Category: Stock Market

AGL Energy Limited (ASX: AGL) and its share price have been the talk of the ASX today after the company revealed its new, permanent leadership team.

Interim CEO Damien Nicks has been given the role permanently while interim chief financial officer (CFO) Gary Brown will take the reins as the company’s permanent finance chief.

Sadly, however, the market appears to be reacting poorly to the news. The AGL share price is down 0.32% at the time of writing, trading at $7.675.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 0.27% and the company’s home sector – the S&P/ASX 200 Utilities Index (ASX: XUJ) – is down 0.2%.

Let’s take a closer look at AGL’s newly appointed leaders.

AGL share price slumps as permanent leaders appointed

The AGL share price is underperforming on Thursday as the company closes a nearly eight-month-long board and management renewal process.

The process kicked off in May 2022. Then, former chair Peter Botten and former CEO Graeme Hunt announced they, along with two other board members, would be stepping down after billionaire shareholder Mike Cannon-Brookes led the derailment of the company’s planned split.

Nicks, who was previously the company’s CFO, was appointed to the position of interim CEO following Hunt’s departure.

On announcing Nicks’ permanent appointment today, AGL chair Patricia McKenzie commented:

The board has been particularly impressed by Damien’s leadership of the business, including his role in championing AGL’s new strategy and his commitment, vision, and fresh approach to accelerate the energy transition and to deliver value for AGL’s customers and position AGL for future growth.

Nicks’ permanent position comes with a $1.4 million annual salary, inclusive of super. That could be bumped by up to 120% if short-term incentives are met.

Nicks could also receive up to 120% of his salary’s value in the form of performance rights on meeting yet-to-be-approved long-term incentives.

Filling Nicks’ previous role will be Brown, who started at the company this time last year expecting to be CFO of Accel Energy – the proposed AGL spin-off.

Brown has acted as AGL’s interim CFO since October, leading its strategic review process.

The post What’s with the AGL share price on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Attention income investors! These 7 ASX 200 dividend shares are projecting yields of 7%+ in FY24
• Can AGL shares really deliver a 7% dividend yield in FY24?
• 2 ASX 200 dividend stocks I’m running a mile from
• Fortescue’s Twiggy Forrest is in the wars this week. Here’s why
• The AGL share price rocketed 30% in 2022. Can it keep the fire burning this year?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Analysts are tipping three S&P/ASX 200 Index (ASX: XJO) shares to lift to a higher value than their current share prices.

Resmed Inc (ASX: RMD), Vicinity Centres (ASX: VCX), and Scentre Group (ASX: SCG) shares have all just been upgraded by brokers.

Let’s take a look at these three ASX 200 shares in more detail.

Resmed

This ASX 200 healthcare share develops and supplies medical devices to treat sleep and respiratory conditions. The company’s revenue lifted 5% in the first quarter of 2023 to $950.3 million.

Citi analysts have placed a buy rating on the Resmed share price with a $37 price target, the Australian reported. This implies an upside of 13% on the current share price.

Resmed shares are up 0.43% at the time of writing today and fetching $32.83. The ASX 200 has also lifted into the green today, up 0.25%.

The Resmed share price has fallen around 1% over the past 12 months.

Vicinity Centres

Vicinity invests and develops property, including shopping malls. In FY22, the ASX 200 share acquired a 50% interest in the Harbour Town premium outlets on the Gold Coast. Vicinity’s profit lifted by $1.2 billion in FY22 compared to FY21.

Analysts at Morgan Stanley have raised Vicinity to equal weight with a $2.26 price target, according to the publication. Vicinity shares are rising 0.74% today to $2.055. Morgan Stanley’s price target on Vicinity implies an upside of 10% on the current share price.

The Vicinity share price has soared almost 21% in a year.

Scentre Group

Scentre owns premium shopping malls in Australia and New Zealand. The company’s sales growth lifted by $3.5 billion in the 9 months to September 2022, compared to the corresponding time frame in 2021.

Scentre Group shares are 0.66% higher today and currently trading at $3.03. Morgan Stanley has lifted its rating on Scentre share price to overweight with a $3.55 price target. This implies an upside of 17% on today’s share price.

