Following on from our earlier report, mining giant Rio Tinto posted solid Q4 production results with several divisions slightly beating calendar year 2016 guidance and their flagship Iron Ore operations meeting expectations.
More important than the actual production results themselves has been the continued strength of the global commodity price environment, which is driving earnings expectations into a higher range.
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As such, it’s reasonable to expect the increase in cash flow from higher metal prices could see RIO surprise the market with a higher dividend or a share buyback in its upcoming annual result in February.
We expect the exceptional second half strength in Iron Ore, Coal and to a lesser degree base metals, will help to significantly boost the immediate earnings for RIO.
This increase in revenue has boosted our short-term earnings forecast, which has resulted in an increase in our near-term price target to $65.00.
