London Stockpile: Dubai is no bother, say London investors

Finance

New York's resilience to the Dubai fallout inspired confidence in London early this week. Initial fears of another financial disaster were downplayed by Monday, with US investors returned after their Thanksgiving break. The default by Dubai World was widely seen as just a hiccup on the way to recovery.

LSE and AIM mining stocks were a mixed bag, with investors jumping on a range of big and small caps, across varied commodities. The FTSE All-Share and AIM All-Share indexes were up about 1% for the five days.

At this week's Mines & Money conference in the city, delegates shrugged off concerns about a Dubai ripple-effect, and most were just happy to have better prospects than the dark depths of 12 months ago.

Gold was, of course, a talking point, and Stockpile set about to determine if continued favour for gold stocks represented responsible investing. Most analysts agreed that it was justified and gold stocks (producers and explorers) were fairly valued.

There were exceptions, with a handful of commentators suggesting gold stocks at the feasibility and development stage were not given their dues by the market and were being traded too cheaply. It was also said that, at the other end of the market, gold stocks might be veering towards over-valued, as investors seeking exposure to the precious metal jump onboard new producers, inflating their share prices.

Russian gold producer Petropavlovsk (previously Peter Hambro) looks assured of a spot in the FTSE 100, firming 5% and boosting its market cap to £2.3 billion.

The Main Market's top mining stock was Kazakh-focused ENRC, jumping nearly 10%. BHP and Rio were up about 3% over the week.

On AIM, Patagonia Gold was a top riser, up more than 25% with a market cap just shy of £100 million. The impressive increase came from drilling results at the Cap-Oeste South East silver-gold project in Argentina’s Santa Cruz province.

Results included 4.1m at almost 562g/t Au and 28,523g/t Ag, including 0.85m at an astonishing 2,105g/t Au and 107,648g/t Ag. A recent resource estimate showed the deposit contained 656,000oz of gold equivalent.

US-producer Western Coal Corp shed more than 10% due to a labour dispute involving its rail contractor and the locomotive engineers' union. Operations resumed after a four-day standstill.
European Nickel also fared poorly. The Turkish developer slid nearly 10% over concerns about rescheduling of a loan owed to Endeavour Financial Corp. The company stated that negotiations were "ongoing".