Whether it's iron ore, gold or gas when resources companies finally hit full production, investors can be handsomely rewarded. Despite the passing of Australia's resources boom, many big companies are only now starting to realise the full benefit of their construction and expansion activities.
It's important investors position themselves for maximum benefit by picking companies which have the lowest costs and the largest margins.
In iron ore, Rio Tinto Limited (ASX: RIO) has the lowest average cost per tonne of any Australian miner with only one mine in the world producing the steel-making ingredient cheaper – Brazil's Vale is believed to have the cheapest mine. Rio says it can produce and ship high-grade iron ore from its Pilbara operations to China for as little as $US50 per tonne. Currently iron ore is over $US120 per tonne.
BHP Billiton Limited (ASX: BHP) is a much more diversified miner and pays a higher dividend than its near pure play iron ore counterpart. It plans to produce between 260 and 270 million tonnes of the steel-making ingredient per annum in 2015. However, its copper, petroleum and coal businesses also continue to grow production levels at low costs. While capex and non-core assets are also on the chopping block, further investment in potash and iron ore divisions are expected.
Top oil and gas producer, Senex Energy Ltd (ASX: SXY), is forecast to grow production and earnings per share in FY14. It has a number of projects across Australia stretching from the Cooper Basin across to the Surat basin. Senex is undertaking a rapid growth strategy and is led by an experienced management team.
Santos Limited (ASX: STO) is another big name in oil and gas here in Australia, with operations in all mainland Australian states. Earnings are expected to nearly double between now and 2015, as the company continues on its goal to reach 80 to 90 million barrels of oil equivalent by 2020.
Gold miner Northern Star Resources Ltd (ASX: NST) also deserves a spot on your watchlist. It has recently undertaken an equity issue to boost funds available to make two acquisitions in Western Australia. According to the company's last annual report, it has a cash cost of $868 per ounce of gold.
Foolish takeaway
Investing in resources is just like any other industry. It takes time. Although Australia's mining boom may be over, many companies are now reaching production phases where the spoils of their planning and construction efforts come to fruition. These five companies offer great exposure across all major commodities and deserve a spot on your watchlists.
