Stockpile: Miners follow London market’s uprising

Finance

Mining stocks were amongst the winners in London this week as the UK’s main market climbed for an eighth consecutive day on Friday, the longest rising streak in 11 months.

The FTSE 100 had advanced by 0.6% on the morning of June 18 from the previous day, but still remains 9.3% down from this year’s high in mid-April amid concerns that Europe’s debt crisis will have a negative impact on economic growth.

Of the miners amongst the exchange’s benchmark group, Vedanta Resources plc and Lonmin plc were the best performed with gains of about 6% each.

Rio Tinto, BHP Billiton and Xstrata plc were also in positive territory after joining forces during the week to release a joint statement to criticise again the Australian Government’s Resources Super Profits Tax (RSPT). Rio Tinto's shares led the trio with a 5% rise, while BHPB added 4% and Xstrata 2.5%.

Gold was headed for its biggest weekly gain in the past three and edged towards the all-time record US$1,252.11oz by mid-June 18 as investors continued to buy the precious metal to protect wealth from Europe’s economic uncertainty.

“Bullion continues to draw support from its appeal as an alternative asset to currencies, being a perfect hedge against excess liquidity and any sovereign default risk,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.

Gold producers reflected the metal’s attraction, with Central Rand Gold Ltd the week’s biggest riser. The South African-focused miner, which moved almost 13% ahead, is still benefitting from its recent announcement to raise US$35 million to fund its CMR West project.

Elsewhere in the gold field, African Barrick Gold plc gained 9% and was recently confirmed as one of two new entrants (the other being Essar Energy) onto the blue-chip FTSE 100 index.

Others to help pull the market up included Ferrexpo plc and Aquarius Platinum Ltd, which improved by 10.5% and 7.5% respectively.

On AIM, Serabi Mining plc had a mixed week but ended strongly to be the top gainer. First, open-pit operations at its Palito mine were suspended after the Brazilian environmental agency said it had breached certain requirements.

Then on June 16 the company announced that Eldorado Gold Corp would be buying a 26.8% stake in the company at a premium to the current share price.

Another notable gainer was African Eagle Resources plc which gained by just over 20% after announcing an increase at its Dutwa nickel project in Tanzania. The new resources contains triple the tonnage and increases the contained nickel equivalent from 345,000t to 845,000t.

Nyota Minerals Ltd was also up strongly after announcing positive drill results at its Tulu Kapi gold project in Ethiopia.

Chaarat Gold Holdings plc fell 12.6% in the week. The company put out a statement that operations both in Bishkek and at site in the north west of the country are unaffected by the developments near Osh in the south of the country. According to the Guardian newspaper on Friday, as many as 2,000 people may have been killed in ethnic violence in the country.