TOP 3 ASX DIVIDEND STOCKS FOR INFLATION

BHP Group Limited (ASX: BHP)

TEAM VEYE | 26 May 2022 ASX | BHP

The Board of BHP Group Limited (ASX: BHP) on 20 May 2022 announced that it had determined to pay to BHP shareholders an in-specie dividend in the form of Woodside Petroleum Ltd (Woodside) shares in connection with the merger of BHP’s oil and gas portfolio with Woodside (Merger).

The in-specie dividend is scheduled to be paid on 1 June 2022 and will be fully franked.

The completion of the Merger, is scheduled for 1 June 2022. Subject to completion occurring, BHP is expected to receive 914,768,948 newly issued Woodside ordinary shares.

Eligible BHP shareholders will receive one newly issued Woodside share for every 5.5340 BHP shares they hold at the close of business on 26 May 2022 (Record Date). Holders of BHP American depositary shares (ADSs) will be entitled to receive one Woodside ADS for every 2.7670 BHP ADS they hold at the Record Date (with each Woodside ADS representing one Woodside share), subject to payment of taxes and applicable fees and expenses.

(Chart source: TradingView) Monthly Candlestick Price Chart Pattern)

On 3 May 2022, BHP completed the sale of its 80 % interest in BHP Mitsui Coal (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned entity of Stanmore Resources Limited (Stanmore Resources).

  • Stanmore Resources has paid US$1.1 billion cash consideration at completion plus a preliminary completion adjustment of approximately US$200 million for working capital.
  • US$100 million cash remains payable to BHP in six months on 3 November 2022 with the potential for an additional amount of up to US$150 million in a price-linked earnout payable to BHP in the 2024 calendar year.
  • The total cash consideration for the transaction will be up to US$1.35 billion plus the final completion adjustment amount.

Quarter Activity Report Highlights: –

  • BHP delivered strong and reliable production in the third quarter.
  • WA iron ore business continues to perform strongly and remains on track to achieve full year volume and cost guidance.
  • Queensland’s metallurgical coal business delivered strong underlying performance and benefited from better weather in the quarter.
  • Jansen potash project is on track, with good progress on the shafts, in the underground mining systems and at the port.
  • Total copper production decreased by 10 per cent to 1,112 kt.
  • Total iron ore production in line with the prior period at 189 Mt.
  • Metallurgical coal production decreased by two per cent to 28 Mt.
  • Energy coal production is broadly in line with the prior period at 10 Mt.

Full year Guidance 2022:

  • Production guidance for iron ore for the 2022 financial year remains unchanged at between 249 and 259 Mt.
  • Queensland Coal production guidance for the 2022 financial year remains unchanged at between 38 and 41 Mt (68 and 72 Mt on a 100 per cent basis), of which BMA is expected to contribute between 29 and 31 Mt, and BMC is expected to contribute between 9 and 10 Mt.
  • Production guidance for the 2022 financial year remains unchanged at between 13 and 15 Mt.
  • Full year total copper production guidance has been lowered to between 1,570 and 1,620 kt, reflecting lowered production guidance for Escondida.
  • Full year nickel production guidance has been lowered to between 80 and 85 kt due to COVID-19 related labour constraints.
  • Full year unit cost guidance for New South Wales Energy Coal (NSWEC) has been increased to between US$76 and US$81 per tonne, reflecting a targeted increase in the proportion of higher quality coal to capture more value from the record high prices for higher quality thermal coal.

Outlook:

Market volatility and inflationary pressures have increased further as a result of the Russian invasion of Ukraine. Market conditions are expected to improve during the course of the 2023 calendar year. The merger of BHP petroleum assets with Woodside has progressed and is set for completion in June 2022 that will create a global top 10 independent energy company by production and the largest energy company listed on the ASX. The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

Rio Tinto Limited (ASX: RIO)

TEAM VEYE | 11 Feb 2022 ASX | RIO

Rio Tinto Limited (ASX: RIO) on 18 January 2022 announced its fourth quarter results.

(Chart source: TradingView) Technical Chart- Weekly Candlestick Price Chart Pattern

Despite challenging operating conditions due to Covid-19 impact, RIO witnessed strong demand for its products and progressed well with various projects. RIO announced a number of partnerships during the fourth quarter. RIO, in line with its strategy, entered into a binding agreement to acquire the Rincon lithium project in Argentina.

