Miners of London posted their best week in terms of stock performance since the beginning of the year. The FTSE 100 miners have gained an average of 10.8 percent, while small businesses and mid caps closed up 6.5 per cent.
The catalyst for the upward movement was the earthquake in Chile, which has led to concerns about the impact on the industry in the country of mining copper. As it turned out that the impact on the mines was minimal, with most operations are not affected. However, damage to power transmission and transportation systems was severe in places, and a melting capacity has also been affected. For the first time since mid-last year there were significant withdrawals of copper stocks from LME warehouses. It will be interesting to see if this trend is maintained or if it was just speculators covering in case of supply problems.
Xstrata (LSE: XTA) was the best performer of the week, making up 15.3 per cent to 1187.25 p, helped by its exposure to copper. Xstrata has a major production at the expense of Chile. Tagging also on shares of Xstrata had news that Glencore has exercised its right to redeem the Prodeco coal operations in Colombia. This will generate Americans 2.5 billion dollars in cash for Xstrata, which has actual custody of assets because he has acquired from Glencore last year. Xstrata has recently launched a program of major capital expenditures by focusing on coal, copper and nickel, and will be able to put money wisely.
Xstrata may have been the best performer of the week, but KAZAKHMYS (LSE: KAZ) was only just behind, setting up 15.2 percent to close at 1545.5 p. Again, copper was the main driver of the company as the basis for mining copper are all in Kazakhstan. An update of positive trading also helped. The company has managed to beat its production targets for 2009 for all metals, and clearly feels confident in the prospects it has resumed dividend payments.
Worst Week FTSE 100 was interpreted Vedanta (LSE: VED), which ended at 2693.5 p, an increase of only 5.7 percent. The company has launched a major issue of convertible bonds, most of which is intended to refinance existing debt, although some of the new funds will be used for more general business. Shareholder of the company, Volcan Investments, said he will not participate in the issue, but given the current enthusiasm of the market for mining, which should not be a problem.
In South Africa, there is currently a mini-boom in transactions between miners and producers of ferrochrome platinum. Origin of this evolution is the nature of the UG2 platinum reef ore, which contains large quantities of chromite, which has still not been found. However, chromite is now a much sought after commodity, and producers of platinum several recently announced plans to construct facilities to recover chromite. The latest to join this trend is Lonmin (LSE: LMI), which announced that it has accepted two separate contracts, one with Xstrata-Meraf, and the other with Chromtec in which these companies will build and operate recovery plants to treat chrome tailings at Marikana Lonmin’s operations. Xstrata Meraf Chromtec and have the right to purchase the resulting concentrate chromite likely to be used as fodder for their operations. Lonmin, in turn, is considering building a factory of over recovery of platinum that will treat de-chrome residue. Lonmin rose 8.5 percent to finish the week at 1964 per
The move to small businesses and mid-cap, it has mostly been a quiet week. Best performer was the week Sable Africa Mining (AIM: SBLM), which rose 42.1 percent to finish at 27p. The company announced it had appointed Matrix as its broker, but the real news was to create a substantial hedge fund Harbinger Capital increased its stake in the Sable Island by 17 percent to 18 percent.
Then came GCM Resources (AIM: GCM), which rose 34.9 per cent to 141p on no news. In fact, the company has said nothing of substance since the month of September, if an update is well overdue.
Proof again that the gates of London are wide open for mining investment has come when Kenmare Resources (LSE: KMR) has announced plans for a major fundraiser. The company is £ 179.6 million euros, half through a bet and the other half through a rights issue to existing shareholders. The issue has been fixed at 12p which is a substantial 47 per cent reduction in the closing price of 22.75p last week, but the discount was probably necessary to get the issue underwritten. The money must be used to finance a major expansion of Kenmare Moma mineral sands operation in Mozambique. The idea is that since the marginal cost of expansion is not large, the return on investment should be considerable. Unsurprisingly, given the deep discount, Kenmare, was the worst performer of the week, closing 33.5 per cent to 15.125p.
Jubilee Platinum (AIM: JLP) is the latest company to engage in business activity. The company issued a statement particularly opaque to the effect that it had begun talks that could affect its share price. However, it does not specify if these negotiations are separate from the recently announced agreement between it and Sylvania (AIM: SLV). Under this agreement, both companies plan to combine their expertise in blending and reprocessing residual platinum. Jubilee closed at 36.25p, an increase of 11.5 percent.
Serabit Mining (AIM: SRB) also becomes involved in a possible merger. In preliminary discussions with an unnamed company for a possible agreement, but so far has not given details. Serabit has an attractive portfolio of exploration properties in a remote region of Brazil, but has been crippled by chronic under-performance of its Palito gold mine. The stock closed up 23.1 percent to 2.0.
Also in South America Mariana Resources (AIM: MARL) has issued an update on its promising gold Calandrias Las-silver project in Argentina. The company said the drilling program next, he is about to start. If it is still early days, the signs are that this is a significant discovery and the market clearly expects positive news more as work progresses. Mariana is closed at 19.75p, up 24.4 percent.
Many people will be this weekend in Toronto and the PDAC. This tends to be less important for London-based investors that Indaba and Mines and money, but it is the real “must attend” for those of a geological persuasion. Deals will be done and plans are hatched.
source:minesite
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