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Gold, Platinum and Silver recover, but Fresnillo, Randgold and Lonmin to weaken FTSE 100

22nd Oct 2009, 5:14 pm Gold, Platinum and Silver recover, but Fresnillo, Randgold and Lonmin to weaken FTSE 100

Overview: Wall Street was off to a volatile start with the Dow Jones industrial average fluctuating around the opening level as the markets were hit by a disappointing employment update, which showed a larger than expected increase in jobless claims. The update was countered by a report from the government, showing that the US index of leading economic indicators rose 1% in September, marking the sixth straight month of growth.

The Dow Jones stabilised at about 0.3% in the black following positive Q3 reports from fast food giant McDonalds (NYSE: MCD), communications services provider AT&T (NYSE: T) and consumer products manufacturer 3M (NYSE: MMM). Pharmaceutical company Merck (NYSE: MRK) also did well with better than expected quarterly earnings and a 2% sales increase.

The technology focused Nasdaq composite went in a different direction, declining 0.5% as eBay (NYSE: EBAY) moved 6% south on a disappointing Q3 report.

The mixed start in the US stock markets did little to help the FTSE 100 climb out of the red as the UK blue chip index remained more than 1% below the opening level in late afternoon, as but a few constituents turned negative with mobile operator Vodafone (LSE: VOD), baoiled out bank Lloyds (LSE: LLOY), telecom giant BT Group (LSE: BT) and distribution and outsourcing group Bunzl (LSE: BNZL) being the only companies to gain more than 1%.
Commodities

Oil prices inched higher in the afternoon following an early slide.

December Brent Crude reached US$79.48/barrel, while US light, sweet crude for December delivery climbed back close to US$81/barrel.

However, the slight increases in oil prices had little effect on the oil & gas sector as all energy companies posted losses.

Services group Petrofac (LSE: PFC) was the leading faller with a 3.2% decline. Tullow Oil (LSE: TLW) slid 2%, while BG Group (LSE: BG) shed 1.6%.

Supermajors BP (LSE: BP) and Shell (LSE: RDSB) both declined about 1.5%.

Cairn Energy (LSE: CNE) kept its losses to a minimum.

Heritage Oil (LSE: HOIL) managed to outperform the sector with a small gain, while fellow midcaps declined with Dragon Oil (LSE: DGO) posting marginal losses after reporting a 9% increase in production in Q3 and Dana Petroleum (LSE: DNX) moving down 1.4%.

North Sea explorers Xcite Energy (AIM: XEL), which entered an agreement with service company Fugro to develop its Bentley field in the North Sea was in the lead with a 13% rally. Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Europe focused oil and gas developer Ascent Resources (AIM: AST) followed, advancing 8%. Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) and energy investor Xtract Energy PLC (AIM: XTR) added 7%.

Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) was among the leading fallers in the sector with an almost 8% slump. US focused junior Empyrean Energy (AIM: EME) lost 6.5%.

Western Europe operating oil and gas company Northern Petroleum (AIM: NOP), which just secured a new licence in the Netherlands, Gulfsands Petroleum (AIM: GPX), an oil and gas company with assets in Iraq, Syria and Gulf of Mexico, and Chinese coal bed methane developer Green Dragon Gas (AIM: GGG) all lost more than 3%.

EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) was down 3%.

Precious metals

Precious metals also inched higher with Gold climbing to US$1,060/oz, while Silver improved to US$17.58/oz. Platinum rose to US$1,363/oz.

All major mining stocks were in decline today. Gold producer Randgold Resources (LSE: RRS) was the leading faller with a 3.2% slide, while silver miner Fresnillo (LSE: FRES) shed 1.5% and platinum producer Lonmin (LSE: LMI) declined marginally.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined 1.8%.

Midcaps followed the trend with Aquarius Platinum (LSE: AQP) dropping 2.2%, while silver miner Hochschild Mining (LSE: HOC) lost 1% and gold producer Petropavlovsk (LSE: POG) declined 1.3%.

Philippines focused Metals Exploration (AIM: MML) was among the top performers in the sector with a 6.6% gain.

Nickel and platinum focused Australia and South Africa operating miner Braemore Resources (AIM: BRR), Africa focused gold deposit developer Cluff Gold (AIM: CLF) and South American based explorer Mariana Resources (AIM: MARL) all added around 4%.

Diamond miner with assets in Sierra Leone and Guinea West African Diamonds (AIM: WAD) improved 3.5%.

Uzbekistan focused gold miner Oxus Gold (AIM: OXS) was in selling mode, shedding 4%, as were Philippines focused gold producer Medusa Mining (AIM&ASX: MML), UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) and Turkey focused gold miner Ariana Resources (AIM: AAU), which lost more than 3%.

Base metals

Base metals headed in different directions today as Copper fluctuated around US$3/pound, while Nickel declined to US$8.76/pound and Zinc rose to US$1.01/pound.

Anglo American (LSE: AAL) was the only base metals focused miner to stay above the opening level.

