Mining Journal > Finance > Stockpile: Major miners fall as Australian tax, commodity prices take toll

Finance

Blue-chip mining companies on the London market were slightly down over the week ending June 3 as uncertainty about the impact of the proposed Australian resources tax continued and commodity prices dipped.

The Australian Government continues to stand steadfastly behind its resources super profits tax (RSPT) despite widespread opposition from the major companies operating in the country.

Xstrata plc made the clearest statement against its perceived impact this week by putting close to A$600 million (US$498 million) of investment into the country on hold owing to the tax, contributing to a drop of more than 3% over the week on the main market.

BHP Billiton, which has also warned of suspending work in the country, was the hardest hit of the major miners with a 6.5% slide, while Rio Tinto also fell, albeit just over 1%.

After a rally in recent weeks towards the precious metal, investors turned away from gold this week as its value dropped to around US$1,200/oz in Europe on Friday morning.

This hurt the gold-minded companies; such as Jersey-based Randgold Resources Ltd which fell mid-week before recovering late in the period to be 2% down.

Another gold-focused company, Central Rand Gold Ltd, was the week’s biggest loser with a 27% fall, while Centamin Egypt Ltd also suffered a minor drop.

At the other end of the scale, Fresnillo (the world’s largest primary silver producer) topped the list of risers with a 4.5% jump. The Mexico-focused miner’s value has enjoyed an impressive resurgence since late-2008, increasing more than nine-fold to £9.22.

Others to enjoy gains included International Ferro Metals Ltd and Anglo Pacific Group with rises of 4% and 3.5% respectively.

On AIM, Central China Goldfields plc surged by almost 40% after releasing news that an independent study of its Bullabulling gold project in Western Australia suggested it could “potentially be a very large deposit.”

Scotland-based investment company Palmaris Capital plc, which has investments in coal mines, moved more than 25% ahead.

Canadian-based Rambler Metals and Mining plc was up almost 18% on news it had received final environmental approval and project release for its Ming copper-gold mine in Newfoundland.

Other companies to make gains included Mwana Africa plc with an 18% rise, and Hambledone Mining plc, which advance by 12%.

African Minerals' chairman, Frank Timis, was quoted in Chinese news reports as planning to export all the company’s planned iron-ore production from Sierra Leone to China, at prices less than those set by the three iron-ore major producers. The company ended 8% higher for the week.

Galantas Gold Corp, owner of Ireland’s only gold miner, was the week’s biggest faller on AIM with a 15% drop. Galantas said it was planning a private placement of up to 50 million shares to raise funds for a drilling programme.

Bellzone Mining plc’s value edged back 10% after rising substantially in recent weeks. The drop comes after an announcement regarding Chinese steelmakers caused a 50% burst for the West African-focused company last month.