Exclusive: De Beers puts Canadian Snap Lake diamond mine up for sale

Stock Markets

By Susan Taylor and John Tilak

TORONTO (Reuters) - Anglo American Plc's (L:AAL) De Beers has put its Snap Lake diamond mine in Canada up for sale after suspending operations at the unprofitable mine last December, a spokesman said on Friday.

De Beers has hired Bank of Montreal (TO:BMO) to market the underground mine in Northwest Territories, said spokesman Tom Ormsby, but he did not provide financial details.

Snap Lake, which has not made money since production began in 2008, produced 1.2 million carats last year and was initially planned to operate until 2028.

In June, De Beers Canada received approval to flood the mine tunnels, reducing maintenance costs, under a revised suspension plan. The flooding has not yet happened but planning work continues.

"Before we get into that actual flooding of the mine ... we thought it would be prudent, certainly, to see if there was an interest," Ormsby said.

De Beers Canada spent C$2.2 billion ($1.67 billion) on mine construction and operation up to year-end 2014.

If no qualified buyer is found, De Beers Canada may proceed with the flooding plan in the fourth quarter, Ormsby said.

De Beers, 85 percent owned by Anglo American and 15 percent by the government of Botswana, has been hurt by waning demand and slumping prices in the diamond industry.

Snap Lake was De Beers' first mine built outside Africa and is 220 kilometers (137 miles) northeast of Yellowknife, the capital of the Northwest Territories.

Accessible only by air and an ice road that operates for two months of the year, the mine was plagued with groundwater problems from extracting diamonds below Snap Lake. It employed 595 staff and 200 contractors before its suspension.

The level of interest is unclear, said one legal source familiar with the matter, with another person adding that the mine's remote location, technical challenges and high reclamation liability have diminished its luster.

The sources said potential buyers could include Stornoway Diamond Corp (TO:SWY), which is poised to open Quebec's first diamond mine, and Peregrine Diamonds Ltd(TO:PGD), which is exploring for diamonds in Canada's Arctic and is backed by high-profile miners Eric and Robert Friedland.

Other diamond miners operating in Canada's Arctic include Rio Tinto Ltd (L:RIO) and Dominion Diamond Corp (TO:DDC).

De Beers Canada also operates the Victor diamond mine in Ontario, which is set to close in 2018 unless an expansion proceeds. It is also building the Gahcho Kue diamond mine in the Northwest Territories.

Gahcho Kue, 49 percent owned by Mountain Province Diamonds Inc (TO:MPV), is expected to start production within the next month with annual output averaging 4.5 million carats.

GE reports weak demand for oil, transport equipment; profit beats

Stock Markets

By Alwyn Scott

NEW YORK (Reuters) - General Electric Co (N:GE) on Friday reported weak demand for new oil, gas and transportation equipment, raising concerns about its full-year performance and sending its shares down as much as 2.8 percent.

Still GE, long considered a bellwether for the U.S. economy, posted adjusted second-quarter earnings of 51 cents a share that topped analysts' estimates of 46 cents, according to Thomson Reuters I/B/E/S.

GE also affirmed its 2016 operating outlook and forecast that strong growth would continue in the second half.

But investors focused on a 16 percent decline in new orders from continuing businesses amid weakness in oil and gas prices and commodity markets that undercut demand, raising questions about its forecast.

"You're counting on the second half being pretty strong, especially in the power business," said Jeff Windau, an analyst at Edward Jones in St. Louis, referring to power plant sales.

"Those are capital intensive purchases and if those get pushed out even just a little bit" it could weaken GE's performance.

GE expects sales for the year to grow at the low end of its 2 percent to 4 percent target range. But it said reduced orders, which represent bookings for future sales, would not affect revenue, which comes as deliveries of actual products and is on course.

"We have an enormous backlog (of orders)," Chief Financial Officer Jeff Bornstein said in an interview. "We don't view it as a concern for future revenue."

About 70 percent of the sales that GE expects this year already are in the backlog, he said.

Investors also reacted to GE being about $1 billion short of estimates on free cash flow for the quarter, said Deane Dray, an analyst at RBC Capital Markets. "That was attributed to slower accounts receivable collection," he said. "You don't typically hear GE talk about that."

With the stock having had a strong run, he added, "a little bit of profit-taking is understandable."

GE shares fell 2.2 percent at $31.87 in mid-day trading on the New York Stock Exchange.

Other parts of the business did well. GE's revenue rose 15 percent to $33.49 billion, helped by a 31 percent rise in the power business, but that reflected the acquisition of the Alstom (PA:ALSO) power business last year.

Sales from continuing industrial operations, known as organic segment revenue, fell 1 percent to $24.4 billion, less than some analysts expected. Power sales without Alstom were up 2 percent.

