Stockpile: London stocks gain on more contract price increases

London’s mining stocks ended a strong month with another week of gains, best expressed by the gains from the four majors, reports Mining Journal's editorial team.

More contract prices were announced this week following strong coking-coal settlements recently. Iron-ore prices were settled at 90% higher from prices a year earlier, while ferrochrome prices were upped 35% from contracts for the first three months of 2009.

The most significant develoment for iron ore was the demise of the annual benchmark pricing system, as BHP Billiton announced customer contracts for three-month periods, ending a 40-year old tradition.

Base-metals prices have also been rising significantly with both copper and nickel trading at near two-year highs on Thursday.

Xstrata plc and Anglo American have shown the most impressive gains of the ‘big four’ over the past month, each up about 20%, while the former has gained 9% in the last five trading days alone. Rio Tinto and BHP Billiton gained 15.3% and 10.8% over the same period.

Centamin was the top gainer of the main board stocks this week after the company announced a 1t (32,150oz) gold production milestone at its Sukari project in Egypt.

The London market is also starting to be offered shares in new entrants to the exchange. African Barrick Gold plc was the first major mining IPO since 2008, and two new entrants have followed this week.

Guinean iron-ore play, Bellzone Mining plc and Peruvian explorer Metminco Ltd listed on the AIM market Thursday. The companies raised US$50 million and US$18 million, respectively.

In the small-cap sector, exploration company Red Rock Resources plc surged 37% higher as it revealed improved market conditions helped it to a £3.22 million profit in the second half of 2009.

Weatherly International plc’s value advanced by almost 13% on an announcement that two of its projects in Namibia would restart in the next six months.

Western Australian-based Norseman Gold plc climbed 16% after it was notified that non-executive director David Steinpreis had bought 56,750 shares in the company.

The biggest riser of the AIM-listed miners was GoldStone Resources Ltd, with a 55% jump. Others to fare well included Altona Energy plc and Namibian Resources plc with gains of 25.5% and 22% respectively.

Tunisia-focused explorer Maghreb Resources plc was the biggest faller of the small caps, crashing 40%. During the week Maghreb announced the resignations of chief executive Richard Collier and non-executive director Anthony Allen.

Firestone Diamonds plc slipped almost 15% after releasing its interim results for December-end period, which the company said saw good progress in the development of its Botswana project portfolio.

Zinc miner and recycling specialist ZincOx shed 6% after announcing the requisitioning of a general meeting to sack its current directors. More than 50% of the company’s shareholders have said they would vote against the proposal.
Other significant fallers were Kryso Resources plc and Ariana Resources plc with losses of 19% and 16% respectively.