Glencore Releases Production Results

The miner forecasts production of 1.5 million tons of copper for 2018

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On Friday, Oct. 26, Glencore PLC (LSE:GLEN, Financial) released production results for the first nine months of 2018.

The Swiss miner delivered a 12% increase in copper production to approximately 1.06 million tons and a 44% increase in cobalt production to 28,500 tons. The production quantities were drawn from operations resumed at Katanga in the Democratic Republic of Congo.

At 786,000 tons, zinc production for the period was 5% lower than the in the year-ago quarter as a result of the sale of African assets to Trevali Mining. Excluding the sale of the African assets, the first nine months of zinc output marks a 7% increase thanks to operations resuming at the Lady Loretta of Mount Isa Mines complex in Australia and strong performance at McArthur River in northern Australia.

With the addition of a second production line at Koniambo in New Caledonia, Glencore could achieve a 13% increase in nickel production to 90,900 tons.

The mining company produced 1.145 million tons of attributable ferrochrome.

The removal of significant overburden material at Prodeco in Colombia didn’t impinge on the company's coal production. On the contrary, Glencore posted 6% growth to 96.7 million tons. The recent acquisition of Hail Creek mines and the Hunter Valley Operations Joint Venture in Australia supported the company's performance. The company has also recovered from the effects of Cyclone Debbie, which impacted first-half production.

Despite the positive contribution from the oil drilling campaign in Chad, underperforming offshore fields in Equatorial Guinea resultsed in a 14% decrease in the entitlement interest oil production to 3.4 million barrels.

For the year, Glencore projects production of about 1.465 million tons of copper, 39,000 tons of cobalt, 1.09 million tons of zinc, 285,000 tons of lead, 132,000 tons of nickel, 1.6 million tons of ferrochrome, 132 million tons of coal and 4.6 million barrels of oil.

On Thursday, Oct. 25, the stock closed at 3.0285 British pounds ($3.91) on the London Stock Exchange. The market capitalization is approximately 41.9 billion pounds. The stock has a price-book ratio of 1.27 versus an industry median of 2.15, a price-sales ratio of 0.28 versus an industry median of 1.64 and an EV-to-Ebitda ratio of 5.66. The EV-to-revenue ration is 0.35. The 52-week range is $3.66 to $5.36 per share.

For the 52 weeks through Oct. 25, shares of Glencore have fallen 14.73%, outperforming copper futures by 4.11%, and is trading below the 50-, 100- and 200-day simple moving average lines. The chart below illustrates the stock's performance.

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Source: Investing.com

The company has a forward dividend of 15.36 cents, granting a 5.07% yield as of Oct. 25. The average recommendation rating is buy and the average target price is 4.048 pounds, or about $5.23, as of Oct. 25.

The stock was down 1.39% at 2.9865 pounds on Friday.

Disclosure: I have no positions in Glencore PLC.

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