Net profit was $2.73 billion, or 30 cents a share, compared with a loss of $1.36 billion, or 13 cents a share, in the year-earlier quarter.

GE's order backlog rose 1.3 percent to $320 billion, reflecting a 2 percent rise in services orders to $233 billion, while equipment orders fell 2.2 percent to $86 billion.

During the quarter, GE returned $18 billion to shareholders through stock buybacks.

The company shed its designation as a non-bank systemically important financial institution after divesting most of its GE Capital business. The change is expected to free about $18 billion in capital, which GE had pledged to return to shareholders through buybacks.

U.S. futures slightly higher as investors continue to chew over earnings

Stock Markets. Investing.

Investing.com – Wall Street futures pointed to a slightly higher open on Friday, bouncing back after Thursday’s decline, as investors continued to chew over earnings report and with only one data point on the U.S. economic calendar

The blue-chip Dow futures gained 31 points, or 0.17%, by 10:55AM GMT, or 6:55AM ET, the S&P 500 futures rose 4 points, or 0.20%, while the tech-heavy Nasdaq 100 futurestraded up 9 points, or 0.20%.

Investors were set on Friday to price in mostly disappointing earnings from a slew of firms that reported after the close on Thursday.

Starbucks (NASDAQ:SBUX) fell 3% in pre-market trade on disappointing comparable sales.

Chipotle Mexican Grill Inc (NYSE:CMG) was in the same boat, reporting worse than expected sales that sent shares down more than 1%.

PayPal Holdings Inc (NASDAQ:PYPL) was down despite earnings that beat consensus and after announcing a tie-up with Visa.

Visa Inc (NYSE:V) itself reported earnings that beat consensus but disappointed on revenues.

AT&T (NYSE:T) was down around 1% as revenues missed forecasts despite a 23% jump.

Not all the earnings news was bad as Advanced Micro Devices Inc (NASDAQ:AMD) jumped almost 9% after its quarterly loss was not as large as feared.

On balance the reports released so far on Friday were positive.

General Electric (NYSE:GE) traded up 2% in the pre-market after both revenue and earnings beat estimates.

Whirlpool (NYSE:WHR), Stanley Black & Decker (NYSE:SWK), SunTrust Banks Inc (NYSE:STI), NorthWestern Corporation (NYSE:NWE), Honeywell International Inc (NYSE:HON) and Textron (NYSE:TXT) were among other companies producing better-than-expected earnings.

On the economic front, Markit will release its preliminary July manufacturing PMI for the U.S. on Friday at 13:45GMT, or 9:45AM ET, in the day’s only major data point stateside.

In oil markets, crude managed to turn around and quote slight gains in midday European trade as U.S. traders began to hit their desks on Friday, despite continuing concerns over the global supply glut.

Investors looked ahead to oilfield services provider Baker Hughes’ data later in the day that will gauge the ongoing recovery in U.S. drilling activity.

The prior release last Friday showed that the number of rigs drilling for oil in the U.S.increased by six last week to 357, the third straight weekly rise and the sixth increase in seven weeks.

The renewed gain in U.S. drilling activity fueled speculation that domestic production could be on the verge of rebounding in the weeks ahead, underlining worries over a supply glut.

U.S. crude futures gained 0.36% to $44.91 by 10:56AM GMT, or 6:56AM ET, while Brent oiltraded up 0.54% to $46.45.

American Airlines profit beats estimates as costs fall

Stock Markets

(Reuters) - American Airlines Group Inc (O:AAL) reported a better-than-expected quarterly profit as the world's largest airline benefited from cheaper fuel.

American's total operating costs fell 3.3 percent to $8.61 billion in the second quarter, with fuel costs declining 20 percent.

Net income plunged 44 percent to $950 million as provisions for income tax surged to $543 million from $15 million.

Excluding items, American's profit slumped to $1.77 per share from $2.62, but handily beat the average analyst estimate of $1.68, according to Thomson Reuters I/B/E/S.

Total operating revenue declined 4.3 percent to $10.36 billion in the quarter ended June 30.

Airline stocks have fallen in recent months amid growing investor concern that carriers will continue to add flights and push down prices despite insufficient demand, and that rebounding oil prices will add to their fuel costs.

Economic slowdown abroad pose an even greater risk to revenue, with foreigners reluctant to buy tickets on U.S. airlines to visit the United States as the dollar rises in value against other currencies.

American's shares were down slightly at $34.85 in light premarket trading on Friday.

Up to Thursday's close, the stock had fallen more than 17 percent this year.

USD/CAD erases gains after strong Canadian data

Forex

Investing.com - The U.S. dollar erased gains against its Canadian counterpart on Friday, pulling away from a two-week high as upbeat economic reports from Canada lent support to the local currency, although lower oil prices limited its gains.

