Mining Journal > Finance > Stockpile: Miners not excluded in broad market sell off

The share prices of mining companies staged a small recovery on Friday in London after a week of general losses in the overall market.

Higher oil prices and continued tension in the Middle East saw a sell off in the markets and a number of commodities.

Precious metals, such as gold, rose in the week, boosting the stock prices of some of the underlying producers.

In a Barclays Capital note, its analysts said: “Oil and precious metals markets, the underperformers for much of 2011 to date, are now the strongest commodity markets, and will likely remain so for as long as regional uncertainty persists.”

Silver climbed to its highest point since March 1980, reaching US$34.32/oz on February 22.

Not surprising then that stocks like Hochschild Mining plc and Fresnillo plc were amongst the top-ten performers of the main boards mining stocks.

The top gainer was Central Rand Gold Ltd, which gained 48% in the week. This was after South Africa’s cabinet approved the recommendations made in a report to address rising water levels on the Witwatersrand gold basin.

Central Rand Gold announced in early February that if no government action was taken by the end of March, the “prospects of the company will need to be re-evaluated”.

Czech coal miner, New World Resources NV, was the second best performer in the week after the company reported a net profit of €233 million (US$322 million) for the year to end-December, compared with a €61.56 million loss the year before.

Overall coal revenues were up by 30% in the year at €1.36 billion with coke sales up 161% at €343 million.
Anglo American plc was the best performer of the big four diversified miners with a 1.3% gain in the week. Last Friday the company released its annual results, showing profits had doubled from a year earlier.

BHP Billiton, the only other gainer of the year, was up almost 1.2%. This week the company announced that it had entered the shale-gas business through the purchase of Chesapeake Energy Corp’s Fayetteville assets in Arizona for US$4.75 billion in cash.

In what was also a tough week for resource stocks on the AIM market, Beowulf Mining plc once again shone, continuing its stellar run in 2011 as the top gainer with a 21% advance. The iron-ore explorer’s value has soared 140% this year, due mainly to the positive results found at the company’s Kallak North and Kallak South prospects in Sweden.

The only other notable gainer of the small caps was another iron-ore company, Baobab Resources plc. The Western Australian-based company added 18% after revealing encouraging results from the South Zone of its Tete project in Mozambique. Baobab started the 2011 phase of drilling at the property earlier this month and two reverse drill rigs are working on the South Zone.

Other companies to make weekly gains included Ovoca Gold plc and Minera IRL Ltd, which both moved about 8% higher.

Canada’s European Goldfields plunged 25% on news regarding the status of mining permits in Greece for its subsidiary in the country. A report in Reuters suggested that regulators in Greece weren’t ready to allow subsidiary Hellas Gold to run two gold mines in the country. However, the company has denied being notified of a decision on the matter.

Churchill Mining plc, which is developing the East Kutai coal mine in Indonesia, fell 20% and has now dropped 85% in 2011. The company said it is looking at a number of specific proposals to fund and develop the project. In addition, a number of investors have expressed an interest in buying out or funding Churchill to acquire a 25% share in the project held by Indonesian partners.

Other companies to make significant losses included Amur Minerals Corp and African Eagle Resources plc, with falls of about 12% each.