Mining Journal > Finance > Stockpile: Gold record adds strength to mining stocks

Gold hit a fresh record this week as producers of the metal paced what was a positive week for resources stocks on the London market.

Bullion reached US$1,447.00oz in the March 24 PM fix following a surge in demand owing to the ongoing turmoil in Libya, debt concerns in Europe and the nuclear accident in Japan. Silver also gained over the week, to close to a 31-year high.

On the back of gold and silver’s fortunes, precious-metals producer Hochschild Mining plc was the leading mining company on London’s main market with a 12% advance. The company, which owns operations in Mexico, Peru and Argentina, is scheduled to release its annual results on March 29.

Egypt-focused gold producer Centamin Egypt Ltd rose 10.5% in a week in which it announced that Ed Haslem would take on the role of non-executive director and senior independent director at the company.

Russian gold miner Petropavlovsk plc gained 7.5% after increasing its proven and probable reserves by 36% as a result of an extensive exploration programme during 2010.

Other gold miners to enjoy positive weeks included Central Rand Gold Ltd and Randgold Resources Ltd, advancing by 12% and 5% respectively.

Elsewhere, BHP Billiton managed an 2% improvement following significant announcements regarding its iron-ore and coal operations in Australia. The group plans to spend US$7.4 billion to expand its iron-ore projects in the Pilbara region of Western Australia, while in Queensland and New South Wales about US$2.9 billion is to be invested in coal developments.

Of the other majors, Rio Tinto performed the best by adding close to 6%. The multinational is edging closer to securing control of coal producer and developer Riversdale Mining Ltd through a takeover, with 38% of shareholders now agreeing to the deal.

Meanwhile, Anglo American plc was more than 5% higher and Xstrata plc rose by 3.5%.

On AIM, Kefi Minerals plc was amongst the top gaining small-caps this week with a 25% gain. The gold and copper exploration company recently signed a heads of agreement to sell its Derinin Tepe (also known as Kizilcukur), Muratdag and Yatik West projects in western Turkey to Ariana Resources plc.

Kefi has been granted a 2% net smelter royalty on all future production from the licences.

Strategic Natural Resources plc was up about 24% this week following reports from South Africa about the sale of the company’s future production. Mcebisi Jonas, the head of Economic Development and Environmental Affairs said in a statement that SNR's 74% owned subsidiary, Elitheni Coal Limited, had entered into a contract with a third party for the sale of 1Mt of coal.

“The board of SNR wishes to clarify that at this time it has not entered into any such contract but, as previously announced, the company is currently engaged in advanced discussions with interested parties in connection with an off take agreement,” said the company.

Weatherly International has signed a forward sales contract with Louis Dreyfus Commodities Metals Suisse for 1,450t of contained copper. The metal will be delivered progressively from its Namibia operations over an 18-month period commencing in April 2011 at a price of US$9,643/t.

Weatherly has contracted forward sales for a total of 3,375t of copper in three tranches at an average price of US$9,560/t of copper. This represents approximately 34% of production up to September 2012.