London's mining sector during last week

News of the weak U.S. economy rocked the capital markets and also impacted on their base metals market. Copper fell to U.S. $ 9,035 per tonne, or U.S. $ 4.10 per pound, and nickel fell to U.S. $ 22,575 per ton. Zinc closed lower at U.S. $ 2,245 per ton.

Gold fared somewhat better, as investors took flight from equities, edging higher to US$1,543 per ounce. Platinum edged higher to US$1,816 per ounce and palladium also climbed higher to US$783 per ounce. However, silver retreated to US$36.23 per ounce.

The turbulent market sent many mining shares lower, although there wasn’t much company-specific newsflow about. Amongst the majors, Rio Tinto and Chinalco have formed a joint venture to explore mainland China for world-class mineral deposits. Chinalco will hold a 51 per cent interest in the joint venture and Rio will hold 49 per cent. Even so, Rio closed 3.9 per cent lower at 4,101p.

The other majors fared little better. BHP Billiton lost 3.4 per cent to close at 2,309p whilst Anglo American closed 2.2 per cent lower at 2,927p. Xstrata closed 3.7 per cent lower at 1,371p. Shares in trader Glencore closed 2.3 per cent lower at 512p as fresh concerns were raised over the group’s corporate governance.

Amongst junior precious metals miners, Arian Silver admitted that it faces a number of operational challenges at its Mexican operations. In particular issues regarding the mill and plant, which were not specifically designed for treating ore from its San Jose mine, need to be addressed. Those problems resulted in a small loss for the mining operation in the first quarter, but were compounded by thefts of silver-bearing concentrate from the mill, which lead to lower-than-expected recoveries. Nevertheless, Arian plans to update the silver resource at San Jose in the coming months and to start another drilling programme. What’s more, the company reckons it will be able to fund operations, including ongoing exploration, from working capital and production cash flow. Arian’s shares slipped 7.3 per cent to 30p.

Vatukoula Gold Mines also had a tough time of it, as it announced increased production from its Fiji operations to 29,743 ounces of gold in the six months to 28th February. The higher gold price helped lift gross profit from £4.5 million to £5 million. However, the market had been expecting annualised production to be pushing towards 100,000 ounces and the shares tumbled 22.7 per cent to 110p.

Elsewhere, several juniors upgraded mineral resources during the week. Producer Highland Gold Mining announced that the Kyrgyz government had signed off on the company’s latest resource of 1.38 million ounces of gold at its Unkurtash project in Kyrgyzstan. The approval will facilitate the granting of a mining license and represents an important step towards mine development of the Unkurtash project. The shares edged 0.8 per cent higher to 151p.

Also on the up was Pan African Resources, which increased the total mineral resource at its Barberton gold mine in South Africa by seven per cent to 2.55 million ounces of gold. There was also a significant increase in grade, which improved by 33 per cent to 8.35 grammes per tonne. The shares climbed 4.9 per cent to 10.75p.

Elsewhere on the continent, African Consolidated Resources increased the resource at its Gadzema gold project in Zimbabwe to 912,000 ounces, as a result of ongoing drilling. The company’s total gold resource now exceeds 1.4 million ounces. But it’s not easy doing business in the land of Uncle Bob, and the shares slipped 9.4 per cent to 6p.

Much worse, though, was the performance across the way in Mozambique, from Noventa. Noventa’s never been a Minesite favourite, but the company must have lost a few other friends too this week after its shares dropped from just over 170p to a meagre 55.5p in the space of a couple of days. The reason was an announcement that delays in construction and development at the company’s Marropino tantalum mine meant that it would need to seek new funds.

Elsewhere in Africa, copper developer Discovery Metals announced a doubling of the mineralised depth of the Plutus deposit that forms part of its Boseto project in Botswana. The grades and mineralised thickness compare favourably with those at the nearby Zeta deposit and indicate that Plutus may also have potential for underground mining. The shares climbed 4.7 per cent to 83.25p.

In southern Cameroon, Afferro Mining has been encouraged by high-grade intercepts at its Nkout iron ore project, which the company believes warrant additional drilling to evaluate the potential for a direct shipping operation, which would offer accelerated cash flow. The company plans to release an updated mineral resource for Nkout later this month. The shares slipped 2.4 per cent to 104p.

It wasn’t all about the mining and resources though. There was also some corporate activity on the cards. Sylvania and Aquarius Platinum have agreed jointly to assess the Everest North UG2 platinum deposit in South Africa. Under the terms of the agreement ore will be processed through Aquarius’s Everest South metallurgical plant, and the resulting concentrate is likely to be sold to Impala Refining Services. Sylvania closed 6.6 per cent lower at 40.63p whilst Aquarius strengthened 0.9 per cent to 337p.

Meanwhile, Turkey-focused Ariana Resources has acquired four gold exploration licences in western Turkey from fellow junior Kefi Minerals. The licences include high-grade veins where previous assay results have returned up to 152 grammes per tonne of gold and 1,320 grammes per tonne of silver. Ariana slipped 2.9 per cent to 4.25p while Kefi closed 5.6 per cent lower at 6.75p.

Elsewhere, Herencia Resources has entered into an agreement to acquire a 51 per cent interest in the Guamanga project, a new copper-gold opportunity in Chile that lies approximately 750 kilometres north of Santiago. The project has potential for iron oxide, copper, and gold. The market wanted more, though, and the shares closed 15 per cent lower at 2.65p.

One deal that seems to be taking forever to conclude is Shandong Iron & Steel’s investment in the huge Tonkolili iron ore project being developed by African Minerals in Sierra Leone. African Minerals announced further progress in its discussions with Shandong over the Chinese group’s proposed investment, although finalisation of the deal remains elusive. African Minerals climbed 9.2 per cent to 545p.

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