Mining Journal > Finance > London Stockpile: Pricing disputes impact market

Finance

The share price of coking-coal companies has surged after contract prices settled 55% higher than the previous benchmark. Within the FTSE index, New World Resources NV was the most notable of these movers, gaining over 10%, while AIM-listed Caledon Resources plc took advantage with a 24% jump.

However, diversified miners BHP Billiton (which reached a coking-coal agreement based on a structural change to shorter-term market-based pricing contracts), Rio Tinto plc and Xstrata were unaffected by the rising prices. All three had barely moved by Friday.

BHPB and Rio, along with fellow giant Vale, were also heavily scrutinised last week for their intentions to raise the contract price of iron-ore by as much as 80%. The iron-ore spot price is currently trading at around US$138/t, more than double last year’s benchmark.

Meanwhile, UK Coal plc shares benefitted from confirmation that Hargreaves Services plc is looking into a merger between the two companies. UK Coal closed the week as the main market’s biggest mover with a gain of almost 15%.

Coal producer Hargreaves (which also provides haulage services, waste transportation and manufactures coke) has an historic link with UK Coal because of its purchase of UK Coal's Maltby colliery in Yorkshire during 2007.

There wasn’t substantial movement for the remainder of the miners, despite the mining component of the FTSE 350 index nudging a 52-week high on Wednesday.

For the second week running, Central Rand Gold Ltd was the biggest loser with a drop of almost 7%. Kazakhmys plc and Randgold Resources Ltd were members of the FTSE 100 that had losses, shedding almost 2% and over 3%, respectively.

The AIM Basic Resource index was up 1.7% in the week, bringing its overall gain for the year to 14.5% by Friday morning.

Corporate news directed share prices in both directions. Charaat Gold Holdings Ltd shares were up 23% for the week as the company released a revised estimate on its namesake deposit in Kyrgyz Republic, with the resource now containing 4Moz of gold.

Norseman Gold plc shares fell 17% in the week as it announced a cut in its full year production outlook to 65,000oz from 75-80,000oz previously. The company did maintain its outlook for the next year (commencing July 1) at 105-110,000oz.
Creat Resources was down more than 11% after the company posted a six-month loss of US$1.6 million on Friday.

Notable Friday morning news included an announcement from Firestone Diamonds plc. The company has secured another toll treatment agreement with a De Beers company, this time in Namibia. The company will toll-treat diamond-bearing ore for Namdeb, generating cash to develop its own kimberlite projects in Botswana.