London Stockpile 18-12-09 - Festive investing not so jolly

Finance

London markets were sluggish in the final full-trading week of the year, like someone who's eaten too much Christmas lunch.

Taking a lead from the US, the main board and AIM barely moved during the week, and there were few large gains made.

Among the majors, precious metals and diamonds were strong performers.

Hochschild Mining was boosted more than 5% on the news it had increased its holding in Gold Resource Corp (GRC).

Hochschild entered into US$16 million private placement with GRC, increasing its interest from 23.9% to 27%.

Since December 2008, Hochschild has invested US$54 million in GRC, which owns development projects in southern Mexico. GRC will use US$8 million of the proceeds to fund development of the El Aguila project including working capital for GRC's recently commissioned Aguila mill which is expected to produce 70 thousand ounces of gold in 2010.

Gem Diamonds made impressive gains, up more than 3%, as did South African producer Aquarius Platinum.

The FTSE 100's big-four diversified producers; BHP, Rio, Xstrata and Anglo American, were flat.

On AIM, Australian iron-ore interest Red Rock was smashed more than 20%.

Also suffering was Philippine explorer Medusa Mining, which shaved more than £30 million off its value.

AIM improvers included Weatherly International, which jumped about 35%, stemming weeks of losses. This week, the company announced the publication of an in-house five-year mine plan for the reopening of its Otjihase and Matchless underground mines, which were placed on care and maintenance along with the company's other mining operations in late 2008 following the downturn in copper prices. Weatherly is preparing to bring these two mines back into production as a priority, with the funding to be provided by the proposed equity subscription by East China Exploration and Development Bureau. The Otjihase mine is located approximately 16km northeast of the Namibian capital Windhoek and Matchless some 40km south west of Windhoek.

The plan is to begin preliminary activities early in 2010 with Otjihase being brought back into production in the September quarter of 2010 and Matchless some months later.

Looking to next year, Stockpile asked some of London's best analysts which commodities were worthy of investment in 2010. Responses were mixed, but copper, gold and coal were popular. Iron ore, nickel and molybdenum stocks were also ones to keep an eye on.