US markets slump, Oct. 26-30

The port at the New Caledonia complex. Credit: Vale.

The Dow Jones Industrial Average slumped 6.47% to finish the week at 26,501.60, and the S&P 500 fell by 5.64% to 3,269.96. Spot gold dropped US$22.70 per oz., or 1.19%, to US$1,878.60 per oz. from the previous week.

Shares of Vale fell US74¢ to US$10.57 per share. The company reported that its third-quarter net profit nearly doubled compared with the same period a year ago. Net profit for the three months ended Sept. 30 climbed to US$2.9 billion, up from US$1.6 billion a year earlier, though it still fell well short of a Refinitiv forecast of US$3.6 billion. Vale said its third-quarter results were driven by a 26% increase in prices for iron ore and a 20% increase in sales volumes. The company posted adjusted earnings before interest, taxes, depreciation, and amortization in the quarter of US$6.1 billion, up from US$4.6 billion in the year-earlier period, in line with estimates.

Newmont rose $2.37 to US$62.84 per share. The company delivered record third-quarter adjusted earnings before interest, taxes, depreciation, and amortization of US$1.7 billion and free cash flow of US$1.3 billion. It also raised its dividend by 60% to US40¢ per share, its second increase in 2020, and says its annualized dividend of US$1.60 per share is now the highest in the gold sector. The company produced 1.5 million attributable oz. gold at all-in sustaining costs of US$1,020 per oz., and 273,000 oz. gold-equivalent from co-products. Third-quarter revenue increased by 17% year-on-year to US$3.2 billion, primarily due to higher average realized gold prices, and adjusted net income came in at US$697 million, or US86¢ per diluted share, up from US$292 million, or US36¢, in the third quarter of 2019.

Shares of Southern Copper rose by US39¢, finishing the trading week at US$52.34 per share. The company received permission from the Peruvian government to resume construction at its US$1.4 billion Tia Maria project, in the southern Islay province of the Arequipa region. The world’s fifth-largest copper producer by output, Southern Copper had to cancel work in August after authorities suspended its construction licence to evaluate objections from residents and regional authorities related to where the plant would be built. The company, a subsidiary of Grupo Mexico, has experienced several setbacks since it first announced its intention to develop Tia Maria in 2010, but now has all the necessary permits to initiate construction, the company said. Once completed, the mine is expected to produce 120,000 tonnes copper a year over an estimated 20-year mine life.


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