London’s mining sector over past week

London mining sector returned to normal after massive funding flushed into the flotation of Glencore, which closed out the first week on the market opened slightly weaker at 523p. That diversion of funds meant that any sellers found the market pretty weak, and the rumour was that short sellers were also out in force capitalising on that trend, and ploughing their profits back into Glencore. If so, as those positions unwind, there might be something of a bounce.

Commodity prices trended higher, led by precious metals. Gold climbed to US$1,537 per ounce while silver strengthened nearly three dollars to US$37.95 per ounce. Platinum rose to US$1,805 per ounce and palladium climbed to US$759 per ounce.

In base metals, copper climbed to US$9,151 per tonne, or US$4.15 per pound, as concerns about supply in China dominated. Nickel continued to slide and closed at US$23,125 per tonne. Zinc closed higher at US$2,266 per tonne.

The majors all moved higher. Rio Tinto closed 3.3 per cent higher at 4,249p, BHP Billiton climbed 1.4 per cent to 2,394p, Anglo American climbed 1.4 per cent to 2,992p and Xstrata gained 2.1 per cent to close at 1,424p.

Amongst companies in the news, Lonmin became the latest miner to be struck by employee unrest as it was forced to start dismissing employees who have been taking part in industrial action at its Karee operations since 17th May. Karee employs around 9,000 people and the company plans to start recruiting replacements once the dismissals are complete. Markets shrugged of that news, and the shares followed platinum higher, closing up 3.2 per cent at 1,572p.

There was happier news, though, for Eastern Platinum. Shares in Eastplats rose two per cent to 63p after it was able to resume operations at its Crocodile River mine after it reached a deal the National Union of Mineworkers on workers’ wages. Operations are returning to normal after the end of the occupation by 155 employees and a strike by a further 480 employees, which disrupted production and damaged underground infrastructure. Management estimates that this action will result in lost production of 7,000 ounces of platinum group metals.

Gold producer Kirkland Lake Gold achieved record production of 10,175 ounces in April from its operations in Ontario, Canada. Quarterly production of over 10,000 ounces lifted total output in the year to April to 81,860 ounces. These are both record production figures for the company, and the shares closed 2.7 per cent higher at 906p.

In Africa, Goldplat has completed the purchase of the Banka mining lease in Ghana from Gulf Coast Resources. Banka has a 10-year renewable mining lease for gold and associated minerals over an area of 29 square kilometres. Goldplat has previously been viewed as a waste recycler, but this is the company’s third mining project, so it’s now getting established among the ranks of the true miners. The company settled the US$1.6 million consideration out of internal resources. The shares climbed 3.6 per cent to 11.53p.

Meanwhile, Greenland-focused Angel Mining has completed commissioning of the process plant at its Nalunaq project and is now producing gold. Production should ramp up to approximately 2,000 ounces of gold per month. Meanwhile, the company continues to progress construction of the upper terminal at its flagship Black Angel zinc mine. The shares slipped 2.8 per cent to 3.28p.

Elsewhere, iron ore pellets exporter Ferrexpo issued a positive trading statement which confirmed that it has maintained production at full capacity and has increased sales. It’s also got rising input costs under control, in spite of higher commodity prices and rising inflation in Ukraine. The group confirmed that demand remains strong in a strengthening price environment, and that it is moving to pricing agreements that are adjusted quarterly in arrears with a one month lag. The shares closed 1.2 per cent lower at 436p.

Amongst junior explorers, Stratex International has formed a strategic alliance with major copper producer Antofagasta to undertake exploration for copper and copper-gold deposits in Turkey, outside of Stratex’s existing licence areas. Under the agreement, Antofagasta will fund US$1 million during the first 16 months whilst Stratex manages initial target generation and exploration. Stratex slipped 1.1 per cent to 6.97p whilst Antofagasta climbed 8.7 per cent to 1,312p.

Mwana Africa was one of the week’s biggest losers. Its shares shed nearly nineteen per cent to close at 4.88p after it raised £9.27 million via an institutional placing at 5p. The proceeds will help fund the drilling programme at the Zani-Kodo gold project and will pay for further exploration at the Semhkat base metals concessions in the Democratic Republic of Congo.

In the far east of Russia, Amur Minerals has closed an early settlement for the equity swap agreement entered into with Lanstead Capital last July. This has allowed Amur to receive advance funds of £2.07 million. That positions the company nicely for the next stage of development of its Kun Mani nickel project, and the shares climbed nearly nineteen per cent to 15.41p.

In South America, Herencia Resources has returned further encouraging exploration results from its Paguanta project in northern Chile, where results showed up to 2.6% per cent copper and 202 grammes per tonne of silver from surface sampling. That, say the boffins, considerably enhances the porphyry prospectivity of the project. The news was positively received and the shares climbed 26.5 per cent to 3.1p.

Meanwhile, sub-sea pioneer Nautilus Minerals has launched a marketed public offering to raise around C$150 million to fund the development of the off-shore Solwara 1 project in Papua New Guinea, including its share of the costs of the vessel. Final pricing will be determined by market conditions and the shares firmed 2.8 per cent to 159p.

Finally, a faint light flickered at the end of a very long tunnel for EMED Mining in its seemingly-endless efforts to secure permitting to restore production at the Rio Tinto copper mine in Andalucia, Spain. The company has received formal approval from the Department of Culture and Heritage of the Andalucían Government for its restart plans. This followed the government’s recent announcement that it would endeavour to facilitate the mine restart. EMED climbed 8.9 per cent to 10.89p.

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