Anglo American plc is one of the worlds largest mining and natural resource groups. With its subsidiaries, joint ventures and associates, it is a global leader in platinum group metals, gold and diamonds, with significant interests in coal, base and ferrous metals, industrial minerals and paper and packaging. The group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia.

            Red = 25 day moving average.           Green = 200 day moving average.

SALES PER ACTIVITY (Data as of 31/12/2005)

Packaging and Paper: 23%
Ferrous metals:         20.5%
Industrial minerals:    14%
Platinum:                 12.5%
Nonferrous metals:    12%
Coal:                       9%
Gold:                       9%

Shares in Anglo American ended October 86p up on 1,903p. That's only a little under 5%, but it could be the start of something bigger.

Anglo shares have crashed this year as the miner's profits took a hit -- disproportionately higher than the rest of the sector, so it wasn't all down to falling commodities demand. But the shares have been creeping up over the month, and got an extra boost when the firm announced that chief executive Cynthia Carroll is to step down.

The well-publicised problems surrounding platinum mining in South Africa remain, but if they can be addressed over the next few months, it could turn out that we're at a good buying opportunity now.

Anglo American appoints new Chief Executive

Anglo American appoints Mark Cutifani as Chief Executive

Anglo American plc ("Anglo American") announces the appointment of Mark Cutifani as Chief Executive, with effect from 3 April 2013.

Mark Cutifani has been Chief Executive Officer of AngloGold Ashanti Limited, the South Africa-based gold producer, since 2007 and has led the successful restructuring and development of its business, which includes operations in ten countries on four continents.

Prior to his current role, Mr Cutifani was the Chief Operating Officer of CVRD Inco, the Canadian nickel company. He started his career in the coal and gold mining industries in Australia and has experience across a wide range of commodities. He has a degree in Mining Engineering and is the current President of the South African Chamber of Mines.

Fall in output http://www.moneyam.com/action/news/showArticle?id=4689330

JP Morgan Cazenove reiterates underweight on Anglo American, target cut from 1040p to 980p.

RBC note today:
"New headwinds face Anglo: We have adjusted our model for the recent Q1 production, and remodeled AngloPlat to come to a lower value. In addition, we see De Beers contributing less this year to Anglo because of soft conditions in diamonds which will limit volume and sales prices, and slow the rehabilitation of Anglo's balance sheet. The contribution of the bulks in the portfolio also remains under pressure. These factors have led to a lower valuation in our model and a change in Price Target to £9/share, with a downgrade in our recommendation to Underperform.
Challenging the "cheap" tag: Anglo's forward EBITDA and P/E multiples seem to compare favourably with its peer group, and it remains the most diversified of the large miners. But over the next few years free cashflow generation remains under pressure, and is threatened under a weaker price scenario. Essentially, debt continues to grow through 2017 as, on our numbers, free cash flow remains negative. Anglo's structure contributes to multiples appearing more attractive than they are, we believe. Using EBITDA as a proxy for cash flow, we modify Anglo's figures to account only for the cash received from AngloPlat and Kumba (ordinary dividends), and proportionately consolidate the EBITDA of De Beers. The result is a worsening in EV/EBITDA multiples relative to the peer group
Diamonds slow: De Beers was the largest contributor the earnings in 2014, and looks set to remain near the top of the ranking in 2015. Conditions in the diamond market have deteriorated with the result that Anglo has guided down De Beers' production this year from 32-34mct to 30-32mct; and we see potential for sales to suffer more in the near-term with prices under some pressure. We have modeled lower sales and prices and this results in De Beers' contribution to Anglo's bottom line falling from $776m to $428m.
The dividend intact for now: We do not see Anglo cutting its $1.1bn ordinary dividend this year, though it will remain a discussion point, we think, given negative free cashflow and rising debt due to still significant capex in iron ore, metcoal and diamonds.
Changing numbers: We adjust our model which results in cuts to our EPS and CFPS forecasts. Our FY15E EPS forecast of $1.15/sh compares with consensus of $1.04/share; our FY16E EPS reduces to $1.37/sh, vs. consensus at $1.48/sh. Our NAV cuts to £11.95/sh. As a result our Price Target, based on 1x NAV and 9x a blend of FY15E and FY16E EPS, reduces to £9/sh.

Investec retains hold on Anglo American, target cut from 1062p to 872p.

