Australian markets performed over the past week

There was an upward trend in share prices late last week, with better expected next week in the wake of the sharp jump in the gold price after we had closed on Friday. But, as you suggest, before we start trading on Monday we’ll have to absorb the next instalment in our never-ending tax debate. Because Sunday is the day the government unveils the details of its proposed carbon tax.

A tax which might target the mining sector.

Little doubt about that. The major worry for miners is a likely increase in the price of diesel, which the industry uses heavily in mobile fleets and remote area power generation, though we’ll have until what’s been termed “Carbon” Sunday for the detail. At that point the bean-counters will get to work, to tell us what it all means, and how it fits in with that other new tax, the super-tax on mining profits.

The other big news last week was confirmation that the resources sector in this country is being stretched to breaking point, and beyond. Troubles at Murchison Metals (MMX), one of the west coast companies planning to mine, process, rail and ship low-grade magnetite ore, was a timely reminder that cost inflation is accelerating, that infrastructure is not being developed in a timely fashion to handle Asian demand for commodities, and that workers of every sort, from skilled to unskilled, are in alarmingly short supply.

You’re concerned that the Murchison crisis could spill over into other projects?

I don’t see how it can’t, because everyone is in the same boat when it comes to finding people and equipment. Murchison discovered that a project expected to cost around A$4 billion would probably cost more than A$10 billion, which is an impossible undertaking for a company valued on the ASX at A$300 million. Little wonder its share price has crashed from around A$3.00 last year to a closing price on Friday of A69 cents.

But with all that said it was an up week. Overall, the Australian market as measured by the all ordinaries index, rose 1.4 per cent last week, with most of the gain coming on Friday. The metals and mining index did better, putting in a rise of 3.3 per cent, while gold went a step better with a gain of 3.6 per cent.

Right. Let’s move on to prices, starting with the strongest sector, gold.

As mentioned earlier, there were several strong risers among the gold companies. Gryphon Minerals (GRY) was rewarded with a rise of A24 cents to A$2.03 after it reported excellent assays from its Nogbele prospect in Burkina Faso. Best drill hits included eight metres at 38.75 grams of gold a tonne from a depth of 68 metres, and five metres at 17.41 grams per tonne. Mt Isa Metals (MET) joined in with its own discovery news, also in Burkina, reporting on intercepts of four metres at 7.45 grams per tonne, with a core of two metres in that hit grading 14.08 grams per tonne. On the market, the Mt Isa added A8 cents to A39 cents. Ramelius (RMS) was a third significant winner from good gold news, this time on the production side. The company went through the 100,000 ounce a year mark, an event which moved the shares up A12 cents to A$1.37.

Most movement among the rest of the gold companies was up, although there were a handful of declines. Crusader (CAS) rose A9 cents to A$1.27. Tanami (TAM) rose A9 cents to A97 cents. Ampella (AMX) rose A22 cents to A$2.07. OceanaGold (OGC) rose A24 cents to A$2.76. Medusa (MML) rose A63 cents to A$7.11. Integra (IGR) rose A7.5 cents to A50 cents. Silver Lake (SLR) rose A22 cents to A$2.16. And Kingsgate (KCN) rose A51 cents to A$8.44. Companies that were worse off included: Troy (TRY), down A7 cents to A$3.52, AusGold (AUC), down A10 cents to A$1.46, and Reed (RDR), down A3.5 cents to A46.5 cents.

Over to the iron ore sector now please.

Conventional iron ore producers and explorers performed well, though not as well as the gold companies. The unconventional iron ore companies, those focussing on magnetite, did less well, in the face of a potential double hit from the super-profits and carbon taxes. Iron Ore Holdings (IOH) benefited from news that its overall resource had swollen to more than one billion tonnes, helping lift the shares by A5 cents to A$1.41. Amex (XZ) continued its remarkable run by adding another A9 cents to A$1.35 on news that it has received the results of a positive prefeasibility study on its Mba Delta iron sands project in Fiji. Fortescue (FMG) was another mover of note, up A14 cents to A$6.53 as interest grows in its expansion plans. Atlas (AGO) added A13 cents to A$3.90. Iron Road (IRD) put on A4.5 cents to A90 cents, while among the leading magnetite stocks Gindalbie (GBG) crept A1 higher to A82.5 cents, and Grange (GRR) recouped some of its recently lost ground with a rise of A4.5 cents to A56.5 cents.

