Mining Journal > Finance > Stockpile: Global sentiment drops, resource stocks pummelled

Finance

With publication of the Henry Tax Review, stocks with operations in Australia took a pounding early in the week, although a wider commodity sell off (on Greek fears and concerns about of China) also played a role in the sell off.

Natural resource stocks in London shed nearly 8% in a trading week shortened by a Bank Holiday on Monday, underperforming the overall FTSE. The sector had actually recovered slightly by Friday afternoon, up over 2% for the day.

Gold’s appeal as a safe-haven investment saw the yellow metal, as well as its producers, gain as a result of concerns for the European economy (centred on Greece) and forecasts by investment analyst Marc Faber that China’s economy was set to collapse in the next 12 months.

Over the week, Australian iron-ore giants BHP Billiton plc and Rio Tinto plc shed a combined £15 billion in market capitalisation over the combined impact of the mooted Resource Super Profit Tax and concerns over future raw-material demand.

Other losers included Ukrainian iron-ore producer Ferrexpo plc, which fell 18% in the week, and Eurasian Natural Resources Corp, which lost 16%.
Finnish nickel producer, Talvivaara Mining Company plc was the biggest loser after it cut its 2010 production forecast from 30,000t to 15,000-20,000t.
Centamin Egypt Ltd, Randgold Resources Ltd and African Barrick Gold plc were amongst the only gainers on the main board's miners. Egyptian gold producer, Centamin, reported a “transformational quarter”, according to one analyst, as the Sukari mine in Egypt produced 37,000oz in the three months to end-March from just 240oz previously as production started in earnest.

Another of the few main-board gainers this week was Namakwa Diamonds Ltd, which reported better revenue and narrowed its loss.

On AIM, much of the resources sector also struggled. Of those to finish in positive territory, Sunrise Diamonds plc announced it was adding a new gold project in Canada to a portfolio that already includes operations in Australia, Ireland and Finland. Sunrise, which also said it would be changing its name to reflect a broader commodity base, was up nearly 7% on the news.

Nyota Minerals Ltd closed almost 6% higher after reporting an increase in the inferred resource at its Tulu Kapi gold project in Ethiopia.

Obtala Mining plc released its first update on its alluvial diamond project in Konoma, Sierra Leone, since acquiring it earlier this year and rose almost 3%.
Other notable risers included Chromex Mining plc and Conroy Diamonds & Gold plc, with gains of over 10% and almost 6%, respectively.

Meanwhile, the value of European Nickel plc and Rusina Mining NL continues to suffer after the two companies updated the timetable for a proposed merger. European Nickel fell by 19% and Rusina was down 14%.

The week’s biggest faller was Toledo Mining Corp with a 23% drop. Elsewhere, Australia-focused coking-coal producer Caledon Resources plc and Strategic Natural Resources were down 20% and 19%, respectively.