USD/CAD pulled away from 1.3139, the pair’s highest since July 11, to hit 1.3079 during U.S. morning trade, steady for the day.

The pair was likely to find support at 1.3008, the low of July 20 and resistance at 1.3191, the high of May 24 and.

Statistics Canada said retail sales rose 0.2% in May, beating expectations for a flat reading and after a downwardly revised 0.8% gain the previous month.

Core retail sales, which exclude automobiles, increased by 0.9% in May, compared to expectations for a 0.3% rise and after a 1.3% climb in April.

A separate report showed that Canada’s consumer price index rose 0.2% in June, exceeding expectations for an uptick of 0.1% and following an increase of 0.4% the previous month.

Year-on-year, consumer prices increased by 1.5% last month, beating expectations for a 1.4% rise.

Core CPI, which excludes the eight most volatile items, was flat in June, in line with expectations and after an uptick of 0.3% in May.

But the Canadian dollar’s gains were limited as lower oil prices weighed on demand for the commodity currency.

The loonie was higher against the euro, with EUR/CAD slipping 0.14% to 1.4410.

In the euro zone, research group Markit said its composite purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors dipped from 53.1 in June to 52.9 in July, above forecasts for 52.5.

Markets were still digesting the European Central Bank’s decision on Thursday to leave monetary policy on hold.

At his monthly press conference, ECB President Mario Draghi said European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

Dollar hovers close to 4-month highs vs. other majors.

Forex

Investing.com - The dollar continued to hover close to four-month highs against the other major currencies on Friday, as global growth worries continued to weigh on sentiment.

EUR/USD slipped 0.11% to 1.1014, still close to Wednesday’s one-month low of 1.0979.

The euro strengthened briefly after ECB President Mario Draghi said on Thursday that European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

Draghi also said the euro zone recovery faces several headwinds, and the risks remain tilted to the downside, citing the UK referendum, slowing emerging markets and the slow pace of structural reforms as key threats.

Earlier Friday, research group Markit said its Flash Euro Zone Composite purchasing managers index, which measures the combined output of both the manufacturing and service sectors dipped from 53.1 in June to 52.9 in July, above forecasts for 52.5.

GBP/USD dropped 0.94% to 1.3107.

Markit said its U.K. manufacturing PMI fell to 49.1 in July from a reading of 52.1 in June. Economists had expected the index to fall to 47.8 this month.

The U.K. services PMI dropped to 47.4 in July from a reading of 52.3 in June, compared to expectations for a decline to 48.9.

The data added to fears over U.K. growth as investors continue to asses the economic effects of the Brexit vote.

USD/JPY added 0.10% to 105.97, off the previous session’s seven-week high of 107.48, while USD/CHF held steady at 0.9863.

The yen had strengthened on Thursday after Bank of Japan Governor Haruhiko Kuroda in a BBC interview played down speculation Japan may be preparing "helicopter money" economic stimulus, which essentially consists in injecting cash directly to the economy by printing money.

But the BBC later said its interview with Kuroda had been conducted in mid-June, which pushed the yen back down.

The Australian and New Zealand dollars were lower, with AUD/USD down 0.52% at 0.7453 and with NZD/USD edging down 0.13% to 0.6987.

Elsewhere, USD/CAD climbed 0.53% to trade at a two-week high of 1.3158.

Statistics Canada reported on Friday that retail sales rose 0.2% in May, beating expectations for a flat reading. Core retail sales, which exclude automobiles, increased by 0.9%.

A separate report showed that Canada’s consumer price index rose 0.2% in June, exceeding expectations for an uptick of 0.1%. Year-on-year, consumer prices increased by 1.5% last month.

Core CPI, which excludes the eight most volatile items, was flat in June, in line with expectations.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.26% at 97.19, close to Wednesday’s four-month highs of 97.37.

Overpriced shares. Trends. Apple.

Stock market. Value investing.

We analyze the trend of shares Apple Inc (AAPL)

Today's price               - 99,43 $

P/E                              - 11.06

P/B                              - 4.18

Return on Equity         -  39.06 %

Book Value Per Share - 23.82 $

The calculation of the coefficient of Benjamin Graham:

P/E * P/B = 22,5 (or less)

11.06 * 4.18 = 46.23 - more than the desired value 22,5.

According to the conservative theory of value investing buy shares of the company are not suitable. The share price is high.

Unsophisticated investor with a small amount of money to invest in this company is risky. You should wait for price reductions.

Buying at this price can afford the very wealthy people whose finances allow to survive the next crisis.

It should be noted excellent indicator Return on Equity = 39.06 %. 

This figure the company from year to year remains constant at a high level of approximately 40%.