Weekly Round-Up: Commodities Track Dawdling Recovery

Prices reflected an ongoing stream of data showing a slow-motion recovery in the US. On Thursday, the Commerce Department revised its fourth-quarter growth estimate from a contraction of 0.1 percent (annualized) to a 0.1 percent expansion, BBC News reported. The revision was based on higher-than-estimated exports and business investment.

Other US data included durable goods orders, which fell 5.2 percent in January, according to MarketWatch. However, if you strip out the volatile transportation category, orders rose 1.9 percent. In a positive sign for resources, particularly oil and base metals, the gain was driven by a 13.5 percent jump in machinery orders—an indication that businesses are priming for growth.

In Washington, meanwhile, the president and Congress were unable to meet a deadline to stop a round of spending cuts from kicking in. Called sequestration, these pre-set reductions, which will amount to $85 billion this year, were part of a 2011 deal to raise the country’s debt ceiling. However, it will still take time for the cuts to come into effect, so politicians still have an opportunity to agree on an alternate plan.

On Thursday, the Dow Jones Industrial Average crept within 20 points of its all-time-high of 14,164.53, which it set on October 9, 2007. Returning to a high not seen since before the financial crisis would have a psychological impact on investors, Chuck Carlson, contributing editor of the Dow Theory Forecasts newsletter, told USA Today.

“I think you have a lot of people that still are anchored on 2008. Now, you have a market that has been crushed but has recouped those losses … From a milestone and awareness perspective, that’s important for the guy on Main Street,” he said.

In morning trade Friday, Brent crude is down 1.03 percent, at $110.24 a barrel, while copper is down 0.41 percent, at $3.51 a pound. Gold is down 0.35 percent, at $1,572.60 an ounce.

Gold

OceanaGold (ASX:OGC,TSX:OGC) halted the first shipments of copper-gold concentrate from its Didipio mine in the Philippines on Monday. The company is currently commissioning Didipio, but it stopped the trucks containing the concentrate due to confusion over the timing of excise tax payments it must make under its agreement with the Philippine government, Mining Weekly reported. Oceana is in discussions with the government and said that mining and processing are continuing at the mine, even though shipments are on hold.

Wesdome Gold Mines (TSX:WDO) reports that it has discovered a new gold occurrence near the Kiena mine in Val-d’Or, Quebec. The new deposit is about 200 meters long and continues at least 300 meters below the surface. Drilling results included interceptions of 30.39 g/t gold over 3.0 meters, 5.04 g/t over 6.8 meters and 71.03 g/t over 2.9 meters.

Helio Resource (TSXV:HRC) has completed the earn-in requirements on the fifth and final licence that makes up the SMP gold project in Tanzania. The company now owns 100 percent of this property, which is in an area adjacent to the newly commissioned New Luika gold mine.

Roxgold (TSXV:ROG) announced further drilling results from its 100-percent-owned Yaramoko Concession in Burkina Faso. Highlights included 20.6 g/t gold over 4.6 meters within a wider intercept of 15.6 g/t over 6.9 meters.

Oil and gas

Repsol (OTC Pink:REPYY) announced that it will sell its liquefied natural gas (LNG) assets to Royal Dutch Shell (NYSE:RDS.A,LON: RDSA) for $6.7 billion, including $4.4 billion in cash and $2.3 billion in assumed debt and leases. The deal includes stakes in LNG projects in Trinidad & Tobago and Peru, as well as a power plant in Spain. Repsol was unable to sell the Canaport regasification terminal in St. John, New Brunswick, but it did sign an agreement under which Shell will supply the facility with LNG for 10 years. Repsol will also write down the terminal’s value by $1.3 billion due to low natural gas prices.

Chevron (NYSE:CVX) will buy up to 60 percent of Beach Energy’s (ASX:BPT) interests in two natural gas properties in Australia for up to $349 million over two years, Beach said in a press release. Under the deal, Chevron will acquire an initial 30 percent working interest in one joint venture and an 18 percent working interest in another, with potential to build on these interests. In all, these properties include 810,000 acres in Australia’s Cooper Basin, according to Mining Weekly.

Carrizo Oil & Gas (NASDAQ:CRZO) announced that its adjusted revenue (including the impact of realized hedges) jumped to $116.7 million in the fourth quarter from $66.3 million a year ago. Adjusted net income was $21.7 million, or $0.54 a share, up from $9.1 million, or $0.23. Production rose 19.5%, to 25,859 barrels of oil equivalent per day from 21,641 a year ago. Carrizo’s average oil price fell 1 percent, to $99.57 a barrel. Gas prices declined 2 percent, to $3.48 per thousand cubic feet.

Copper

Freeport-McMoRan Copper & Gold (NYSE:FCX) will raise $6.5 billion through a four-part bond offering, Bloomberg reported. The company is raising funds to finance its acquisition of Plains Exploration & Production Co. (NYSE:PXP), which it announced in December. Freeport’s offering consists of $1.5 billion of five-year notes, $1 billion of seven-year notes, $2 billion of seven-year bonds and $2 billion of 30-year bonds. The extra yield these securities pay compared to Treasury bills with similar maturities will range from 1.625 percent on the five-year notes to 2.375 percent on the 30-year bonds, according to Fox News.

Equinox Copper (TSXV:EQX) announced a fully subscribed non-brokered private placement that will consist of 3.3 million units at $0.15 each. Each unit consists of one common share and one purchase warrant that is exercisable at $0.25 over a two-year term. The company will use the proceeds to enhance production at its Aura project in Chile, to fund exploration at the Binghampton-Copper Queen project and for general working capital.

Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.