Key points: 

  • The story for the miners this reporting season was lower commodity prices, and higher costs due to inflation, oil prices and labour. 
  • Since then, commodity prices have risen. If that continues, higher earnings will offset higher costs.
  • Morningstar's top pick for the ASX miners is takeover target Newcrest Mining (NCM).

Transcript: 


Jon Mills: Basically, there weren't really many surprises or any surprises in the latest round of results. Basically, lower commodity prices, high costs due to inflation, oil prices and labour and so on and so forth.

Going forward though, commodity prices have risen quite significantly in general, with no exception of thermal coal since China decided to reopen in late 2022. And so if that continues, we'd expect generally higher earnings. That will probably offset higher costs because we're still seeing inflation coming through and most of the miners have guided to at least slightly higher costs and in some cases more than slightly higher costs.

Coming out of the reporting season, our best idea remains Newcrest, which is an Aussie gold miner has actually received a couple of takeover offers from competitor called Newmont, which is the biggest gold miner on earth. Newcrest quite correctly, in our view, said no, the offer is way too low. What they have done though, is that they've said to Newmont look we're willing to give you non-exclusive due diligence to learn more about Newcrest with the idea that hopefully Newmont will come back with a higher offer. So we'll wait and see what happens.