US markets up, Sept. 17-21

The Dow Jones Industrial Average jumped 2.25% to 26,743.50 and the S&P 500 Index rose 0.85% to 2,929.67. New York spot gold increased 0.47% to US$1,198.70 per oz. gold.

Rio Tinto topped the value charts with a US$4.13-per-share gain to finish at US$51.58 per share. The company provided details of its new share buy-back program on Sept. 20, saying it plans to buy back shares worth US$3.2 billion. The funds were generated from the sale of coal assets. The latest share buy-back plan is on top of the company’s existing buy-back programs, of which US$1.7 billion in shares remain to be purchased before the end of February 2019.

Shares of AngloGold Ashanti were up 9.6% to US$8.81 on news it had reached a three-year deal on wage increases, as well as a new shift arrangement, with trade unions representing most of its employees in South Africa.

Peabody Energy signed a definitive agreement to buy the Shoal Creek metallurgical coal mine from private coal producer Drummond Co. for US$400 million. The mine is located in central Alabama and serves Asian and European steel mills with high-vol A coking coal. The transaction, which could close before year-end, involves the purchase of the mine, preparation plant and supporting assets, but excludes legacy liabilities other than reclamation. Glenn Kellow, the company’s president and CEO, said in a press release that buying “the well-capitalized and high-quality” Shoal Creek mine meets the company’s goal of upgrading its metallurgical coal platform through strategic investments, and “offers major logistical advantages and represents an opportunity to create significant value.” Benjamin Nelson, vice-president and senior credit officer at Moody’s Investors Service, said in a note that the acquisition is “credit positive, based on expectations for the company to fund the transaction out of cash without diminishing liquidity.” At the end of June, Peabody reported a cash balance of nearly US$1.5 billion. Peabody’s shares ended at US$42.01 apiece, down US$1.75.


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