Scentre shares have slipped 0.5% in the last year.

The post 3 ASX 200 shares tipped to rise higher: experts appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares with multi-decade growth runways: Scott Phillips
• How to prepare your portfolio for the ‘old normal’: Scott Phillips
• Buy QBE and this ASX 200 blue chip share: broker
• Here are the top 10 ASX 200 shares today
• Are healthy returns on the horizon for ASX 200 healthcare shares in 2023?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Northern Star Resources Ltd (ASX: NST) share price is pushing higher on Thursday following the release of the gold miner’s quarterly update.

At the time of writing, the gold miner’s shares are up 1.5% to $12.20.

Northern Star share price higher on solid quarterly update

• Quarterly gold production of 397,783 ounces
• All-in sustaining cost (ASIC) of A$1,746 per ounce
• Gold sales of 404,287 ounces
• Average realised price of A$2,531 per ounce
• Half year gold production of 764.4k ounces and sales of 773.24k ounces
• Full year guidance maintained

What happened during the quarter?

For the three months ended 31 December, Northern Star delivered gold sales of 404,287 ounce at an ASIC of A$1,756 per ounce.

Management advised that this was driven by its operations delivering in line with expectations and a significant cost improvement at key growth projects, Pogo and Thunderbox.

And with Northern Star reporting an average realised price of A$2,531 per ounce for the period, it achieved an ASIC margin of A$775 per ounce.

This helped underpin strong profitability during the first half, which could be boosting the Northern Star share price today. In fact, management advised that it expects to deliver cash earnings of A$460 million to A$475 million for the half. This will be an increase of 7% to 10.4% over the A$430 million recorded during the prior corresponding period.

What did management say?

Northern Star’s managing director, Stuart Tonkin, was pleased with the quarter and notes that the company is on track to achieve its production guidance for the full year. He said:

The December quarter has demonstrated our capability to operate at 1.6Mozpa, in line with our five-year growth strategy. All three production centres achieved positive net mine cash flow after funding their capital requirements. We remain on track to deliver our FY23 guidance.

This will mean 1,560k ounces to 1,680k ounces of gold at an AISC of A$1,630-1,690 per ounce.

What’s next?

Tonkin also spoke positively about the company’s prospects in 2023 and its value-creation plans. He added:

We have entered the 2023 calendar year with a stable and united team and a strong safety culture. I’m proud of our people and their commitment to safely and sustainably execute our value-creation strategy. This strategy is built on world-class gold assets in Western Australia and Alaska that provide us with superior organic growth optionality. This is complemented by our ongoing exploration success, which enables the low-cost resource inventory build needed for long-term success.

Northern Star share price snapshot

Following today’s gain, the Northern Star share price has now risen 10% since the start of the year and, as shown below, 40% over the last 12 months.

The post Northern Star share price lifts on strong update appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Monday
• 4 ASX 200 shares celebrating Friday with new, 52-week highs
• 5 ASX 200 shares smashing new, 52-week highs on Thursday
• The gold price is trading at 8-month highs. What’s next in 2023?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A relatively new ASX lithium share is exploding on the market today.

The Patriot Battery Metals Inc (ASX: PMT) share price is soaring 22% today and is currently trading at $1.065. For perspective, the ASX 200 is climbing 0.25% today.

The Patriot share price has soared 78% since the company joined the ASX.

Let’s take a look at what this ASX lithium share reported to the market today.

Lithium results impress

Investors are buying up Patriot shares today after the company drilled the “highest grade lithium drill intercept” to date in Quebec, Canada.

Assay results at drill hole CV22-083 showed:

• 156.9 metres (m) at 2.12% lithium oxide including 250 metres at 5.04% lithium oxide or 5m at 6.36% lithium oxide

This drill hole is continuing to extend mineralisation eastwardly at the CV5 pegmatite. Patriot said it has intersected part of a “large, high grade zone” within the overall pegmatite.

