Noah Zivitz

Managing Editor, BNN Bloomberg

Archive

There’s an all-out assault on costs across Canada’s resource sector. From Suncor to Barrick, and beyond, we’re seeing some of the biggest names in mining and energy pull out all the stops to slim down while still aiming to ramp up production. Some highlights from the earnings barrage:

Suncor's second-quarter funds from operations jumped to $1.63 billion from $916 million a year ago amid higher production and a "continued focus on costs in all areas." To wit: oil sands operating costs plunged to $27.80 per barrel from $46.80 a year ago. On the downside, the company is trimming Syncrude’s production forecast due to the fire earlier this year. Worth also pointing out the massive Fort Hills oil sands project is also inching closer to starting production later this year (albeit amid an apparent dispute over funding obligations, according to Teck’s release).  

Cenovus is reiterating its plan to take out another $1 billion from its cost base over the next three years. Also said its asset sale process is “proceeding well”, and claiming an early win on the takeover of Conoco assets as cash flow surged 128% in the second quarter.

Barrick Gold is maintaining its full-year production and all-in sustaining costs forecasts after Q2 AISC dipped to $710/ounce and output rose to 1.432 million ounces. Also said it will soon start discussions with Tanzania's government regarding an export ban affecting Acacia Mining (of which Barrick owns 63.9%).   

Goldcorp is lowering its full-year AISC forecast after Q2 costs dipped to $800/ounce from $1,067 a year earlier. Also said CFO Russell Ball is leaving the company, to be replaced by former BMO Capital Markets Managing Director Jason Attew.

Agnico-Eagle is also lowering its full-year AISC forecast, as well as bumping its production forecast.

Teck Resources' second-quarter adjusted profit surged to $577 million from $3 million a year earlier thanks to higher commodity prices and record sales of steelmaking coal. Also narrowed its full-year production forecast range and raised the full-year cost outlook.

Watch for interviews with some of the biggest names in mining today on BNN, including: Agnico CEO Sean Boyd (7:45 a.m. ET), Lundin CEO Paul Conibear (11:10 a.m. ET), Barrick President Kelvin Dushnisky (1130 a.m. ET), Sherritt CEO David Pathe (11:50 a.m. ET), Goldcorp CEO David Garofalo (2:35 p.m. ET), and Cameco CEO Tim Gitzel (2:50 p.m. ET)

FALLOUT FROM THE FED’S DROPPED WORD

Amazing what one dropped word can do to a currency. The Canadian dollar reached a high of 80.54 U.S. in overnight trading after closing above 80 cents yesterday for the first time since June 30, 2015. The big swing happened yesterday afternoon when traders noticed the U.S. Federal Reserve reassessed inflation as “running below two per cent.” In June, the Fed said inflation was “running somewhat below two per cent.”

OTHER NOTABLE STORIES:

-West Fraser Timber is expanding in the United States, announcing late yesterday it’s buying Gilman Companies for US$430 million. “This is a long‑term strategic move that strengthens our core lumber business and gives us increased scale and geographic diversification,” said West Fraser CEO Ted Seraphim in a statement. Gilman has 900 employees and annual production capacity of 700-million board feet of lumber. Assets to be acquired include something called a “finger-joint mill.”

-Beyond earnings, Cameco said today it settled a tax dispute with the United States. As part of the deal, Cameco will pay the IRS US$122,000, versus the originally-anticipated US$122 million.

-Mitel Networks said today it's buying Sunnyvale, California-based ShoreTel for $530 million.

-Canfor disclosed late yesterday in its quarterly results that it incurred $34.8 million in expenses as a result of the two recent rounds of duties in the U.S.

-Facebook shares are rallying ~4 per cent in the pre-market after the company smashed second-quarter estimates. The company’s spending habits stand in stark contrast with what we’re seeing in Canada’s resource sector. Facebook’s costs hit US$4.9 billion in the second quarter, compared with US$3.7 billion a year earlier.

-Meg Whitman stepped down as chair of HP yesterday, instantly fanning the speculation about her being a leading candidate for Uber’s vacant CEO role. Let’s not forget she’s still CEO of HP Enterprise.

-Best press release headline of the day: Most parents prefer to give their adult kids money than live with them: CIBC Poll. CTV's Chief Financial Commentator Pattie Lovett-Reid will have more on this throughout the day.

NOTABLE RELEASES/EVENTS

-Notable earnings: Cenovus, MEG Energy, Crescent Point Energy, Cameco, Potash Corporation of Saskatchewan, Teck Resources, Yamana Gold, Fairfax Financial, Maple Leaf Foods, Royal Dutch Shell, Verizon, UPS, ConocoPhillips, P&G, MasterCard, Amazon.com, Intel, Twitter, Starbucks, Electronic Arts

-Notable data: U.S. durable goods orders (8:30 a.m. ET)

-9:30 a.m. ET: Suncor earnings call

-11:00 a.m. ET: Canfor earnings call

-12:00 p.m. ET: West Fraser conference call on Gilman takeover

-1:45 p.m. ET: Finance Minister Bill Morneau holds media avail in Regina

 Every morning BNN's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.