Mining Journal > Finance > Friday losses dent positive month for FTSE

Finance

Losses to mining stocks on the final trading day of the month have erased some of the joy of what has been a mostly positive July on the FTSE.

Major miners BHP Billiton and Rio Tinto had both fallen more than 1% by midday as the market awaited the latest US gross domestic product data.

Much of the main market in the mining sector was lower for the week, with African Barrick Gold plc (ABG) dropping almost 7% to be the hardest hit. ABG, which was elevated to the FTSE100 in recent months, this week cut its full-year production guidance to 750,000-800,000oz after delays in accessing higher-grade ore at one of its Tanzanian gold mines.

In what was a trend, other main-market gold miners also copped sharp falls, as bullion headed towards a third straight weekly decline. The value of gold has slumped by almost 6% in July, but has started to fluctuate in London on speculation the fall will increase demand.

By Friday morning, gold was sitting at US$1,168/oz, about 8% lower than the record US$1,265/oz on June 21.

Other gold miners to suffer included Petropavlovsk, Fresnillo plc and Randgold Resources Ltd, which all fell at least 6%.

Elsewhere, Xstrata was close to 2% lower on news copper and coal production had fallen in the six months to end-June compared with the same period of 2009.
Platinum producer Lonmin plc was the week’s top riser (gaining almost 3%), despite reporting a 46% drop in third quarter sales after its main furnace was shut down for repairs. However, the South African company is confident of an improved fourth quarter as the furnace has been performing steadily for more than a month.

Kazakhstan’s largest copper producer, Kazakhmys plc, was up more than 2% after announcing that it had met or beaten output targets over the first half of 2010.

On AIM, emerging silver developer, Arian Silver Corp was up 45% this week, helped by a very positive research note from Edison Investment Research.

While an initial valuation of £0.15/share was placed on the stock for current development projects, an additional £1.40/share was mentioned as possible additional value for the “resources that could be discovered as a result of exploration success on the balance of the San Jose vein.”

Arian, which was trading at £0.10/share by lunchtime on Friday, is exploring and developing epithermal silver deposits in Mexico. The company plans to use revenues from its San Jose development to fund exploration on the San Jose vein.

More exploration success for Forte Energy NL in Mauritania helped lift the uranium stock 14% in the week.

Horizonte Minerals plc gained 13% after a deal was announced with Teck Resources Ltd, which will see the mining company inject its Brazilian Araguaia nickel project into Horizonte for a 50% stake.

Guinean iron-ore company Bellzone Mining plc, gained 11% after signing a mining convention with government. The convention grants the right to mine and defines the legal and tax conditions over the companies Kalia project.

Norseman gold was a notable loser, after the Australian gold producer reported quarterly results on Friday. Production for the three months to end-June was up slightly from the previous quarter at 14,469oz. Operating costs were lower at A$943/oz from A$990/oz previously.

The company said production in the quarter continued to focus on lower grade areas, “with the focus remaining on capital and ore developments to open up areas for future stoping.”