Base metals next, please, starting with copper.

Strength in the price of copper was only partially reflected in the copper company share prices. Sandfire (SFR) led the way with a rise of A34 cents to A$7.48. Rex (RXM) wasn’t far behind, rising A13 cents to A$2.48. Other companies on the rise included: OZ Minerals (OZL), up A36 cents to A$13.71, PanAust (PNA), up A13 cents to A$4.06, and Anvil (AVM), up A70 cents to A$6.60. Losses were posted by Hot Chili (HCH), down A3.5 cents to A58.5 cents, Resource and Investment (RNI), down A6 cents to A$1.21, and Metminco (MNC), down a fractional half a cent to A30 cents.

Nickel companies continued to firm after a few bad months. Mincor (MCR) recovered another A4.5 cents to A97.5 cents, up considerably on the A82.5 cents price of three weeks ago. Western Areas (WSA) added A31 cents to A$6.05. Independence (IGO) put on A 26 cents to A$5.84. Mirabela (MBN) firmed by A10 cents to A$1.92. Even Minara (MRE) managed a rise of A2 cents to A75 cents, despite an equipment failure at its Murrin Murrin mine which is likely to cut annual nickel output.

Zinc companies also shrugged off a long spell of negative sentiment. Kagara (KZL) gained A6.5 cents to A64.5 cents. Perilya (PEM) put on A2.5 cents to A66 cents. Blackthorn (BTR) rose by A6.5 cents to A51.5 cents. Terramin (TZN) closed the week at A29 cents for a gain of A2 cents, but did trade up to A31.5 cents on Wednesday. Meridian (MII) added A1.9 cents to A11 cents.

The energy stocks next, coal and uranium, please.

All up, in sympathy with the oil price. Best of the coal companies was Coal of Africa (CZA), which rose A18 cents to A$1.29 after it delivered some good news on a South African project.

Yes, we’ll be hearing more on that from John Wallington, the chief executive, on Minesite next week.

Look forward to it. Also on the move in coal was Whitehaven (WHC), up A28 cents to A$6.08. Metro Coal (MTE) rose A12 cents to A70 cents. Carabella (CLR) rose A19 cents to A$1.99, and Bathurst (BTU) rose A9 cents to A$1.11.

Those coal rises would appear to indicate that the carbon tax isn’t seen as too much of a worry?

Or that investors are looking through the tax and seeing a change of government, caused to some extent by the introduction of these unpopular taxes. Whatever the reason, the market has redeveloped a taste for energy companies. That was evident too in the continued rebound among the uranium explorers. Bannerman (BMN) was the star in the uranium space last week, adding A10 cents (35 per cent) to A38.5 cents. Forte (FTE) gained A1.6 cents to A7.6 cents. Berkeley (BKY) rose by A5 cents to A44 cents. Deep Yellow (DYL) had its best week for some time, with a gain of A3 cents to A19 cents, and Aura (AEE) gained A2.5 cents to A27 cents.

Minor metals to close, please.

Rare earths led the way among the more exotic mineral commodities. Lynas (LYC) announced a joint venture with Germany’s Siemens to produce high-strength magnets and its shares moved strongly as a result, closing A26 cents higher at A$2.01. Alkane (ALK) added A10 cents to A$2.28, and Arafura (ARU) put on A5.5 cents to A80 cents.

Potash companies rose marginally. South Boulder (STB) rose A12 cents to A$2.49, and Minemakers (MAK) added A3 cents to A47 cents.

Lithium companies weakened. Galaxy (GXY) fell A3 cents to A75 cents, and Orocobre (ORE) by A1 cent to A$2.08 cents.

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