Mining Journal > Finance > Stockpile: Letseng find gives Gem a boost

Gem Diamonds Ltd has experienced a return to form on the London main market since revealing a massive find at its Letseng mine in Lesotho earlier this month.

The diamond miner added more than 11% in the past week to be one of the top performing resource stocks.

Gem recovered the world's 15th largest diamond, a 553ct Type II D colour stone that adds to the distinguished history of the Letseng mine.

Elsewhere in the diamond sector, Namakwa Diamonds Ltd remained steady following the substantial losses of earlier this month. Namakwa had plummeted 60% in one day after advising of issues with financing and changes to the company's board.

Allied Gold plc, which listed on the main market during May, was the top mover for the second straight week with a 14% gain.

The major miners all added value, with Xstrata plc the standout performer, moving about 6% higher. Anglo American plc advanced 5%, while BHP Billiton and Rio Tinto were almost 3% ahead.

Rio Tinto announced more investment into its iron-ore operations in the Pilbara region of Western Australia, with US$833 million to be spent on power and fuel projects. The company is working towards reaching iron-ore capacity of 333Mt/y in the Pilbara by 2015.

The hardest hit miner was silver producer Fresnillo plc, which fell over 12% as prices for the precious metal were lower. Despite the hefty loss, Fresnillo has been a top performing miner in 2011, up close to 13% for the year.

Gold was also lower this week and that was reflected in many of its miners. These included Petropavlovsk plc, Centamin Egypt Ltd and Randgold Resources Ltd, which fell 5%, 3% and 2.5%, respectively.

Two companies with historic regulatory issues topped the AIM miners log this week.

Scotgold Resources plc announced positive feedback to the revised planning application covering its Cononish gold and silver project in Scotland.

Amongst the responses, were a 'no objection' from the Scottish Environmental Protection Agency. While Scottish Natural Heritage raised a 'technical' objection, “but indicate that it is capable of being resolved through the application of suitable conditions”.

There is a National Parks Authority (NPA) Board hearing targeted for late October.

Chris Sangster, chief executive officer of Scotgold, said: “The company has worked hard on the revised application to ensure it was responsive to the objections raised from our original application.”

The shares were up nearly 23% on Friday and nearly a fifth for the week.

ENK plc, formerly European Nickel plc, has announced the sale of its Caldag nickel project in Turkey for US$40 million in cash following years of permitting delays.

Analysts at Evolution Securities described the news as “fantastic”, adding: “Years of perseverance in Turkey had demonstrated that it was going to be impossible to progress Caldag to production due to the perpetual permitting hurdles which the company faced.”

The company will now focus on its Acoje laterite project in the Philippines.

Managing director, Rob Gregory, said: “This transaction brings immediate value to shareholders, and removes the costs associated with keeping Caldag on care and maintenance.

The sale outcome will provide the funds required, without the need to raise additional equity, to allow ENK to complete the bankable feasibility study on its Acoje nickel laterite project in the Philippines which is targeting first production in 2013.”