Further significant drill intercept results included:

• 45.3m at 1.72% lithium oxide including 31m at 2.11% lithium oxide at drill hole CV22-069
• 31.2m at 1.95% lithium oxide including 9.0m at 2.78% lithium oxide

Commenting on the results, exploration vice president Darren Smith said:

It is hard to find words to adequately describe the impressive nature of the lithium mineralisation in drill hole CV22-083.

The recently commenced winter drill program will continue to probe and delineate this area ahead of an initial mineral resource estimate planned for the first half of 2023.

Patriot first started trading on the ASX in early December 2022. In early January, the company advised it had commenced its 2023 lithium drill program at the Corvette Property in Quebec.

Patriot share price snapshot

Patriot Battery Metals has surged 42% in the year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned 1.21% in the last year.

This ASX lithium share has a market capitalisation of about $128 million based on the current share price.

The post ”Hard to find words’: Why this ASX lithium share is rocketing 22% appeared first on The Motley Fool Australia.

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More reading

• This under-the-radar ASX battery metals share is leaping 15% on Friday. Here’s why

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A high yield on an ASX dividend share can be a tempting metric to consider when choosing your next investment. But not all high yielders make good investments. A company’s dividend yield tells us what dividends a company has paid, not what it will pay in the future.

And companies have absolutely no obligation to keep their dividends at the levels of previous years. As such, it’s possible to get caught out buying a share for a seemingly high dividend yield, only for the company to cut said dividend after you buy.

This undesirable situation is known as a dividend trap.

Avoiding a dividend trap

It can trap investors because if a company cuts its dividend, it can be an indication that it is under financial stress. As such, the dividend cut might be accompanied by a share price fall. And now our investor has lost capital in their investment, leading them to be ‘trapped’ if they don’t want to sell out and crystallise a loss.

That’s why all ASX shares with relatively high yields should be examined very closely if an investor wants to avoid this situation.

But let’s discuss three ASX dividend shares that I think could be in danger from this very trap.

The first is Magellan Financial Group Ltd (ASX: MFG). Magellan paid out $1.79 in dividends per share last year, which gives the company an eye-watering trailing yield of 19.2% on current pricing.

However, Magellan is a company that is currently under the pump. Its funds under management (FUM) have been falling precipitously over the past 12 months.

Over the six months to 31 December 2021, Magellan has an average of $112.7 billion in funds under management. But its latest figures from December 2022 had the company’s FUM down to just $45.3 billion. That was down from $50.2 billion just a month earlier.

Fund managers’ profits are directly tied to how much capital they can charge their fees on. As such, it’s looking highly unlikely that Magellan will be able to pay anything close to $1.79 per share in dividends in 2023.

Thus, I think Magellan is a classic dividend trap right now.

2 more high-yield ASX shares I’m avoiding

Fortescue Metals Group Limited (ASX: FMG) is another potential dividend trap in the making. Record iron ore prices in 2021 and 2022 saw Fortescue dial up its dividends to a record $3.58 and $2.07 per share respectively. On 2022’s numbers, Fortescue shares offer a trailing dividend yield of 13.4% today.

Fortescue is an extremely well-run company, without the kind of existential problems that Magellan is dealing with right now. However, it is still a price taker at the end of the day. Fortescue’s profits are explicitly tied to the price of iron ore.

While iron ore is still high by historical standards at US$120 a tonne today, the base metal remains a long way from the US$200-pus per tonne prices we were seeing in 2021.

Because of this, I think Fortescue’s dividends will struggle and investors might have to put up with lower payments this year. There are probably still healthy dividends coming to shareholders in 2023, but I wouldn’t be banking on a 13.4% dividend yield.

Finally, let’s check out WAM Capital Limited (ASX: WAM). This popular listed investment company (LIC) is a favourite of many income investors.

But the WAM Capital dividend is looking rather shaky on the latest figures. For the past few years, this company has paid out 15.5 cents per share in dividends. That leaves it with a trailing yield of 9.7% right now.

But the company’s latest updates tell us that this LIC only has 11.9 cents per share left in its profit reserves. That’s looking dangerously low. So I wouldn’t be relying on this company to maintain its dividends at the old levels going forward.