Anglo American receives total cash proceeds of $1.6 billion for sale of 50% interest in Lafarge Tarmac

Anglo American plc ("Anglo American") announces that it has completed the sale of its 50% ownership interest in Lafarge Tarmac Holdings Limited ("Lafarge Tarmac") to Lafarge SA ("Lafarge"). Anglo American has received cash proceeds of approximately £992 million ($1,559 million), constituting the agreed minimum consideration of £885 million set out in the July 2014 binding agreement and approximately £107 million of working capital and other adjustments, subject to certain post-closing adjustments.

The completion of this transaction brings the aggregate proceeds received by Anglo American for the sale of its Tarmac assets to approximately $2.5 billion since 2008.

StockMarketWire.com
Kumba Iron Ore will contribute $192m to Anglo American's underlying earnings for the six months to the end of June - down from $409m last year.

Kumba Iron Ore's IFRS headline earnings fell to $213m - down from $606m last time.

Anglo American will report its results for the six months ended 30 June on 24 July.

StockMarketWire.com
Anglo American posts a pre-tax loss of $1,920m for the six months to the end of June - compared with a profit of $2,945m a year ago. The group booked commodity price-driven impairments of $3.5 billion after tax, including $2.9 billion at Minas-Rio.

Underlying earnings fell by 30% to $904m and group revenues were down by 17% at $13,346. Underlying EBITDA fell by 24% to $3,280m.

Productivity improvements and indirect and capital cost reductions accelerated, with disposals being progressed: - $1.5 billion of operating and indirect cost reductions and productivity gains targeted in H2 2015 and 2016 (operating costs $800 million, productivity gains $400 million, indirect costs $300 million)

- Additional capital expenditure reductions of up to $1.0 billion by end 2016

- $1.6 billion of disposal proceeds delivered in July 2015



Chief executive Mark Cutifani said: "The transformation of Anglo American that I set out 18 months ago is progressing, despite considerable external challenges. I expect the operational turnaround to generate $1.2 billion(4) of underlying EBIT upside over the next 18 months, in addition to the $1.7 billion delivered to date. Structurally, we are focusing the portfolio around those assets that are of the scale and quality to generate most value to the Group.

"We expect to generate proceeds of at least $3 billion from asset sales, including the $1.6 billion received from the sale of our 50% interest in Lafarge Tarmac. We are unrelenting in enforcing strict cost and capital discipline across Anglo American, building upon the unit cost reductions delivered to date. Combined with planned capital expenditure reductions of up to $1.0 billion by end 2016, we are on track to deliver our long term net debt target of $10 billion to $12 billion, with net debt after the Lafarge Tarmac proceeds at $11.9 billion.

"Having defined our portfolio and significantly improved operational performance, now is the right time to accelerate the right-sizing of the organisation that supports the future business; we are targeting a $500 million total cost saving, of which $300 million will be realised from our ongoing core business, through the reduction of 6,000 overhead and other indirect roles, a 46% decrease, including those that will transfer with the businesses we are divesting. Post asset sales, we expect to have reduced our number of assets from 55 to 40 and reduced total employees by 35%, while maintaining copper equivalent production.

"As a result, and following the asset disposals and further business improvement, our underlying EBITDA margin of 25% in the first half of 2015 would increase to 35% on a like for like basis, representing a 40% improvement off a substantially lower cost base."

StockMarketWire.com
Anglo American's third quarter production increased by 2% (on a copper equivalent basis) compared to a year ago and by 3% compared to the previous three months.

Iron ore production from Kumba decreased by 12% to 11.4 million tonnes due to a temporary lack of sufficient exposed high quality ore for blending purposes at Sishen and adjustments to the mine plan and schedule as it transitions to the lower cost pit configuration. Minas-Rio produced 2.9 million tonnes (wet basis) of iron ore, a 60% increase compared to Q2 2015, reflecting the ongoing ramp up of the operation. Export metallurgical coal production increased by 8% to 5.5 million tonnes, driven by productivity improvements at Grasstree, which more than offset the loss of production from Peace River Coal being placed on care and maintenance in December 2014. Export thermal coal production was broadly flat at 8.8 million tonnes, with higher production at Cerrejón offsetting lower production from South Africa. Copper production from retained operations increased by 1%, while total production decreased by 3% to 171,100 tonnes as a result of the sale of the Norte assets, effective for reporting from 1 September. Nickel production decreased by 36% to 6,800 tonnes due to the planned Barro Alto furnace rebuilds. Both furnace rebuilds are now complete, ahead of schedule and below budgeted cost, with Furnace 2 operating at design capacity and Furnace 1 currently being ramped up. Platinum production (expressed as metal in concentrate)(6) increased by 14% to 614,300 ounces due to Rustenburg, Amandelbult and Union mines ramping up to normal production levels during the comparable period in 2014 following the strike. Diamond production decreased by 27% to 6.0 million carats, following the decision to reduce production to better reflect current trading conditions.

