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Market Update

Australian Indexes Drop 1.2% in November, BHP Faces $5.2 B Lawsuit

Author: Marcus Jacob
Last Update: 8:39 AM ET November 30 2015

5:30 PM Sydney, Australia – ASX 200 index extended monthly loss to 1.2% on weakness in resource stocks. BHP and partner Vale SA face $5.2 billion damage lawsuit in Brazil. Mincor Resources changes management. Dick Smith books non-cash impairment of $60 million. Slate & Gordon rebounds.

Australian markets closed lower on Monday after BHP faced a lawsuit in Brazil and Dick Smith announced unexpected impairment charges.

The Brazilian government announced that it would sue BHP Billiton and its Brazilian partner for $5.2 billion in damages for the dam disaster earlier this year.

Dick Smith, the retailer of electronics goods announced non-cash impairment of $60 million and sluggish sales in November.

Inflation increased 0.1% in November, after remaining flat in October and below the Reserve Bank of Australia’s target of 2% to 3%.

Private sector credit jumped 0.7% in October, the Reserve Bank of Australia said. For the year, the private sector credit soared 6.7%.

The Australian dollar slid to 71.91 U.S. cents and in stock trading, turnover jumped to 1.28 billion shares worth $7 billion.

At the close, the ASX 200 Index decreased 36.10 or 0.7% to 5,166.50 and the broader All Ordinaries Index slipped 33.20 to 5,218.20.

For the month, ASX 200 dropped 1.2%.

In commodities trading, gold declined US$11 to US$1,057 an ounce and Brent crude future for immediate month delivery edged down 7 cents to US$44.79 a barrel.

Australian Stock Movers

BHP Billiton Limited declined 3.6% to $18.09 after Brazil filed a lawsuit against the Anglo-Australian mining company over the dam failure and contamination in Brazil.

BHP Billiton and its Brazilian partner Vale SA face charges for damages of approximately $5.2 billion.

According to the Brazilian Attorney General’s office, the proceeds will be used for recovery efforts in the Rio Doce region.

Dick Smith Holdings Ltd tumbled 57.6% to 28 cents after the electronics retailer announced earnings impairment of $60 million due to disappointing November sales and high inventory levels.

The company said it couldn’t confirm its previous profit guidance of $37 million to $43 million.

In 2012, private equity firm Anchorage bought Dick Smith from Woolworths for $94 million.

Metcash Limited surged 12.1% to $1.5 after the general merchandise company reported revenues in the first-half ending in October increased 1.4% from a year ago to $6.6 billion.

Net profit in the period soared 20% to $122 million compared to $101.7 million and diluted earnings per share rose to 13.1 cents from 11.4 cents in the same period a year ago.

Slate & Gordon Limited recovered 34% to 90 cents and last week the stock endured heavy losses after the U.K. government proposed changes in compensation and restricted maximum amount.

Mincor Resources NL fell 2% to $0.25 after the long-time managing director of the mining company, David Moore, decided to step down.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc