Mining Journal > Finance > Stockpile: Vedanta hurt by Indian government rejection

Finance

Again suffering from negative press, Vedanta Resources plc was this week’s biggest loser on the London main market, falling a further 9% to continue a dreadful August.

Vedanta’s latest setback was the refusal of India’s Ministry of Environment and Forests to allow the company to mine for bauxite in Orissa. This rejection has left the company looking for alternative sources of bauxite to feed its Lanjigarh alumina refinery.

Other major miners also registered hits, with BHP Billiton, Rio Tinto and Xstrata each falling about 2%. BHPB, which said it would meet with shareholders regarding acquisition target Potash Corporation of Saskatchewan Inc, released its full-year results during the week. The mining giant recorded a 5% increase in revenue to US$52.8 billion, leading to an overall attributable profit of US$12.7 billion.

Xstrata's share price was also slightly down after it announced a US$383 million cash offer for all the shares in Sphere Minerals Ltd, the owner of the Askaf iron-ore project in Mauritania.

On a positive note, UK Coal plc continued to show gradual improvement, gaining 7% despite reporting (as expected) disappointing interim results. However, Evolution Securities explained: “Importantly, the group is past the worst with recent output from its three remaining deep mines showing sharp recoveries from the earlier trough.”

Gold rose to an eight-week high of US$1,244/oz on August 26 on concern that economies are stalling. Bullion has strengthened by 13% this year, at one stage reaching an all-time high of US$1,265/oz on June 21.

The share prices of most gold producers were also higher, albeit marginally, with Central Randgold Ltd, African Barrick Gold plc and Randgold Resources Ltd all in positive ground.

Other companies to make notable improvements included silver miners Fresnillo plc and Hochschild Mining plc, with gains of 5% and 2%, respectively.

Over to the small caps, and a research note seems to have contributed to a tripling in share price of Tertiary Minerals plc. The note from Seymour Pierce, titled: ‘Dark Horse’, indicates the potential for Tertiary to become Europe’s largest fluorspar producer. The company has around 3.5Mt of fluorspar across its Scandinavian projects and “is trading at a fraction of its potential resource-based valuation and NPV”, according to the note. At the time the stock was trading at just £0.02, and was given a £0.14/share target price. By Friday morning it was trading at £0.06/share.

The research’s comparison of other market peers may have helped boost interest in Maghreb Minerals plc, which gained 55% in the week. The company’s enterprise value per resource tonne was considered to be 'low' compared with those of other companies measured.

Bellzone Mining plc also gained on some positive research out of the US recommending a ‘buy’ on the company, whose assets include a Guinean iron-ore development.

There was not much news driving this week’s losers, except for Rambler Metals and Mining plc which actually released a positive feasibility study for the redevelopment of its Ming mine this week.