  • Pilbara iron ore production was up by 1% on Q3 2021, down by 2% on Q4 2020 and was down by 4% on FY20 to 319.7 million tonnes (100% basis). The drop was mainly due to above average rainfall in the first half of the year, and delays in growth and brownfield mine replacement tie-in projects.
  • Pilbara shipments was up by 1% on Q3 2021, down by 5% on Q4 2020 and was down by 3% on FY20 to 321.6 million tonnes (100% basis).
  • Bauxite production was down by 6% on Q3 2021, down by 2% on Q4 2020 and was down by 3% on FY20 to 54.3 million tonnes. The fall was attributed mainly to severe wet weather in the first quarter impacting system stability throughout the year, equipment reliability issues and overruns on planned shutdowns at our Pacific operations.
  • Aluminium production was down by 2% on Q3 2021, down by 7% on Q4 2020 and was down by 1% on FY20 to 3.2 million tonnes. The drop was mainly due to reduced capacity at its Kitimat smelter in British Columbia following the strike which commenced in July 2021. The labour union and employees have reached an agreement with controlled restart in 2022.
  • Mined copper production was up by 6% on Q3 2021 and was down by 7% on FY20 to 494 thousand tonnes. The fall was mainly due to lower recoveries and throughput at Escondida as a result of the prolonged impact of COVID-19.
  • Titanium dioxide slag production was up by 9% on Q3 2021 and down by 16% on Q4 2020 and was down by 9% on FY20 to 1,014 thousand tonnes. The fall was mainly as a result of community disruptions and subsequent curtailment of operations at Richards Bay Minerals (RBM) coupled with unplanned maintenance and equipment reliability issues at Rio Tinto Feret Titane (RTFT) in Canada.
  • Production of pellets and concentrate at Iron Ore Company of Canada (IOC) was up by 15% on Q3 2021 and down by 9% on Q4 2020 and was down by 6% on FY20 to 2.5million tonnes. The fall was mainly due to prolonged labour and equipment availability issues impacting product feed and various other operational challenges throughout the year.

Guidance FY2022:

  • Pilbara iron ore (shipments, 100% basis) expected to range between 320 Mt to 335 Mt.
  • Bauxite expected to range between 54 Mt to 57 Mt.
  • Alumina expected to range between 8.0 to 8.4 Mt.
  • Aluminium targeted to range between 3.1 to 3.2 Mt.
  • Mined copper to range between 500kt to 575 kt and Refined copper to range between 230kt to 290kt.
  • Iron ore pellets and concentrate to range between 10.0 Mt to 11.0Mt.

Outlook:

RIO holds a strong portfolio of projects with activity in 18 countries across seven commodities in the early exploration and studies stages. The recent acquisition of Rincon, positioned as one of the largest undeveloped lithium brine projects in the world, is well in line with RIO long term strategy to prioritise growth capital in commodities that support decarbonisation and to continue to deliver attractive returns to shareholders. The overall market for battery grade lithium carbonate remains strong, with lithium demand forecasted to grow by 25-35% per annum over the next decade with a significant supply demand deficit expected from the second half of this decade. This acquisition will help RIO towards building its battery materials business and strengthen its portfolio for the global energy transition. Rio Tinto, Turquoise Hill Resources (TRQ) and the Government of Mongolia as on 25 January 2022 announced that together they have reached an agreement that will move the Oyu Tolgoi (OT) project forward with mine operations to commence in the coming days and production expected in the first half of 2023.

OZ Minerals Limited (ASX: OZL)

TEAM VEYE | 31 May 2022 ASX | OZL

On 17 May 2022, OZ Minerals Limited (ASX: OZL) and Havilah Resources signed a conditional binding Terms Sheet in relation to a Proposed Transaction comprising an 18-month option to purchase Kalkaroo (Kalkaroo Option) and for a Strategic Alliance in the copper-rich Curnamona Province of northeastern South Australia.

(Chart source: TradingView) Monthly Candlestick Price Chart Pattern)
  • Kalkaroo with its proximity to OZ Minerals’ existing South Australian operations is at pre-feasibility study stage and is potentially one of Australia’s largest undeveloped open pit copper-gold deposits.
  • Under this Strategic Alliance, OZ Minerals commits funding of up to $18 million to Havilah during the Option and Alliance Period, at least half of which would be directed towards exploration for new copper deposits.
  • Under the Strategic Alliance, up to $9 million would be directed towards exploring copper targets within Havilah’s surrounding highly prospective Curnamona Copperbelt over the next 18 months.
  • OZ Minerals may elect to not exercise the Kalkaroo Option at any time during the Option and Alliance Period provided 5,000 metres has been drilled or a Shortfall Payment (metres not drilled multiplied by $400) is paid to Havilah.

Quarter Highlights:

  • Strong financial position with $210 million cash balance at the end of the quarter and significant liquidity available.
  • At Carrapateena a milestone of 100,000t of copper in concentrate produced was achieved on 4 April and the process plant continued its strong performance with a total of 1.1mt milled.
  • At the end of the quarter, 33,500 tonnes of copper were provisionally priced at US$10,350/tonne.
  • A fully franked final dividend of 18 cents per share was paid during the quarter.

Guidance FY2022: 2022 Group production and cost guidance remain on track.

  • Total Copper Production: 127,000-149,000Tonnes.
  • Total Gold Production: 208,000-230,000 Ounces.
  • All-in Sustaining Costs: 135-155 US cents/lb
  • C1 Cash Costs: 85-95US cents/lb

Outlook:

The market outlook remains strong for renewable minerals like copper and nickel, with copper being a commodity with strong fundamentals underpinning economic growth and human development. OZL’s approach of taking projects from an early study phase through development and into operation can unlock significant value for its shareholders.

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