Australian Markets performed over the past week

It might look that way if you use only the all ordinaries index as a guide. But a one per cent overall fall by the broadest measure of the market hid what was a modestly firmer tone among the miners, and an ever better tone among the gold companies. The metals index managed to post a rise of half a per cent. The gold index was up by 1.6 per cent thanks to the higher US dollar gold price, which offset a recovery in the exchange rate. The Australian currency rose by US2 cents over the week.

Before running through prices, perhaps a quick tour of the major news events among the miners.

Tax, naturally, remains high on the agenda, though this week there was an interesting twist as the national government in Canberra hammered away at its problem state, Western Australia, and WA in turn, said it was turning its face more towards Beijing than Canberra.

Now that is interesting, because WA is where you’re sitting.

Precisely, and it is becoming a very interesting place to be as the mining boom, mark two, gathers pace. A few numbers tell the story of Australia’s two-speed economy, as the minerals and oil-rich west steams away from the rustbelt manufacturing east. Five years ago, WA accounted for around 30 per cent of Australia’s export income. That number, thanks to high iron ore and petroleum prices, has risen to 42 per cent, and by the end of the decade is tipped to pass 50 per cent. What makes that growth trajectory more significant is that so much of the country’s income is coming from a state with just 10 per cent of the population.

Isn’t WA the state that has an active secession movement?

We do, but no-one takes it seriously at a political level. It’s a totally different matter at the financial level, though, which is why the comment about looking more to Beijing than Canberra holds weight. One part of Australia is at the epicentre of a boom, and welcoming it. The other part is in a funk and can only think how to tax the bit that is performing strongly, without joining in the game by encouraging resource development in the south-east.

You’re in for interesting times, hopefully without the troubles that the famous Chinese curse can bring.

Oh, I think the interesting times have arrived. They’re just going to get more interesting.

Enough chit-chat, time for prices, starting with the best of the movements and any companies that are doing something newsworthy.

Among the gold companies that caught the eye last week was PMI Gold (PVM) which we took a close look at two weeks ago. On Wednesday PMI it reported a fresh suite of encouraging assays from its Obotan project in Ghana. The best intersections included a whopping 125 metres at 2.18 grams a tonne from a depth of 271 metres, with a rich eight meter zone towards the end of the hole running at 19 grams per tonne. The data from the current drilling will lead to a resource upgrade in the September quarter. On the market, PMI added A11 cents to close the week at A56 cents, but did get as high as A59.5 cents in early Friday trade, which is handsomely higher than A48 cents the shares were at when Minesite gave the stock a kick along.

Hopefully a few readers took note. Back to prices now, please.

There was a solid recovery from Allied Gold (ALD) which had been sold off as it contended with a few issues at its Pacific island mines. It gained A5.5 cents to A51.5 cents. Elsewhere, Cobar Consolidated (CCU), the pure silver miner emerging in New South Wales, added A3.5 cents to A88 cents after receiving government development approval for its Wonawinta mine. Meanwhile Medusa (MML) steamed ahead thanks to presentations made to London investors during the week, closing the week at A$8.24 for a gain of A34 cents, just short of its all-time high of A$8.38.

Good price-news was harder to find outside of the gold sector, although one eye-catching move was a very sharp rise by Territory Resources (TTY), a small iron ore miner which has accepted a cash takeover offer from South Africa’s Exarro. That deal which boosted Territory’s price by A17.5 cents to A45.5 cents. Another company with iron ore we rarely hear from, Altura Mining (AJM), had a good week too, putting in a rise of A3.5 cents to A21 cents. Altura also has some coal, and speaking of which, two pure coal companies also generated a bit of investor interest. New Hope (NHC) hit a fresh 12 month high of A5.26, up A29 cents over the week, and Aston (ATZ) also reached a fresh high of A$9.90, up A49 cents.

Let’s shift across to a call of the card, starting with gold.

