AMERICAS METALS & MINING:DB INDUSTRIALS AND BASIC MATERIALS CONFERENCE:DAY 2 KEY TAKEAWAYS

Day 2 featured Freeport-McMoRan, Wheaton Precious Metals, Coeur Mining,Allegheny Technologies, Arcelor-Mittal and Century Aluminum.

    Allegheny do not expect Section 232 to be a major driver of profitability, ratherreiterated that accelerating next gen aircraft engine builds will drive top lineand improve profit mix over next 3 years. Revenue from new titanium/nickelpowder facilities alone could increase from $75m to $250m over same period.Reducing Net Debt to EBITDA (4.8x annualized 1Q17) remains a priority withFCF intended to pay off $350m notes due 2019. The $288m 2022 Convertibleis likely to be exercised. Lastly, Pension should be fully funded by 2021.

    Century Aluminum articulated WTO case as better LT solution vs. Section 232,as it fixes the underlying issue of China oversupply. Primary aluminum importscurrently supply ~half of US consumption (~6mtpa) and 232 would need to bemodified to allow continuation of Canadian imports. Failing that, even if all USidled capacity (~1mtpa) is restarted, a 2 mtpa shortage of primary aluminumsupply would occur. A restart up to 150ktpa of Hawesville's idled capacity isunlikely prior to 2Q17 results. Icelandic Krona appreciation of ~15% since1Q17 implies Grundartangi costs up.

    Freeport-McMoRan management is working with Indonesia to resolve theuncertainty surrounding Grasberg ownership, smelter and terms/conditions. Asexport license expires in October, Freeport is optimistic to reach an agreementby YE17. A local public listing for part of Grasberg is one option. While theopen-pit is operational, labor issues remain with ~4,000 workers on strike.Underground development ($40m/month) continues but more certainty neededto commit remaining ~$3bn capex. Grasberg accounts for ~1% of IndonesianGDP and 40% of Papua region. Net Debt of ~$11bn should decline further.

    Ryerson noted that rising US Oil & Gas rig count (~5% sales) has a goodcorrelation with the company's volumes (vs. completed wells/total feet drilled),implying significant growth potential in 2017. Class 8 trucks (~13%) demandhas remained relatively flat vs. prior expectations of down 15-20% this yearand is expected to see double-digit recovery in 2018. Two-thirds of FCF will beused to pay down debt, rest for investing until ND/EBITDA drops <3.0x.Wheaton discussions focused on further M&A opportunities as mining sectorresumes growth phase. San Dimas mine now ramping post-strike in 1Q17.

    Ongoing CRA tax issue best-case scenario end-2017 and worst case early-2019. Longer-dated options such as Pascua-Lama, Rosemont and a Saloboexpansion could create significant value.

    Coeur Mining recently refinanced its bond and now aims to keep Net Debt toEBITDA at 1x or below. Management working on further exploration (Resourceto Reserves and greenfield), asset optimization (Rochester through Jualin andPalmarejo ramp-up) while examining M&A opportunities in Canada, Mexicoand the US (mainly advanced and producing assets).