That Was The Week That Was …. In London, Australia And Canada.
Minews. Good morning London Correspondent. Good to have you back from the PDAC. It appears to have all been a little too much for our Canadian correspondent who has not filed any copy.
LC. Last week was an odd one. It contrasted an almost euphoric PDAC in Toronto with the worst week in many months for London’s junior mining stocks. The PDAC was massive, with approaching 15,000 attendees and a huge numbers of companies hosting stands. Even discounting the domestic Canadian explorers, there was still much to be seen, including a solid selection of London-quoted companies.
Inevitably though, it was the same familiar faces – it is disappointing that many juniors still do not realise that, in order to meet potential investors (and their money), they do have to get out and present their wares. Let’s see how many book stands for the major London show in May.
As to the market, the week’s two new issues, Oriel and Gippsland, both did well, closing 15 per cent and 39 per cent respectively above their associated stock placing prices. However, that was about all of the good news – 73 of London’s juniors closed flat or down and only twelve closed better, including the two new arrivals. The terrible news from Madrid obviously hit sentiment towards the end of the week, but even before that the stocks had continued the well established trend downwards.
Two factors seem to be driving the market: the need for cash to buy into the multiplicity of new issues and the fact that the recent run up in the market had taken most juniors way above the level where they represented good value. However, the present correction has taken the sector some considerable way below the high point and is starting to offer some interesting opportunities for those seeking significant positions. Calling a turn before the event is highly risky but that point cannot be far off (major external events aside).
No new miners are due to list in the coming week, though at least six are still lined up to arrive before the end of the month. However, RAB Capital lists on Tuesday and, since it is one of the most active supporters of junior miners in London, its performance will be closely followed.
New issues aside, the best performer of the London juniors was Greenwich Resources, up 22 per ent to close at 2.75p. Let us hope that there is some real substance behind the move, as this stock has been almost entirely passive for most of the past decade.. However, by the close there was still no news in support. Next up was Trans Siberian Gold, enjoying a small correction to close up 15 per cent , again on no news. Various oher companies also put out announcements but most of it was housekeeping which the market treated accordingly.
The largest fall was suffered by Gold Mines of Sardinia, down a further 19 per ent to 1.12p as more investors worked out that almost all of the value had been transferred into Medoro. The next worst was Jim Slater’s Galahad, down 17 percent to 17p – no news issued but maybe the return to reality was hard for some of the more dedicated followers of hype to accomodate. The company went the rounds of some fund managers last week. When asked for comment one simply raised his eyes to he heavens in mute supplication. Several other stocks suffered double digit falls, though there was nothing much in the way of specific news to justify the moves.
All in all, the London market is enduring a sharp and, for some, painful correction but the reality is that it was inevitable and this mining boom still has some considerable way to run – remember that there have still been almost no major new mineral discoveries in this cycle.
Minews. Thanks LC. Interesting stuff. Now over to Our Man In Australia here it’s also a pretty patchy week from the look of it.
Oz. Red ink everywhere, with a few splashes of black to lighten a fairly tough trading period thanks to troubles on commodity markets, currency markets, and not to mention the return of fear as a market driver in the wake of the Madrid massacre.
Minews. We know about two of those effects up here, the commodity market and Madrid effect, what’s that about currency?
Oz. Unless you’re in the middle of it you don’t notice, but over the past few weeks the Australian dollar has been falling very sharply, losing all of the gain made against the U.S. dollar since the start of the year. The Oz dollar opened in January at US75.27c, hit US79.72 on February 18, and closed last week at US72.84, which is back to where it was last November.
Minews. Shouldn’t the fall be welcomed by the mining industry?
Oz. In theory, but it is compounding a loss of confidence as commodity markets decline, and the overall effect is definitely negative.
Minews. Enough about currency, what’s happening in the real world, starting with whatever good news you have to tell us?
Oz. Kanowna Lights (KLS), on a percentage basis, was the best performer over the week, up 36 per cent, but this is really just a A1.1 cent rise to A4.1 cents thanks to a report on Wednesday about interesting drilling results from its joint venture with Abelle in South Australia’s Gawler Craton. No assays yet but it appears to have hit a section of copper-rich chalcopyrite and chalcocite.
Emperor Mines (EMP) was up A$0.18c (27per cent ) to A$0.85c on news that it is merging with South Africa’s Durban Deeps. De Grey Mining (DEG) continues to attract support for its gold project in the Pilbara region of Western Australia, rising A11c to A71c, and Reed Resources (RDR) rose A4.5c to A31c.
The most interesting increase in the week, however, was Paladin Resources (PDN), not because it gained A2.5c to A13c, more because of what it represents – the return of uranium as a speculative play-thing. Despite its base in Australia, where new uranium mines are effectively banned, Paladin has African uranium interests, and might soon get a small one in Namibia into production, just in time to catch a very interesting upswing in the world uranium price. Over the past few months the hot metal has doubled from around US$ 8 a pound to US$17 on concern that a shortage is emerging.
Minews. Who would have thought uranium would make a comeback, we’ll keep an eye on that. Now gives us the bad news.
Oz. Widespread falls really. Elkedra Diamonds (EDN), Red Metal (RDM) and Australian Magnesium (ANM) stood out because each hit new low points for the year. Elkedra dropped to A7.7c, Red Metal reached A26c, and Australian Magnesium continues its disappearing trick, down to A4.8c.
Other falls including Precious Metals (PMA), down A4.5c (22%) to A15.5c, market darling A1 Minerals (AAM), down A10c (16%) to A53c, Alliance (AGS), down A0.8c (15%) to A4.6c, and Equinox (EQR), down A6.5c to A41.
Minews. Thanks Oz. Let’s hope for better things next week.
AR1 Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
(20min delay)