Most of the other moves were modest, but the direction was positive. St Barbara (SBM) rose A6 cents to A$1.87, while its takeover target Catalpa (CAH) added A2 cents to A$1.74. Azumah (AZM) rose by A2 cents to A56 cents. Gryphon (GRY) gained A4 cents to A$1.57. Kingsgate (KCN) continued its recovery with a rise of A21 cents to A$7.94. Northern Star (NST) put on A 2.5 cents to A40 cents. Beadell (BDR) added A3.5 cents to A83 cents. Gold Road (GOR) rose by a tiny half a cent to A60 cents, but is attracting increased attention as a drilling program at its Yamarna project gathers pace, and might be worth a closer look soon. Offsetting the gains were a number of gold companies in retreat. Adamus (ADU) lost A4 cents to A64 cents. Perseus (PRU) fell by A4 cents to A$2.68. Chalice (CHN) slipped A3 cents lower to A31 cents. Focus (FML) ended the week at A7.3 cents, down A0.2 of a cent, but with some interesting developments underway, and another company worth a closer look.

Base metals next, please.

It was a mixed picture in the copper space. Nickel trended down, and zinc stocks trended up, just. The best of the copper companies was Sandfire (SFR) which added A26 cents to A$6.90. Rex (RXM), the other near-term mine developer, rose by A8 cents to A$2.67. Other movers included CuDeco (CDU), up A10 cents to A$3.28, Exco (EXS), up A2 cents to A65 cents, and Horseshoe Metals (HOR), up A1 cent to A27.5 cents, and worth keeping an eye on. Offsetting the rises were declines by OZ (OZL), down A5 cents to A$1.34, Marengo (MGO), down A1 cent to A30 cents, and Metminco (MHC), down A2.5 cents to A35.5 cents. Hot Chili (HCH) called for suspension pending an announcement with a last sale at A61 cents.

Mincor (MCR) was the best of the nickel companies, but its rise of just A1 cent to A$1.09 tells the story. Interest in Mincor was sparked by its move into a gold project in Papua New Guinea. After that it was all down, or flat. Western Areas (WSA) lost A10 cents to A$6.15. Panoramic was A6 cents lighter at A$1.94. Minara (MRE) eased back by A3.5 cents to A74.5 cents, and Mirabela (MBN) slipped A5 cents lower to A$2.01.

Blackthorn (BTR), surprisingly, was the best of the zinc companies despite losing BHP Billiton as a partner in an exploration project. It added A1.5 cents to A56 cents. Perilya (PEM) firmed by A1 cent to A59 cents. Prairie Downs (PDZ), rose by A1.5 cents to A18.5 cents, and Ironbark (IBG) was A1 cent stronger at A28 cents.

Over to iron ore and coal, please.

After Territory and Altura most of the iron ore moves were negative. Atlas (AGO) fell A12 cents to A$3.60. Murchison (MMX) fell A8.5 cents to A$1.85. Grange (GRR) fell A3 cents to A59 cents. Gindalbie (GBG) fell A3.5 cents to A94.5 cents. Fortescue (FMG) fell A4 cents to A$6.40 after dropping a big debt raising that had been planned in the US, a sign that the appetite for high-risk bonds has faltered in New York.

Coal companies traded on a more positive note. Aside from Aston and New Hope, which we’ve already mentioned, other moves came from Bathurst (BTU), up A13 cents to A$1.20, Stanmore (SMR), up A5 cents to A$1.27, and Coal of Africa (CZA), up by half a cent to A$1.18. Macarthur (MCC) went the other way, shedding A33 cents to A$11.66, and Coalworks (CWK), slipped A5 cents lower to A69 cents.

Uranium and minor metals to close, please.

There wasn’t much good news among the uranium companies, despite a small increase in the price of uranium. Berkeley (BKY) was hammered on news of trouble with its partner in Spain, plunging a painful A34 cents to A48.5 cent. Other falls included Manhattan (MHC), down A5 cents to A55 cents, Bannerman (BMN), down A3 cents to A31 cents, and Energy and Metals (EMA), down A1 cent to A17 cents.

The minor metals were surprisingly quiet. Rare earth companies effectively marked time. Lynas (LYC) slipped A1 lower to A$2.28, while Alkane (ALK) added A1.5 cents to A$1.84. There was a mixed picture in tin. Venture (VMS) rose a healthy A6 cents to A44 cents, while Kasbah (KAS) lost half a cent to A24.5 cents. Wolf (WLF), which is more a tungsten than tin play was steady at A39.5 cents. Lithium companies weakened, as did the potash players.

Source