The post 3 high-yield ASX shares I think are dividend traps right now appeared first on The Motley Fool Australia.

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More reading

• My Fortescue shares are up 30% in 3 months. Should I buy more?
• I wouldn’t touch this popular ASX dividend share with a 10-foot pole
• Fortescue shares: 4 reasons to buy (and not buy) in 2023
• My ASX shares fell 15% last year. Here’s what I’m doing now
• ASX 200 mining shares: To buy or not to buy?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last year was a rollercoaster for the share price of lithium favourite Lake Resources NL (ASX: LKE).

It tumbled 21% over the 12 months ended 31 December amid short seller attacks, ownership disputes, and the market’s apparent distaste for unprofitable outfits.

But could 2023 be the year the S&P/ASX 200 Index (ASX: XJO) lithium developer posts a profit? Let’s take a look.

Right now, the Lake Resources share price is trading at 82 cents.

Let’s dive into the lithium developer‘s business

Lake Resources is currently working on its flagship Kachi Project’s definitive feasibility study (DFS).

The Argentina-based project’s DFS will be based on 50,000 tonnes per annum of lithium carbonate equivalent (LCE) production.

The company plans to use direct extraction technology by technology partner Lilac Solutions to produce lithium at the project.

It was recently revealed that the project’s demonstration plant – operated by Lilac – has successfully run for 1,000 hours. It produced 40,000 litres of lithium chloride elute in that time, which was sent to be turned into lithium carbonate.

Additionally, the company provided an update on Kachi’s lithium resources last week. Its measured and indicated resource was doubled to 2.2 million tonnes of LCE.

Unfortunately, despite all the good news, Lake Resources likely won’t post a profit in 2023.

Lake Resources‘ maiden profit unlikely in 2023

There’s one key ingredient resource shares generally need to turn a profit: Saleable product.

As we have explored, Lake Resources isn’t quite there yet. And it probably won’t reach the milestone for some time to come.

The ASX 200 company previously slated Kachi’s construction to begin this year, with production of 25,500 tonnes per annum tipped for 2024.

From then, it’s expected to bring in US$260 million of earnings before interest, tax, depreciation, and amortisation (EBITDA) each year.

Fortunately, while Lake Resources probably won’t be operating in the green this year, the company is in good financial shape. It had $158.8 million of cash and no debt at the end of September.  

That, along with low-cost project finance from the UK Export Finance and Export Development Canada, should fund it through to production.

The post Will Lake Resources become profitable in 2023? appeared first on The Motley Fool Australia.

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More reading

• Can income investors bank on CBA growing its dividend yield by 18%?
• 2 ASX 200 shares with multi-decade growth runways: Scott Phillips
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With earnings season just around the corner, a number of ASX 200 shares have been releasing trading updates this week.

Today has been no exception, with a large number of updates hitting the wires. Some have been positive; some have been less so.

Three that have led to big moves from ASX 200 shares today are summarised below. Here’s what is happening:

Nanosonics Ltd (ASX: NAN)

The Nanosonics share price is rocketing higher today after the infection prevention company upgraded its full year guidance.

Its shares are up 11% at the time of writing after a stronger than expected first half led to management boosting its FY 2023 revenue growth guidance to between 36% and 41% from 20% to 25%.

One slight disappointment that investors appear willing to overlook is that its operating costs are now expected to grow 22% to 27% in FY 2023 instead of 15% to 18%.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price has come crashing down to earth after the release of the investment platform provider’s quarterly update.

This ASX 200 share is down 10% after reporting a significant slowdown in net inflows. Although its funds under administration (FUA) grew 10.2% year over year to $62,414 million, its net inflows of $2,087 million were down 42% on the prior corresponding period and 29% from the first quarter.

This reflects “larger than usual outflows in the High Net Worth (HNW) investors and mid-market segment.”

Paladin Energy Ltd (ASX: PDN)

The Paladin Energy share price is down 7% following the release of the uranium developer’s quarterly update.

Investors may be disappointed that it is expected to be another year until the company’s Langer Heinrich Mine returns to production. Management is targeting the commencement of production during the first quarter of calendar year 2024.

