Mining Journal > Finance > Stockpile: Markets bounce on EU solution

Commodity stocks rallied along with global markets this week, as Europe’s decision-makers finally agreed on proposed resolutions to the region’s sovereign-debt crisis.

The rescue deal approved between leaders will involve restructuring of Greek debt as well as write-offs of certain existing amounts.

The FTSE 100 index rallied by nearly 3% on Thursday, the market’s first trading day, following the news.

Nearly all of London’s main-board tickers were up for the week, with Xstrata plc performing the best of the big four mining groups, with a 17.1% gain. Rio Tinto, Anglo American plc and BHP Billiton were up by 13%, 10.5% and 10% respectively.

The top gainer on the main board was International Ferro Metals Ltd with a near-30% jump. The company’s September quarter production report beat forecasts and the company’s chrome operations in South Africa were producing at full load.

Analysts at Numis said: “Overall a good update with a positive in-line outlook for significant improvements now the operations are firmly back on track.”

New World Resources was the second-best performer, adding a fifth to its share price. The company announced a trading update for the September and pricing information for the December quarter showing a 9% drop in coking-coal prices and a 13% decrease in coke prices.

The Company remains on track to produce 11Mt of coal and 800kt of coke. However sales of coke are expected to be 525,000t-575,000t compared with an original target of 720,000t.

On AIM, Herencia Resources plc’s announcement of two potential new porphyry copper targets at the Guamanga copper-gold project in Chile pushed the company 27.5% higher.

The company said the discoveries were found following recent geological fieldwork at the project, and that the new finds were in addition to existing targets identified by high-grade assays returned from previous drilling.

Arian Silver Corp added 23% after reporting high-grade silver results from its San Jose project in Mexico.

The company said the results from its drilling programme had so far showed continuity of vein thickness, silver mineralisation and grades from both in-fill and step-out drilling.

Jim Williams, Arian's chief executive, said: “Drilling continues at a good pace using two Longyear 44 rigs and we are currently anticipating completion during the reporting period.”

Ariana Resources gained 19% after saying it had started a follow-up drilling programme at its Red Rabbit gold project in Turkey.

The top movers on AIM this week were Namibian Resources plc and Natasa Mining Ltd, which added about 33% and 29% respectively.

The hardest-hit AIM mining company was Australian-focused Norseman Gold plc, which dropped 24% for the week after it resumed trading on the exchange.

Norseman also said it had raised more than £5 million from a placement of convertible loan notes and almost £7 million through a conditional placement of more than 138 million shares.

Other companies to suffer significant falls included GMA Resources plc and Platmin Ltd, which dropped 15% and 13% respectively.