallied following continued signs of an improving US economy, helping to quell investors' concerns after sovereign-debt issues in the Eurozone and a criminal probe of Goldman Sachs that rattled the market last Friday.

The Australian market is expected to open higher following positive offshore leads. The SPI is currently up 20 points to 4815 points.
Mining profits..

The Henry Tax review has been labelled by the government as “stronger, fairer, simpler”. This didn’t fool the resource sector which fell sharply yesterday as investors factored in lower earnings for mining companies following the proposed plan by the  Rudd government to introduce a 40 per cent tax on profits. BHP estimates that the proposed tax will increase the effective tax rate by 14 percentage points – from 43 percent to 57 percent by 2013 for all Australian operations. BHP currently has 50% of its projects in Australia. What is also of concern to the resource industry is the proposed retrospective nature.  Mining companies were still digesting the implications of the plans, which came as part of a review of Australia's entire taxation system which will also see the country's headline corporate tax rate reduced to 28 per cent from 30 per cent. The only winners, for now, have been accountants whom are struggling to make sense of Rudd’s complex resource super profits tax which is going to create massive headaches for all involved. The market, which is fearful of uncertainty, is causing the miners to trade at a considerable discount. BHP, RIO and FMG at current levels may prove to be a value buy, as it is possible that the market has overreacted to the proposal. Any proposed tax will be subject to scrutiny from both sides of politics.

Lihir accepts sweetened NCM bid.

Lihir Gold (LGL) has accepted a revised A$9.5 billion takeover bid from Newcrest Mining (NCM), despite a sweetener only in the scrip part of deal, with the cash component unchanged at 22.5 cents per Lihir share. Lihir shareholders will now get one Newcrest share for every 8.75 Lihir shares, rather than every nine Lihir shares, which both companies say represents a 6.4% improvement. The deal, which is far from sealed, will see both parties in continued discussions as they try to finalise all details. A soaring gold price has seen both Newcrest and Lihir tipped as potential takeover targets for offshore gold majors looking to replace reserves. Analysts have said Barrick Gold Corp, Newmont Mining Corp. AngloAmerican Plc could potentially step into the fray. LGL and NCM will recommence trading at 11am.

 

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