Mining Journal > Finance > Stockpile: Politics and prices move stocks

Developments in African politics were a key driver in certain stocks this week both amongst the top gainers and fallers.

Randgold Resources plc and Cluff Gold plc both gained strongly towards the end of the week as news of a potential breakthrough in the Ivory Coast’s power impasse hit markets.

News out late on Thursday was that rebel fighters had entered Abidjan and were preparing to make a finally push to remove Laurent Gbagbo. After losing a presidential run-off five months ago, President Gbagbo refused to step down and hand over power to Alassane Ouattara, whose claim on the presidency is recognised by the UN.

Randgold Resources, which owns the Tongon mine in the West African country was already up on Thursday following some positive forecasts for financial 2011. The company expects to produce 750,000-790,000oz of gold at total cash costs, after royalties and taxes, below US$600/oz. In addition the company increased its attributable mineral resources and reserves by 5%.

Randgold Resources shares gained 8.11% in the week, while Cluff, which owns the suspended Angovia operation in the Ivory Coast was up by nearly 5% on Friday alone.

Last Friday, Zimbabwe’s Minister of Youth, Indigenisation and Economic Empowerment published a statutory instrument setting out requirements for the provisions of the Indigenization Act.

The Notice defines stated the ownership requirements as "a controlling interest or 51% of the shares or interests which in terms of the Act is required to be held by indigenous Zimbabweans in the non-indigenous mining business concerned". The notice also indicated that foreign-owned companies must submit an indigenisation plan within 45 days and implement it within six months. Shares in Aquarius Platinum Ltd, which owns half of the Mimosa platinum mine in the South Africa country, fell 5.4% in the week.

The company said: “Aquarius confirms that it's Zimbabwean operating subsidiary, Mimosa Mining Company (Pvt) Ltd, is engaged in discussions with the relevant authorities in order to establish a position that will be compliant with the Act and beneficial to stakeholders.”

Kenmare Resources plc was the top gainer of London’s main-board mining companies. Analysts at RBC Capital Markets this week raised mineral-sands prices and boosted Kenmare’s target price by 10% to £0.55/share. The note said: “With its Moma mine in Mozambique running at Phase 1 nameplate and a 50% expansion scheduled to ramp up in 2013, the company is in a favourable position to take advantage of higher prices in tight markets.”

Vedanta Resources gained by 8.44% in the week. The country’s Economic Times reported that the country’s stock market regulator had approved the country’s proposed open offer for 20% of Cairn India.

BHP Billiton was up 5.5% after outlining a number of growth plans in the week. These included US$7.4 billion spend on the expansion of its Pilbara iron- ore operations, a US$554 million investment for Escondida in Chile and the announcement of progression to feasibility stage on the Olympic Dam expansion project in Australia.

Central Rand Gold Ltd was the biggest faller on the main board after the company announced that it would be placing its underground operations on care and maintenance after a lack of clarity regarding governments plans to pump water out of the Witwatersrand Basin’s old mine workings.

On AIM, Baobab Resources plc was the week’s top mover after the release of an aeromagnetic survey at the Tete iron-vanadium-titanium project in Mozambique. The findings revealed a robust new target at the project and helped push the company 34% higher.

Scotgold Resources Ltd gained 18.5% after accepting an offer of a regional selective assistance grant worth £600,000 from Scottish Enterprise for the Cononish gold-silver project. The grant is to assist in establishing mine facilities and job creation through development at the project, payable retrospectively.

Canadian company Galantas Gold Corp added 16% following the securing of an arrangement to increase the number of drill rigs at the Omagh project in Northern Ireland to four.

Positive results from Horizonte Minerals plc’s drilling programme at its Araguaia nickel project in Brazil gave the company a 15.5% boost. The company revealed that 116 drill-holes over 3,158m had been completed with high-grade zones including 10.4m at 2.08% Ni and 14.3m at 1.93% Ni.

Other companies to make positive movements this week included Leyshon Resources Ltd and Platmin Ltd with gains of 16.5% and 15% respectively.

Churchill Mining plc shares tumbled almost 30% for the period as it continues to battle the cancellation of four mining licences comprising the East Kutai coal project in an Indonesia court. The company also released its half yearly report for the end- December period (which were in line with expectations) and said it was well-funded to contest the East Kutai ruling.

The other major faller for the week was Oxus Gold plc, which dropped 18% following a recent announcement it plans to halt operations in Uzbekistan. The company has entered international arbitration against the Uzbekistan government over concerns its assets in the country won’t be properly valued.

Elsewhere, Nyota Minerals Ltd and Red Rock Resources plc both lost about 10% each respectively.