RBC note today:
A mixed bag of production which will likely be overshadowed by production cuts in iron ore, diamonds and copper (previously guided).
Iron ore beat guidance cut: Kumba production of 11.4mt was a beat vs. RBC at 10.6mt driven by better performance from Sishen and a resurgence in production from Kolomela. Anglo has trimmed Kumba production guidance by 1mt to ~43mt, with weaker production expected from Sishen (31mt vs. 33mt previously) as waste mining picks up; this is offset partially by a 1mt increase to guidance for Kolomela (this will see an increase in waste mining). Minas Rio continues its ramp up with production of 2.9mt, although water issues in the quarter drove a miss vs. our 4mt estimate and Anglo has revised down its Minas Rio FY15 production guidance to 10mt from 11-14mt.
Copper misses: Copper production of 171kt was a miss vs. RBC at 191kt driven by a mixture of weaker throughput at Los Bronces due to water constraints (which have now abated) and weaker production vs. our forecasts from the AA Norte assets which were sold in the quarter. Production guidance has been reduced to 680-710kt (from 720-750kt) to reflect the sale of the AA Norte assets (~37kt) and a ~3kt cut at Collahuasi as oxide production is curtailed.
Export met up: Australian export met production of 5.5mt was a beat vs. RBC at 5.2mt due to stronger performance from Capcoal, while thermal export lagged our 1.9mt forecast at 1.4mt as Drayton nears the end of its life, and thermal domestic production of 1.8mt was lower than our 2.2mt forecast. Production guidance is unchanged at 20-21mt.
Thermal weaker: SA export thermal production of 4.9mt was in line vs. RBC; however, Eskom thermal production lagged our 7.7mt forecast at 6.8mt due to weaker demand, and non-Eskom thermal production of 1.7mt was a touch below our 1.8mt forecast. Cerrejon produced 2.5mt, vs. RBC at 3mt. Production guidance for export thermal is unchanged at 28-30mt.
Platinum broadly in line: Refined platinum production of 611koz was in line vs. RBC at 618koz, while refined palladium production of 391koz was in line with our 389koz; refined rhodium lagged our 87koz forecast at 78koz. Production guidance is unchanged at 2.3-2.4moz.
Diamonds miss: Diamonds continues its challenging year with production of 6mct missing our 7.4mct forecast driven by the bringing forward of planned maintenance at Jwaneng and Orapa due to weaker market conditions. Production guidance has been revised down to 29mct from ~29-31mct.
Nickel upside: Nickel production of 6.8kt slightly lagged our 7.2kt forecast, although progress at Barro Alto continues ahead of schedule and budget. FY15 guidance raised to 28-30kt (from 25-30kt).

nearly $20 billion of debt or over 3 times market cap. If it was a boxer the towel would be being prepped for launch..

Who goes first GLEN or AAL?

Anglo American sets out radical portfolio restructuring and further material cost savings and capex reduction

Key highlights to be set out in the presentation include:

Radical portfolio restructuring
· Focus on Priority 1 assets to deliver free cash flow and greater returns through the cycle - number of assets to be reduced by ~60%
· Corporate structures and overhead to be aligned to future portfolio
o Consolidate from six to three businesses: De Beers, Industrial Metals, Bulk Commodities
o London office co-locating with De Beers in 2017

Driving operational discipline
· $3.7 billion of cost and productivity improvements targeted from 2013 to 2017:
o $1.6 billion delivered by end 2015(1), including $0.3 billion in 2H15
o $1.1 billion in 2016
o $1.0 billion in 2017, with potential to accelerate in part into 2016
· Care & maintenance / closure of cash negative assets - Snap Lake C&M, Thabazimbi closure

