That Was The Week That Was … In Australia

By Our Man in Oz

Minews. Good morning Australia. Your mining market seems to have taken a bit of a battering last week.

Oz. It looks like that, but most of the serious damage was confined to a handful of stocks with sharp falls by BHP Billiton, Rio Tinto and Fortescue Metals dragging the ASX mining index down by four per cent, while two of the leading gold stocks, Newcrest (NCM) and Regis (RRL), were mainly to blame for a seven per cent fall in the gold index.

Two factors spooked investors in mining and gold stocks: a reduced growth target in China which will limit demand for steel-making materials such as iron ore and metallurgical coal, followed by the latest slide in the price of gold, which dropped even further after we closed on Friday.

Minews. Whatever the cause – and don’t forget the strengthening U.S. dollar – those are big index falls which must have rattled investor confidence.

Oz. They are, but another factor which caused a re-think about the overall market was the re-balancing of the ASX top 200 index which saw three once-prominent iron ore miners kicked off.

Atlas (AGO), BC Iron (BCI) and Mt Gibson (MGX) have all suffered heavy losses as a result of the sharp fall in the iron ore price, and will be feeling even more pain today as a result of the latest drop in the price to less than US$60 a tonne.

Minews. Iron ore seems to be resuming its traditional position as product only suitable for large-scale miners.

Oz. Precisely, and it would not be a surprise if we see more mine closures over the next six-to-12 months.

Minews. It’s time now for a look at prices.

Oz. Before we do that a few final words on the big picture down this way, starting with the fact that while mining stocks had a tough week the overall market, as measured by the all ordinaries index, crept up by half-a-percentage point thanks to growing interest in healthcare stocks.

Minews. What will it take to rekindle investor interest in mining?

Oz. The biggest factor is a return of confidence in the China-growth story which has been severely dented by big changes in the way that country operates, including fears that it might be heading into a lost decade, or two, in the same way Japan boomed then crashed.

But, a more immediate benefit could come from an overdue and substantial fall in the value of the Australian dollar which remains stubbornly stuck around the US78 cent mark but would be more comfortable to everyone below US70 cents.

Minews. Over to prices, now, starting with any exceptional moves and then our weekly call of the card.

Oz. Most of the big moves, as you would expect, were down, with a handful of rises worth a special mention.

Horseshoe Metals (HOR), which hasn’t been in the news for a long time, reported further progress at its namesake copper project in Western Australia, adding A1 cent to A3.5 cents in the process, though what’s more interesting is that the stock has now risen by A2.2 cents over the past two weeks which is a gain of 170 per cent.

Mincor (MCR) is worth a mention because it went against a falling trend suffered by other nickel stocks after reporting fresh high-grade assays which lifted the stock by A2.5 cents to A70 cents, but did rise as high as A72.5 cents.

Red Mountain (RMX) reported strong drilling results from its gold project in the Philippines, doubling the share price by A0.3 cents to A0.6 cents.

Highfield (HFR), one of the fertiliser-project developers, hit a 12-month high of A$1.02 on Friday before closing at A$1.01 for a week’s gain of A11 cents.

Minews. And let’s not forget the big falls.

Oz. Regis (RRL), one of the favourites of local gold bugs, disappointed with a poor update at its mining operations on Friday, suffering an immediate A51 cent (26.7 per cent) fall on the day to close at A$1.40, but did trade down to a low of A$1.33.

Fortescue, as mentioned earlier, was hit by a wave of selling as the iron ore price slipped and it reported a fresh deal covering its heavy debt burden, with those developments knocking A34 cents (13.6 per cent) off the stock which closed on Friday at A$2.15.

Wolf (WLF), the Devon tungsten-project developer, reversed its rise of two weeks ago, shedding A4.5 cents (12 per cent) to A33.5 cents.

Minews. Now for the sector call, please, starting with gold.

Oz. Mainly down, as expected, with a handful of rises that included Evolution (EVN), up A2 cents to A86.5 cents. Medusa (MML), up A1 cent to A99 cents. Tanami (TAM), up two-tenths of a cent to A2.8 cents, thanks to rival takeover bids, and Endeavour (EVR), up A5 cents to A64 cents.

The long list of falls was topped by Newcrest and Regis which we’ve already discussed, but also included Northern Star (NST), down A16 cents to A$2.20. Kingsrose (KRM), down A5 cents to A24 cents. Beadell (BDR), down A4 cents to A28 cents, and Alacer (AQG), down A6 cents to A$2.75.

Minews. Iron ore next please.

Oz. Fortescue was the big loser there but other falls included Atlas (AGO), down A2.5 cents to A16.5 cents. Mt Gibson (MGX), also down A2.5 cents to A22.5 cents. BC Iron (BCI), down A5.5 cents to A43.5 cents, and Crusader (CAS), down A4 cents to A20 cents.

Minews. The base metals next, starting with copper, please.

Oz. The copper sector was a bit of a surprise given the lower price of the underlying metal with rises and falls evenly matched. Stocks to gain ground included Horseshoe, mentioned earlier, Sandfire (SFR), up A5 cents to A$4.44. Stavely (SVY), which rose by A2 cents to A19.5 cents. Altona (AOH) and Rex (RXM), which both added two-tenths of a cent to A10.5 cents and A10 cents respectively, and King River (KRC), up three-tenths of a cent to A3 cents. Copper stocks to lose ground included OZ Minerals (OZL), down A10 cents to A$3.71 and Hot Chili (HCH), down A1.5 cents to A12.5 cents.

Nickel stocks trended down after Mincor’s rise mentioned earlier. Falls were posted by Western Areas (WSA), down A19 cents to A$4.03. Sirius (SIR), down A31 cents to A$2.89, and Panoramic (PAN), down A3 cents to A57 cents.

Zinc stocks barely moved. Terramin (TZN) was steady at A13 cents. Ironbark (IBG) lost A1 cent to A9.4 cents, and Red River (RVR) lost A2 cents to A13.5 cents.

Minews. Uranium, coal and graphite, please.

Oz. Uranium stocks eased in line with the lower price, led by Paladin (PDN) which lost A1 cent to A39 cents and Vimy (VMY) which was half-a-cent lower at A34 cents.

Coal stocks firmed modestly. Whitehaven (WHC) and Atrum (ATU) added A2 cents each to A$1.63 and A$1.42 respectively. Prairie Downs (PDZ) lost A3 cents to A27 cents.

Talga (TLG) was the pick of the graphite stocks with a rise of A3.5 cents to A46 cents. Syrah (SYR) added A29 cents to A$4.72.

Minews. The minor metals to close, please.

Oz. Titanium mineral producers crept a little higher, led by Iluka (ILU) which added A19 cents to A$8.05, and Mineral Deposits (MDL) which put on A1 cent to A78 cents.

Rare earth stocks trended lower. Lynas (LYC) slipped six-tenths of a cent lower to A5.2 cents, and Alkane (ALK) was A1.5 cents weaker at A37 cents.

Diamond stocks lost ground, led by Lucapa (LOM) which shed A1.5 cents to A20.5 cents.

Minews. Thanks Oz.