Australian Market Report -Financials Lead Markets Lower
Tuesday, July 8 - The Australian share market fell Tuesday to its lowest level since August 2006 as offshore weakness triggered selling, particularly in financials.
The All Ordinaries fell 69.3 points (1.36%) to 5,022.4 while the S&P/ASX 200 weakened 69.6 points (1.39%) to 4,932.9.
Ausenco (AAX) said a fire at Equinox Minerals Ltd.'s (EQN) Lumwana copper project had damaged electricity equipment and will cause a delay in the mine's commissioning. The transformer and substation hit by the fire form part of the processing plant, Ausenco said, which is currently in the process of commissioning the 169,000-metric-ton copper mine with joint venture partner Bateman. "The cause of the fire is not yet known but a delay in the project's completion is expected," said Ausenco Chief Executive Officer Zimi Meka. "An investigation has commenced and we will keep the market fully informed of progress. Equipment damage is covered by insurances," Meka said. Ausenco was contracted to provide engineering, procurement and construction services for the Lumwana project in October 2006. AAX fell $1.61 (11.02%) to $13.00 and EQN weakened 37 cents (8.22%) to $4.13.
Transurban Group (TCL) said that toll and fee revenue on its key Citylink tollroad in Melbourne rose 9.7% on anormalised basis to $94.1m during the three months to June from a year ago. Across its portfolio of Sydney roads during the fourth quarter, revenue was up 5.6% to $30.7m on the Hills M2, up 13% to $43.3m on the Westlink M7, up 14% to $20.1m on the M1 Eastern Distributor, and up 4.8% on the M5 and up 5.7% on the M4. On the Pocahontas Parkway in the US state of Virginia, revenue was up 7.8% to US$3.7m during the period. TCL strengthened 15 cents (3.37%) to $4.60.
Allco Finance Group (AFG) said it has sold part of its Singaporean real estate arm for S$180m, or about A$138m, to Frasers Centrepoint Ltd. The move frees up cash that the structured asset finance and funds management company can use to repay some of its debt as it remains in negotiations with its bankers following a dramatic fall in its market capitalisation. The sale comprises Allco's 17.7% interest in the Allco Commercial Real Estate Investment Trust and 100% interest in the manager of Allco REIT, Allco (Singapore) Ltd., Allco said in a statement. The deal will generate proceeds in excess of A$90m after the repayment of loans associated with the investment, Allco said. AFG firmed 2 cents (4.35%) to $0.36.
Lend Lease (LLC) said its UK Catalyst Lend Lease consortium reached financial close with Lancashire County Council on a GBP63m (A$130m) program to build two secondary schools. The latest phase of the UK schools program will build, through a 27-year private finance initiative agreement, two high schools in northern England, which will serve more than 2,000 pupils, Lend Lease said in a statement. Lend Lease's Bovis unit will build both schools, it said. Construction of the first school began in May and work on the second will begin next month, the company said. The schools will have biomass boilers that burn wood chips rather than fossil fuels, photovoltaic cells mounted in the windows to convert sunlight into electricity, rooftop panels to heat water systems and wind turbines to generate extra electricity, Lend Lease said. In December, the County Council and Catalyst Lend Lease reached financial close on a GBP44m (A$90m) project to build two schools on a single site in Burnley with work progressing well and the schools due to open in September 2009, it said. LLC declined 17 cents (1.77%) to $9.43.
Lend Lease also said that Actus Lend Lease has signed an agreement with the US Army for the first phase in a project to privatize hotels at military bases. Over five years, US$400m (A$418m) will be spent on more than 4,500 newly constructed and renovated hotel rooms at 12 installations across the US, the Sydney-based company said. In addition, a further US$2.4bn of reinvestment has been programmed for the project's out year development, Lend Lease said in a statement.
Australian copper, zinc and lead producer Kagara (KZL) announced an initial resource of 61,600 metric tons contained metal for its Lounge Lizare nickel project in Western Australia. The initial resource totals 5.72m tons at a nickel grade of 1.08%, the Perth-based company said. The announcement means Lounge Lizard has advanced to a stage at which it represents a potentially low-cost and low-risk underground development option with a short development leadtime, Kagara said. KZL dropped 2 cents (0.54%) to $3.68.
CBH Resources (CBH) held an open briefing on growth strategy and outlook with MD and CEO Stephen Dennis. The company reported that it has recently completed a $90m 25% expansion (now 1.6 Mtpa) to the milling circuit at the Endeavor Mine. In 2008/9 it plans to process 1.3Mt of ore at higher metal grades to produce 66,000 tonnes of zinc contained in concentrates and 34,000 tonnes of lead contained in concentrates, which is above the 1.1Mt mined in 2007/8. The company projected a 230% and 146% growth in zinc and lead production by FY2012 based on the upgrade of Endeavor, production at the Rasp Mine and commissioning of the Panorama Cu-Zn project. A bankable feasibility study has been completed for the $213m Panorama copper-zinc project in Western Australia and it is currently looking at several ways to optimise the Panorama Project. The deposit has a particularly high pyrite content and one of the opportunities recently identified that increases the scope of the project is the co-production of a pyrite concentrate, which could be used to produce sulphuric acid. The company's exploration activities in FY09 will be predominantly around Endeavor, Broken Hill and Panorama. CBH remained unchanged at $0.17.
In economic news, Australian business conditions deteriorated sharply and unexpectedly in June, further confirming a sharp economic slowdown as high interest rates, record fuel prices and an ongoing credit squeeze put a stranglehold on activity. Australian business conditions fell 7 points to an index reading of nil in June, 20 points below its recent peak in October 2007, according to a survey by the National Australia Bank. Business confidence fell by 5 points in June to an index reading of minus 9 index points, its lowest level since the September 2001 terror attacks on the east coast of the US, NAB said.
The NZSX50 rose 39.14 points (1.25%) to 3,160.59 while the Nikkei dropped 326.94 points (2.45%) to 13,033.10 and the Hang Seng shed 656.09 points (2.99%) to 21,256.97.
The Australian dollar was last quoted at US$0.9519.
Overseas Market Report -
