Anglo American shares underperform

Finance

Unlike counterparts Xstrata and Rio Tinto, Anglo American chose not to resume dividend payments this year, a decision that impacted its performance on the London market, the Mining Journal editorial team reports.

The Anglo American share price was underperforming its peers on Friday after the company released its full-year results. The company has decided to delay the resumption of dividend payments but added that they could be reinitiated for the current financial year if global economic conditions continue to improve.

A week earlier, Xstrata plc and Rio Tinto both reinstated cash distributions after pausing last year.

The London market can expect a new gold play this year as Barrick Gold Corp, the world’s largest gold producer, announced that it would be floating its African assets in a new vehicle called African Barrick Gold plc. The new company, with four producing mines in Tanzania, hopes to complete its placing by the end of March.

Top performers in the FTSE 350 mining index this week included Russian gold producer, Petropavlovsk plc, which was up 8.7% as the dollar gold price strengthened.

Eurasian Natural Resources plc gained 8.2% in the week to £10.15/share after the company announced a US$300 million deal with its founding shareholders to buy Chambishi Metals plc, owner of a Zambian copper smelter.
The overall FTSE 350 Mining Index was up 5.37% by midday Friday.

In commodities, copper continued to fall this week as the rising dollar caused the appeal for raw materials to diminish.

The dollar reached a nine-month high against the euro after the rate charged to banks for direct loans rose for the first time in more than three years.

It is predicted that copper prices could continue to fall in London next week as speculation grows that the dollar will grow further in strength. This follows copper’s drop in London last week on speculation demand may slow from China because of a narrowed gap with Shanghai prices.

On AIM, news coming out of Cluff Gold plc in the past week has generated plenty of market buzz, with the London-based company the week’s most notable mover.

The company, run by mining stalwart Algy Cluff, rose 27.7% after it revealed that a third party had made a bid. However, responding to this sharp rise, Cluff said that proceedings with the unnamed suitor were at an early stage and there was no certainty the bid would lead to an offer.

Cluff has a promising gold asset in Sierra Leone, as well as projects in Burkina Faso and Cote d’Ivoire
Ariana Resources plc also had a strong week after it announced significant progress towards production on its joint venture with Process Construction on the Red Rabbit project in Turkey. After dropping some of its early week gains on Friday, the company finished 18.1% up for the week.

Another leading mover, African Copper plc, gained 17% after it reported a profit for the full year to end-December after partially reversing a £99 million (US$156 million) impairment made a year earlier. The company said the reversal reflected favourable changes in estimates of future cash flows at its Mowana copper mine in Botswana.

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