One positive is that Paladin finished the period with unrestricted cash of US$163.2 million.

The post 3 ASX 200 shares making big moves following trading updates appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
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Embattled S&P/ASX 300 Index (ASX: XKO) share City Chic Collective Ltd (ASX: CCX) has a new major investor following a $7.75 million buying spree by billionaire retail fanatic Brett Blundy.

The entrepreneur began his career by building a struggling Melbourne music store into Sanity Entertainment Group and has since founded Bras N Things. He now commands a $2.28 billion fortune, according to The Australian.

Blundy is no stranger to the ASX retail space, either. He currently boasts notable stakes in Lovisa Holdings Ltd (ASX: LOV), Accent Group Ltd (ASX: AX1), and now, City Chic.

Let’s take a closer look at the ASX 300 share’s newest major shareholder.

Aussie retail billionaire snaps up City Chic shares

No doubt plenty of eyes are on the City Chic share price on Thursday. Blundy’s new 7.3% stake in the struggling plus-sized fashion retailer was revealed yesterday.

The billionaire built the holding up in four purchases between 22 December and 16 January, paying an average of around 44 cents per share.

The first purchase occurred just days after the City Chic share price crashed 31% to a 52-week low of 37.5 cents on the release of a disappointing trading update.

The company declared it expects to post an earnings before interest, tax, depreciation, and amortisation (EBITDA) loss for the first half after demand faltered, forcing it to spend on more promotional activity.

The ASX 300 share has since rebounded to trade at 72 cents at the time of writing, 12.5% higher than its previous close.

Though, it’s still a whopping 87% lower than it was this time last year.

What else is going on with the ASX 300 share?

Blundy’s buy wasn’t the only change in the company’s register announced yesterday.

It also revealed the nation’s largest super fund, AustralianSuper, has reduced its position in the retailer by 6.16 million shares leaving it with a 5.9% stake, down from 8.5%.

Eagle-eyed market watchers might also be eyeing the City Chic share price for another reason.

The company previously promised to release a detailed trading update for the first half in mid-January. No such announcement has been released at the time of writing.

The post Guess which beaten-up ASX 300 share this Aussie billionaire is buying up big appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 300 retail shares to buy right now, and one to avoid: Macquarie
• Little downside protection for popular ASX 200 shares as 2023 looms a much tougher year for blue chip stocks
• Why BWX, City Chic, Domain, and John Lyng shares are sinking today
• Why did this ASX All Ordinaries share just crash 19%?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Accent Group and Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Santos Ltd (ASX: STO) share price is trading lower on Thursday morning.

At the time of writing, the energy producer’s shares are down 2.5% to $7.17.

Why is the Santos share price falling?

Investors have been hitting the sell button on Thursday following the release of the company’s fourth quarter and full year update.

According to the release, Santos achieved sales revenue of US$1.9 billion during the fourth quarter, bringing its full year revenue to a record of US$7.8 billion. This was up 65% year on year.

Santos also achieved record annual free cash flow of approximately US$3.6 billion, which was more than double the level recorded in 2021.

And while its fourth quarter production was lower quarter on quarter at 25.6 million barrels of oil equivalent (mmboe) due to reduced domestic gas volumes in Western Australia following unplanned maintenance at John Brookes, that couldn’t stop Santos from reporting record annual production of 105.4 mmboe (or 103.2 mmboe including Bayu-Undan volumes on a net PSC entitlement basis).

However, it is worth noting that this was at the very low end of its production guidance range, which may have disappointed the market today and could explain some of the weakness in the Santos share price.

Merger update

A key driver of the company’s growth was of course the merger with Oil Search last year, which boosted its output materially.

In addition, management provided an update on its merger synergies target. It revealed that US$122 million in sustaining annual synergies have been achieved, which is towards the upper end of the US$110 million to US$125 million guidance range.

Outlook

Also potentially weighing on the Santos share price today has been its guidance for FY 2023.

Management advised that 2023 production is now expected to be in the range of 89-96 mmboe, down from its previous guidance of 91-98 mmboe.

