That Was The Week That Was … In Australia

By Our Man in Oz

Minews. Good morning Australia. It looks like your mining sector had another tough week.

Oz. There’s no doubt about that. The mining index lost a hefty 7.4 per cent and the gold index was down by seven per cent. To put those falls into perspective that means the overall mining sector has dropped by 11 per cent in two weeks and the gold index is down an even more painful 14 per cent.

Minews. You’ll struggle to extract any good news from falls like that.

Oz. Perhaps, but the picture does become a little brighter when you dig deeper because much of the blame for the sharp slide in the mining market can be laid at the feet of the big two, BHP Billiton and Rio Tinto.

Last week, BHP Billiton fell by A$2.88 (8.8 per cent) to A$29.76, with only a small portion of the drop attributable to the stock trading ex-dividend. Rio Tinto fell by A$3.09 (five per cent) to A$57.30.

The first point about the falls by the big boys is that their percentage drops mirror the fall in the overall mining index for the week, and what’s even more interesting is that the big two are both down by 11 per cent over the past two weeks, which is also the same as the mining index.

Minews. An interesting point, but one which might only show how your mining market is dominated by just two big companies.

Oz. That’s one way of looking at it. Another is that investors prepared to look behind the statistical data will always find stocks outperforming the index.

Minews. Presumably, that’s what you’re about to show us.

Oz. Precisely. As always, there were a number of newsworthy companies that did quite well last week, starting with Windward Resources (WIN) which jumped A13 cents (58 per cent) higher to A35.5 cents, after reporting encouraging exploration news from its Fraser Range project near the Nova mine of Sirius Resources (SIR) in Western Australia.

Catalyst Metals (CYL), a thinly traded gold explorer, added A8 cents (40 per cent) to A28 cents after the iron ore heiress, Gina Rinehart, invested in Catalyst’s Four Eagles gold project in Victoria.

Sumatra Copper and Gold (SUM) had its best week for a long time, adding A1.3 cents (28 per cent) to A6 cents as after filing an optimistic update earlier this month on its Tembang project in Indonesia.

Mirabela Nickel (MBN) continued its remarkable revival trip after a horrid 2014. The stock added another A5 cents (60 per cent) to A13.5 cents after releasing an update on its Santa Rita mine in Brazil. It’s got a long way to go to reclaim the A44c it was trading at last July but it’s now well above the A2.9 cent level that it endured before its long trading suspension.

Vanadium-project development TNG (TNG) signed off-take deals with a Korean company over future production from its Mt Peake project, adding A4 cents (25 per cent) to A20 cents in the process.

Sipa (SRI) continued its march higher thanks to interest in its Ugandan copper exploration project, rising by another A2.4 cents (39 per cent) to A8.5 cents, but did trade up to a 12-month high of A10.5 cents on Friday.

Minews. Interesting moves, though it seems the biggest deal of the week did little for the two stocks involved.

Oz. Ahh, you mean OZ Minerals (OZL) offloading its 19 per cent stake in Sandfire (SFR), an exit long tipped, though when it happened on Friday the reaction was underwhelming. OZ added A8 cents to A$3.79. Sandfire fell by A17 cents to A$4.27.

Minews. The market had obviously anticipated the move. Time for a call of the sectors, starting with gold as that seems to have been buffeted by the lower price of the metal.

Oz. Mainly down is the best way to describe the gold sector, as might be expected with the latest fall in the U.S. dollar gold price and while the Australian dollar price benefited from a fresh US1 cent fall in the exchange rate it wasn’t enough to save local goldminers.

Catalyst and Sumatra, mentioned earlier were two of the few gold stocks to rise. Falls included: Medusa (MML), down A19 cents to US80 cents, Silver Lake (SLR), down A3.5 cents to A16 cents. Resolute (RSG), down A7 cents to A25 cents, Kingsgate (KCN), down A13.5 cents to A64.5 cents. Troy (TRY), down A13 cents to A43 cents, and Perseus (PRU), down A9 cents to A25.5 cents.

Minews. Iron ore next, please.

Oz. Weaker, as you might expect, but with most of the smaller iron ore stocks trading at, or below cash backing which could be limiting their falls. Fortescue (FMG) lost A15 cents to A$2.00 after a poorly received refinancing project, Atlas (AGO) shed A1.5 cents to A15 cents, Mineral Resources (MIN) was down a sharp A72 cents to A$6.84 and BC Iron (BCI) slipped A2.5 cents lower to A41 cents.

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

Oz. OZ, Sandfire and Sipa were mentioned earlier, other copper moves were mixed, including Rex (RXM), down A1.4 cents to A8.6 cents, Talisman (TLM), up half-a-cent to A16 cents, but perhaps driven more by its emerging nickel exposure, and Staveley (SVY), down A2 cents to A17.5 cents.

Nickel stocks trended down. Western Areas (WSA) lost A23 cents to A$3.80. Sirius (SIR) was A11 cents weaker at A$2.78. Mincor (MCR) slipped A1 cent lower to A69 cents, and Metals X (MLX) was A7 cents weaker at A$1.18, but should perhaps be seen more as a gold stock these days.

Most zinc stocks weakened, but not by much as they’re already on the floor. Terramin (TZN) lost A1 cent to A12.5 cents. Aurelia (AMI) was half-a-cent weaker at A26.5 cents, while Energia (EMX) crept up by six-tenths of a cent to A5.1 cents.

Minews. Graphite, uranium and coal next, please.

Oz. Bora Bora (BBR) was the pick of the graphite stocks, rising by A5.5 cents to A24 cents thanks to an encouraging set of drill results. Talga (TLG) added A1.5 cents to A47.5 cents, while Syrah (SYR) slipped A32 cents lower to A$4.40.

Uranium stocks were flat with most opening and closing at the same price. Vimy (VMY) posted one of the heavier falls with a A3 cent drop to A31 cents. Paladin (PDN) slipped half-a-cent lower to A38.5 cents.

Coal stocks were weaker, in line with the latest fall in the oil price. New Hope (NHC) lost A14 cents to A$2.43 and Prairie Downs (PDZ) fell by A3.5 cents to A23.5 cents.

Minews. The minor metals to close, please.

Oz. Titanium stocks weakened, led by Iluka (ILU) which fell by A35 cents to A$7.70. Base (BSE) continued to fall, shedding A1.5 cents to A12 cent.

Fertiliser stocks strengthened. South Boulder (STB) put on A1 cent to A24.5 cents. Highfield (HFR) added A4 cents to A$1.05.

Wolf (WLF) led a stronger group of tungsten stocks, rising by A3.5 cents to A37 cents.

Lynas (LYC) led a weaker rare earth group, slipping by three-tenths of a cent to A4.9 cents.

Minews. Thanks Oz.