Protecting the balance sheet
· Capex reductions expected of a further c.$1 billion(2) to the end of 2016
o $2.9 billion aggregate capex reduction vs. original guidance(3) for 2015-2017
o $2.5 billion capex in 2017, a c.55% reduction vs. 2014
o SIB & capitalised stripping capex reduction of 30% from 2014 to $2.0 billion in 2016
· Disposals target increased to $4.0 billion - Phosphates and Niobium confirmed for sale
o c.$2.0 billion asset disposals agreed to date
· Dividend suspended in respect of 2H15 and 2016 - upon resumption, policy will change to pay-out ratio to provide flexibility through the cycle and clarity for shareholders
· Net debt guidance at end 2015 unchanged at $13.0 - 13.5 billion, despite price deterioration
· c.$15 billion of liquidity maintained and limited refinancing required in 2016 of $1.6 billion
· Expected impairments of $3.7 - $4.7 billion, largely due to weaker prices and asset closures

Likely to be more chances to get in but those who bought earlier in the week are doing well on the week!

Canaccord note today:
"Anglo American reported underlying EBITDA of US$4,854M, down 38% from US $7,832M, and underlying earnings were US$827M, down 63% from US$2,217M in 2014. Underlying eps was also off 63%, at 64c vs 173c in 2014. Net debt at year end was US$12.9bn compared with guidance of US$13.0-13.5bn. The company said that it is free cashflow positive at current commodity prices, and anticipates an additional US$1.9bn EBIT benefit from additional cost and productivity gains in 2016. Anglo is targeting US$3-4bn of asset disposals this year, and pro forma net debt of US$10bn by year-end. Forecast capital expenditure for 2016 has been reduced by only US$200M relative to December guidance levels (to US$3.0bn), while 2017 capex, at US$2.5bn, is in line with December guidance.
Anglo American has now provided the detail on a more aggressive plan than we or the market anticipated. The company will focus on diamonds, Platinum Group Metals and copper. All other assets will be managed for cash generation or disposal. This potentially adds all coal, iron ore and nickel assets to the “For Sale” list which already included the Niobium and Phosphate businesses, and selective assets in coal and platinum. The company hopes to deliver US$3-4bn of asset sales this year, and US$5-6bn in total. If fully implemented, the asset portfolio would shrink from 55 assets in 2014 to 45 in 2015, and eventually just 16 core assets.
Following our review of the 2015 results, we have revised our estimates, primarily to reflect a slightly higher cost profile than we had been forecasting at most assets. The forecasts are based upon the current business, so clearly as the disposal programme proceeds, there could be some material changes to estimates. We now forecast 2016 underlying EBITDA of US$3,770M (previously US$4,252M), underlying earnings of US$317M (was US$461M) and eps of 25c (from 36c). The company has already announced that no dividend would be paid for 2016.
The revised restructuring plan is bold, but high risk. The company will be seen as a forced seller and a price-taker by potential asset acquirers. Anglo will need to take care with its restructuring, particularly in South Africa, where it plans to exit a substantial asset base, but retain diamond and platinum interests. Our 350p target price (unchanged), based on NPV, rolling 12-month earnings vs the market and EV/ EBITDA, includes a 25% discount for implementation risk. Even if the plan can be successfully executed, with diamonds and platinum, Anglo’s residual portfolio will be a later cycle, more consumer-driven portfolio and earnings may recover later than at its more diversified peers. Given these factors, and the fact that the share price has almost doubled since its January lows, we downgrade our recommendation from Hold to SELL."

Harry
Do you hold these?
I have Glencore, which is much worse performer!!

No I don't hold any miners except VED, but I do keep a close watch and at some point they will come back into fashion..........not yet though. Good luck with GLEN. I just don't understand their business model any more, so not one I would consider holding.