This is primarily due to the temporary shutdown of the John Brookes platform in Western Australia extending to around late-January/early-February, combined with a delay in commencement of production from the Spartan field into the second quarter due to the repair works at John Brookes.

Capital expenditure guidance is maintained at approximately US$1,200 million in sustaining capex (including restoration) and approximately US$1,835 million for major projects.

The post Santos share price falls on Q4 update and FY23 production guidance downgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price is on the rise on Thursday.

At the time of writing, the mining giant’s shares are up 0.5% to $49.30.

This follows the release of the miner’s second quarter update this morning.

BHP share price higher on second quarter update

For the three months ended 31 December, BHP reported iron ore production of 66.9Mt, which was up 3% quarter on quarter. This was underpinned by record production at WAIO in the month of December thanks to strong supply chain performance and reduced impacts of labour constraints and wet weather.

This means for the first half, BHP achieved record iron ore production of 132Mt, which represents a 2% increase over the prior corresponding period.

In respect to pricing, for the six months, BHP commanded an average iron ore price of US$85.46 per tonne, down 25% from the same period last year.

BHP’s copper production came in at 424.3kt for the second quarter, up 3% quarter on quarter. Management advised that this was driven by higher volumes at Escondida due to higher throughput, higher concentrate volumes at Spence reflecting the ramp up of the Spence Growth Option, and strong volumes at Olympic Dam as a result of planned refinery maintenance in the prior period.

For the first half, the Big Australian’s copper operations delivered production of 834.4kt (up 12% year on year) and achieved an average realised price of US$3.49 per pound.

Given how strong coal prices are right now, investors will be pleased to learn that BHP’s metallurgical coal and energy production improved during the quarter. BHP reported met coal production of 7Mt (up 4% quarter on quarter) and energy coal production of 2.9Mt (up 9% quarter on quarter).

Management revealed that its met coal production growth was driven by higher volumes due to improved strip ratios and the planned longwall move at Broadmeadow in the prior period, partially offset by continued significant wet weather. This took its first half met coal production to 13.6Mt.

BHP’s higher energy coal volumes was the result of improved operating conditions, including less significant wet weather impacts and reduced labour shortages in the quarter, partially offset by planned wash plant maintenance completed in November. For the half year, BHP’s energy coal production came in at 5.5Mt for the half (down 24% year on year).

Finally, BHP’s nickel production fell 14% during the quarter to 17.7kt due to planned maintenance. This led to its half year nickel production falling 2% to 38.4kt.

How does this compare?

According to a note out of Goldman Sachs, its analysts were expecting:

• Iron ore shipments of 74.8Mt
• Copper production of 420kt
• Met coal production of 6.9Mt
• Nickel production of 16.1Mt

While iron ore shipments data wasn’t provided, BHP has beaten Goldman’s copper, met coal, and nickel estimates, which may explain why the BHP share price is edging higher today.

Outlook

BHP’s production guidance for FY 2023 remains largely unchanged. The only small changes that have been made are Escondida and BHP Mitsubishi Alliance (BMA) trending to the low end of their respective guidance ranges.

In respect to costs, the company’s full year unit cost guidance is unchanged for Escondida and WAIO. However, unit costs for BMA and New South Wales Energy Coal (NSWEC) have been increased, largely reflecting production impacts from significant wet weather and inflationary pressures.

BHP CEO, Mike Henry, appears positive on the second half thanks to China’s reopening. He commented:

BHP believes China will be a stabilising force when it comes to commodity demand in the 2023 calendar year, with OECD nations experiencing economic headwinds. China’s pro-growth policies, including in the property sector, and an easing of COVID-19 restrictions are expected to support progressive improvement from the difficult economic conditions of the first half. China is expected to achieve its fifth straight year of over 1 billion tonnes of steel production.

The post BHP share price higher amid record first half iron ore production appeared first on The Motley Fool Australia.

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More reading

• Should I buy BHP shares in 2023?
• 5 things to watch on the ASX 200 on Thursday
• My ASX shares fell 15% last year. Here’s what I’m doing now
• ASX 200 mining shares: To buy or not to buy?
• Why did iron ore shares lag the ASX 200 on Monday?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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