Market review in Australia and Hongkong

Much of the past week was spent at the Mines & Money conference in Hong Kong while also keeping a watchful eye on the home market. The mood in both places was equally positive, and the 2,000 delegates who made it to the Hong Kong edition of Mines and Money certainly came away feeling pretty optimistic especially after being revved up by the like of Robert Friedland on the outlook for copper, Andrew Forrest on iron ore, Rob McEwen on gold and David Morgan on silver.

Not a bad team of keynote speakers, and certainly a big turn up compared with last year.

Roughly triple the head count of the 650 who were at the 2010 conference, which isn’t a bad measure of the ultra-positive mood in this part of the world towards commodities. Morgan and McEwen in particular played to the audience, with Morgan tipping a future silver price of more than US$100 an ounce, and McEwen tipping gold to go to US$5,000 per ounce. Wild and hairy-chested as those forecasts look, both men have the credentials to make them. Morgan runs Silver-Investor.com and has forgotten more about his favourite metal than most people know. McEwen is the founder of the very successful Canadian gold company, Goldcorp.

They picked a good week to spruik their wares with gold and silver continuing their relentless upward charge. Time’s short, let’s switch to the Australian market.

It was an up week on the ASX. The all ordinaries index added 2.6 per cent. The metals and mining index was slightly behind, up 2.3 per cent, and the gold sector starred with a gain of 5.7 per cent. The rise in local gold shares was especially commendable as the Australian dollar also surged to fresh heights, closing the week at its highest since it was allowed to float freely in 1983, at US$1.02.

Prices now, but perhaps keep it brief as you have a plane to catch.

Thanks. Gold is the obvious starting point for a shortened market review. The challenge is to find any gold company that fell in such an up week. Among the top performers was the Brazilian focussed gold and iron ore explorer, Beadell Resources (BDR), which confirmed that it might produce both products, given the unique nature of its orebody. That news helped the shares add A12 cents to A90 cents. Several of the Aussies attending Mines and Money also did well. Gold Road (GOR) put on A5.5 cents to A47.5 cents. Cobar Consolidated (CCU), the silver specialist, added A11 cents to A97 cents. Kingsgate (KCN) gained A49 cents to A$8.99. Medusa (MML) rose by A43 cents to A$7.21. And Kingsrose (KRM) added A7 cents to A$1.62, but did hit an all-time high of A$.68 during Friday trade. Other movers included Troy (TRY), up A12 cents to A$3.82, Resolute (RSG), up A13 cents to A$1.25, Allied (ALD), up A4 cents to A66 cents, Adamus (ADU), up A6 cents to A77 cents, Perseus (PRU), up A30 cents to A$3.10, and Ausgold (AUC), up A7 cents to A$1.18.

Uranium companies next, please, given the rebound which seems to have started.

There was a solid recovery, although not back to the pre-Japan tsunami level. Mantra (MRU) was one of the best thanks to a revived, albeit lower, takeover offer. It added A$1.43 to A$6.72. Extract (EXT), another company in the middle of a corporate shuffle, was also better off, closing up A$1.43 at A$8.43. Other uranium movers included Berkeley (BKY), up A17 cents to A$1.07, Uranex (UNX), up A5 cents to A38 cents, Bannerman (BMN), up A3.5 cents to A48 cents, and Paladin (PDN), up A25 cents to A$3.85. Manhattan (MHC) was also stronger, up A19 cents to A$1.00, as its chief executive, Alan Eggers, took every opportunity in Hong Kong to spread the uranium story.

Over to the base metals now, starting with copper to see whether Mr Friedland’s talk helped the market.

He seems to have done his job, as the copper companies were up, as were, the zinc and nickel companies. One of the best copper moves came from Hot Chili (HCH) which caught the attention of Mines and Money delegates after a presentation by its chief executive, Christian Easterday. Hot Chili’s shares added A7 cents A75 cents. Rex (RXM) was another copper player making itself visible in Hong Kong, and it duly rose by A14 cents to A$2.89. Other copper movers included Marengo (MGO), up A3 cents to A31.5 cents, Sandfire (SFR), up A21 cents to A$6.99, and Equinox (EQN), up A6 cents to A$5.37. Metminco (MNC) was one of the few to fall last week, down A3 cents to A38 cents.

Nickel companies attracted an increased level of interest, perhaps aided by a tip from a presenter at Mines and Money. Warren Gilman, deputy chairman of the Canadian investment bank CIBC, said nickel was set for an upward run in the next 12-to-18 months. Across the seas to the south, on the ASX, Panoramic (PAN) was the strongest of the nickel miners, adding A31 cents to A$2.31. Western Areas (WSA), another Aussie in Hong Kong, rose by A63 cents to A$6.66. Mincor (MCR) reversed a little of its recent slide with a rise of A2 cents to A$1.43. Independence (IGO) added A30 cents to A$6.56, and Minara (MRE) put on A6 cents to A78 cents.

The zinc moves were generally modest, but there was evidence of a stronger overall upward trend, although that might well have been a rub-off from the strengthening price of lead. Blackthorn (BTR), a zinc player we used to hear a lot about, was the pick of the sector after it announced a fresh deal with Glencore regarding its Perkoa project in Africa. Blackthorn added A12 cents to A66 cents. Meridian (MII) rebounded after a painful slide, rising by A2.2 cents to A12 cents. Kagara (MZL) gained A6 cents to A63 cents, and Perilya (PEM) added A6.5 cents to A62 cents.

Iron and coal next, please.

Both coal and iron ore were mixed, but trending up. Pick of the better known coal companies were two Mines and Money attendees, Hunnu (HUN) and Xanadu (XAM). Both are busy in Mongolia. Hunnu added A15 cents last week to A$1.48 and Xanadu rose A7 cents to A57 cents. Coal of Africa (CZA) went against the trend with a fall of A11 cents to A$1.15, but Carabella (CLR) continued its strong upward run, rising by A70 cents to A$2.75. Good as all that looks, the star of the coal sector was a new player, Newland Resources (NRL), which reported promising coking coal assays from its tenements in the Bowen Basin of Queensland, and effectively doubled on the news to close at A15.5 cents.

Iron ore companies were led higher by Fortescue (FMG) which added A30 cents to A$6.28 after an upbeat talk from Andrew Forrest in Hong Kong and a revised resource estimate of 10 billion tonnes of ore. Elsewhere, Atlas (AGO) added A20 cents to A$3.52. Iron Ore Holdings (IOH) attracted plenty of interest in Hong Kong as Ocean Equities analyst, Sam Spring, did a good job talking up the company. The shares gained A29 cents to A$1.91, but did pop up as high as A$2.04 earlier in the week. Other movers included Gindalbie (GBG), up A1.5 cents to A$1.06, and BC Iron (BCI), up A10 cents to A$2.54. However, Sundance (SDL) lost support after a big share shuffle which saw the estate of the late Ken Talbot exit the company. That knocked A3 cents off the price which ended at A46 cents. Elsewhere, Brockman (BRM) eased back by A20 cents to A$5.90, while Murchison (MMX) tumbled a sharp A17 cents to A$1.06 amid doubts about plans for a new port on the west coast.

Minor metals and then off.

A mixed bag among the lesser metals. Tin companies were mixed. Venture (VMS) lost A1.5 cents to A47.5 cents. Kasbah (KAS) added A1.5 cents to A28 cents. Lithium was also a mixed bag. Galaxy (GXY) lost A9 cents to A$1.24, but Orocobre (ORE) added A27 cents to A$2.76. Iluka Resources (ILU), the biggest of the zircon miners, put in a star turn, rising by A98 cents to A$11.75.

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