Mining Journal > Finance > Stockpile: Market tumbles on economic concerns

Mining stocks were hammered in London this week as fears of a return to recession-like economic conditions circled the globe.

Even gold, normally regarded as a safe haven against flailing economies, struggled as the precious metal suffered its biggest weekly fall since 2008 to sit below US$1,700/oz.

Silver was even more severely hit, dropping by about 17% (the most in four months), while copper was at its lowest point for more than a year.

Despite gold’s decline, miners of the precious metal survived the carnage better than most, with African Barrick Gold plc being the best performing stock, finishing just 4% lower. Randgold Resources Ltd and Centamin Egypt Ltd each fell around 8%, while silver miners Hochschild Mining plc and Fresnillo plc dropped 9% and almost 13%, respectively.

Unlike the precious metals companies, copper miners did not cope as well. The base metal plunged on fears that demand may deteriorate as Europe’s debt crisis worsened and the US economy showed no signs of improvement. Antofagasta plc and Kazakhmys plc experienced the biggest losses, with falls of 29% and 24%, respectively.

Xstrata fell more than 22% to be the worst performing major miner. The company said in a presentation this week that it expected demand for copper to continue to outpace supply. “We anticipate a more modest deficit next year, as a number of mine projects ramp up,” Xstrata said.

The remaining majors were not spared from market attention, with Rio Tinto, BHP Billiton and Anglo American plc dropping 19%, 14% and over 12%, respectively.

On AIM, explorer Kryso Resources was a clear standout by adding more than 22% as most of the junior miners struggled like their main market peers. The company said earlier this month that it was awaiting final government approval for its Pakrut gold mine in Tajikstan.

Scotgold Resources Ltd was about 9% higher after reporting it had completed a US$1.6 million fund raising announced last month. The company plans to use the funds for further exploration at its gold and silver assets in Scotland.

Other companies to record share-price gains for the week included Platmin Ltd and Strategic Natural Resources plc, which added about 9% and 6%, respectively.

Dual-listed exploration company Afferro Mining Inc suffered the biggest loss, with a 31% decline.

South American precious metals explorer Mariana Resources fell by 23%. The company said earlier this moth it had filed an updated NI43-101 technical report on its Las Calandrias project.

Vatukoula Gold Mines Inc shed 16% of its value despite the release of an improved operational update. The company said underground ore delivered from its mine on Fiji had increased by 40% year-on-year in the 12 months to end-August.

Other companies to make notable losses included Arian Silver Corp and European Nickel, with falls of 21% and 20%, respectively.