Deutsche Bank note today:
"In this note we examine the high quality longwall assets that Anglo American has put up for sale in Australia and potential buyers. These coal assets form the most valuable part of the disposal programme, but are in a commodity that few are excited to enter. Achieving an acceptable valuation for shareholders may prove challenging. We think the two logical buyers are BHP and Rio. Both can extract operating synergies, BHP more though. We also think Japanese trading house, private equity, South32 and X2 may take a look.
We believe from BHP’s standpoint, the acquisition of Anglo’s coal assets would provide operational synergies around Goonyella and Caval Ridge, plus best practice opportunities which could unlock material value for Broadmeadow. But the company has made it clear that its preferred areas of investment are copper and oil. In addition, regulators are likely to investigate any acquisition by BHP. Rio Tinto has expressed interest in met coal previously, but does it need more exposure to Chinese steel? There may be synergies with its Kestrel UG mine. But does it want to assist in Anglo’s balance sheet repair or does it see other assets that may fall from the tree if the environment deteriorates further? Would the Japanese trading houses, PE, X2 or S32 have any interest? Based on a long term met coal price of US$125/t and AUDUSD of 75c our NPV of Grosvenor and Moranbah is US$3.3bn. Every US$5/t reduction in our LT met coal price curve reduces NPV by US$328m.
Anglo has announced it is shrinking its operations to three core areas and has effectively put “the for sale sign up” on all remaining assets. It has also talked about debt reduction to US$6bn, suggesting US$7bn of disposals. But in reality, we expect Anglo to try and sell only a portion of the assets for sale. The extent of any disposal program beyond the US$3-4bn targeted for 2016 will be dependent on progress on cost cutting and operational gains as well as operating cash flow. Investors should focus on progress towards the 2.5x ratio more than the absolute level of debt reduction, in our opinion. Given the size of the disposal program (1x current market cap potentially) management will be under significant pressure to limit the value destruction on any single disposal by their owners- the shareholders.
The underlying value of Anglo’s assets remains materially in excess of the current share price. However, execution risk around the disposal program remains high making any investment case difficult without signs of progress on delivery. Main risks include higher/lower commodity prices, stronger/weaker FX and progress or delays on the disposal program."

Jefferies note today:
"We hosted Anglo’s CEO, Mark Cutifani, FD, Rene Medori, and Head of IR, Paul Galloway, for meetings in the US yesterday. Investors are in general skeptical about the company’s ability to deliver on its planned restructuring. We are waiting for real progress before including the potential value uplift in our analysis. The ball is in Anglo’s court, and it is time for mgmt to prove the doubters wrong.
Core Anglo has value: Anglo’s restructuring plan involves selling non core assets to pay down debt and improve margins. According to mgmt, core Anglo (DeBeers, Platinum, Copper) will consist of just 16 assets (versus 45 today) and will generate $2.5bn-$4.0bn of EBITDA through the cycle with net debt of just $6bn (versus Anglo’s net debt of $12.9bn). At the midpoint of the EBITDA range and a mid-cycle EV/EBITDA multiple of 6.5x, core Anglo’s fair equity value would be $15.3bn, or 833p per share.
Restructuring risks: Anglo believes that selling non-core assets is a better approach than issuing equity or selling core assets at premium multiples. Mr Cutifani argues that the resource optionality within tier-1 mines is difficult to value and it is unlikely that full value would be realized in a sale. In the case of non-core assets, the difference between Anglo’s assumed valuation and the buyer’s valuation should be mostly a function of differing commodity price assumptions. Mgmt believes it can realize full value for these non-core assets. Investors, however, are concerned that the sale process will take too much time and that the company’s ability to sell these assets for “full value” depends on commodity prices staying firm. Several investors would prefer an equity issuance as a faster, less risky solution. Either way, it is clear that deleveraging is essential for Anglo.
Fade the rally: Based on our analysis, the tradeoff between risk and reward is not favorable in AAL shares at the current price. The recent rally has been extraordinary, with the AAL share price up 137% since Jan 20. Some of that could be attributed to a modest recovery in commodity prices and improved sentiment toward the sector, but we are reluctant to give Anglo additional credit for restructuring targets at this time. We would take profits after the recent strength.
Valuation/Risks
Higher commodity prices and/or successful restructuring are risks to our Underperform rating. Our 300p target is at a discount to NPV due to operational risks. We are not modeling restructuring benefits at this time."

UBS note today:
"We downgrade Anglo to Sell (from Neutral), lifting our price target to £4.00/s. The stock is up 137% from the low in mid-Jan, outperforming the sector by ~85%. We believe the outlook for Anglo's key commodity prices has not improved materially and the execution risk with the proposed restructuring remains high. Our key concern is that Anglo will struggle to sell coal, nickel and iron ore assets at attractive prices in the current market and thus, if they do, it could be destructive to shareholder value."