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London Stockpile: Dubai default deals blow

Focus

Publishing Date
27 Nov 2009 11:50am GMT
Author
Mining Journal

Summary

London Stockpile is a weekly discussion of significant developments among London’s Official List and AIM mining/exploration stocks, based on their five-day share price movement.

By Blake Wilshaw 

London markets were static for most of the week, with US and Islamic holidays resulting in low trading volumes. However, markets were thrown a curveball on Thursday, following bad financial news from Dubai.


Dubai World announced that it intends, at best, to delay paying its debt obligations boosted the US dollar against the euro, subsequently pushing down gold and copper prices.

The share price of FTSE 100 copper producers Antofagasta and Kazakhmys both dropped on Friday morning. They were down about 3% and 6%, respectively, for the week.

The biggest gain on the Main Market in London was made by Namakwa Diamonds. The £42 million firm soared more than 15%. Not a bad feat considering the lack of news flow in recent months.

Less fortunate was fellow blue-chip diamond producer, Gem Diamonds, which fell more than 8%.

Ukraine iron-ore producer Ferrexpo improved 4% this week. This gain was attributed to positive feedback following an analysts' dinner in London.

Rio Tinto slid 5%. The initial public offering (IPO) in New York of its Cloud Peak Energy coal business contributed US$741 million to the company’s debt-cutting initiative. Analysts quizzed by Stockpile downplayed the significance of the IPO. Indeed, some noted that the company could have had a quicker and “cleaner” exit from the North American coal market. The Cloud Peak shares, US$15 at listing, had fallen to about US$14.39 by Friday.

Back over the pond, on AIM, Cullinan diamond mine owner Petra reported the sale of a 168ct gem for US$6.28 million. The news helped haemorrhage a week of losses for the company’s stock, which had a week-on-week fall of 16% on Thursday, but had recovered to be down about 5% on Friday.

Mariana continued its steamroller run, notching up another week of impressive gains. The Argentinean silver-gold explorer was Stockpile’s top stock for the last week of November, firming more than 18%.

African Consolidated had a strong showing, up 7%. The company was boosted by the Rapaport diamond pricing group saying it would expel members found to be trading diamonds from the Marange deposit in Zimbabwe. Marange is held by African Consolidated, but the company currently has no access to the site as it is being mined by the Zimbabwe government with the aid of a South African private firm. Rapaport implemented a ban on all Marange-diamond trading, due to “severe human-rights abuses”.

African Diamonds, an investor favourite for most of November, had a 13% downward correction.

Namibian copper producer Weatherly International was smashed more than 20%, giving it the unfortunate title of AIM’s worst-performing mining equity.

Not too far behind were uranium explorers Niger and Forte Energy¸ dropping about 15% on the week.



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