Chilean miner Antofagasta (LSE: ANTO) and Kazakhmys (LSE: KAZ) emerged as the leading fallers with declines of 2%. Xstrata (LSE: XTA) was down 1.8%, while BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) lost 1.4%. Eurasian Natural Resources (LSE: ENRC) declined 1.6%, while Vedanta Resources (LSE: VED) ended the day with small losses.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) headed in the same direction with a 5% slide.

Australia focused coking coal producer Caledon Resources (AIM: CDN) and Indonesia operating coal miner Churchill Mining (AIM: CHL), which released its full year results today, were the leading fallers among the juniors with losses of over 7%. Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) and Tunisia focused metal miner Maghreb Minerals (AIM: MMS) followed, tumbling 6% and 5% respectively. Nickel and iron ore exploration junior Landore Resources (AIM: LND) also lost 6%.

Uranium and copper explorer Kalahari Minerals (AIM: KAH) and South American focused junior miner Herencia Resources (AIM: HER) moved down 3%.

Laterite nickel specialist European Nickel (AIM: ENK) outperformed the market with a 6.2% gain. Southern Africa focused Strategic Natural Resources PLC (AIM: SNRP) added 5%.

Banks, insurance, private equity

Most financial stocks were in decline today with the exception of partly nationalised bank Lloyds (LSE: LLOY), which went against the tide with a 3% gain after selling some of its investment operations for £35 million.

Barclays (LSE: BARC) was the leading faller with a 2% retreat. HSBC (LSE: HSBA) was close with a 1.8% loss, whole Royal Banks of Scotland (LSE: RBS) and Standard Chartered (LSE: STAN) posted declined of less than 1%.

All blue chip insurers turned negative on Thursday. Old Mutual (LSE: OML) was in the lead with a 4% slide.

Prudential (LSE: PRU) lost 3%, while Standard Life (LSE: SL) and Aviva (LSE: AV) slid 2.5%. Friends Provident (LSE: FP) and Legal & General (LSE: LGEN) were down 1.2% and 1% respectively, while RSA Insurance Group (LSE: RSA) declined marginally.

Private equity group 3i (LSE: III) ended the day with marginal losses.

Large and Mid Cap News

Ferrexpo plc (LSE: FXPO) announced that its major shareholder RPG Industries SE (RPGI) has sold 70.5 million Ferrexpo shares  to J.P. Morgan, Citigroup and Morgan Stanley in three separate Total Return Swap ("TRS") transactions. The deal represents approximately 12% of the issued share capital in Ferrexpo.

Dragon Oil PLC (LSE: DGO) said gross field production for the third quarter 2009 averaged 46,060 barrels of oil per day, a 9 percent increase over the corresponding period of 2008, and that the outlook for the remainder of 2009 is positive on the back of the oil price recovery.

Vectura Group plc (LSE: VEC) announced that the Phase III trials with NVA237 are proceeding to plan while the initiation of Phase III studies for QVA149 are now expected to occur during 2010. The drugs are designed for the treatment of chronic obstructive pulmonary disease (COPD). As a result of the trial’s progress, the receipt of the associated milestone payment of $7.5m is expected during the financial year to 31 March 2011.

International Power (LSE: IPR) announced that it has successfully completed the acquisition of Canadian wind farm developer, AIM PowerGen Corporation. International Power acquired AIM PowerGen from Renewable Energy Generation Limited (AIM: RWE) for a total value of £139m.

Anglo American plc (LSE: AAL) announced that it is going to restructure its businesses units to create a more streamlined management structure and further focus the Group on its core mining portfolio. The international mining group will create seven commodity business units (BU), additionally Anglo has decided to divest certain non-core assets.

Small Cap News

Arbuthnot (LSE: ARBB), the 175 year old broking, research, wealth management and market making bank, today reported encouraging trading results for three months ending 30th September 2009, and expressed cautious optimism about outlook for the full year 2009 results.

Gulfsands Petroleum PLC (AIM: GMX) said gross cumulative oil production from the Khurbet East  field in Block 26,  Syria, has reached 5 million barrels with minimal water production and  little pressure depletion being observed to  date.

North Sea explorers Xcite Energy (AIM: XEL) has advanced its Bentley field closer to production today, engaging oil & gas services provider Fugro Well Services to drill and test a horizontal production well on the field, intended to be the start of an early production system to deliver first oil on the field.

Mongolia-focused Petro Matad Ltd (AIM: MATD) has hired Ansai Yuehua Oil Tech Company to drill its Davsan Tolgoi prospect on Block XX in eastern Mongolia.

African focused nickel and gold exploration and development junior Nyota Minerals (AIM & ASX: NYO) reaffirmed its focus on the Muremera and its drilling programme in Ethiopia and said various parties were interested in farming into its SwaziGold project in Swaziland, which it said was the best way to further develop and finance the project.

Churchill Mining PLC (AIM: CHL) said the maiden reserve statement for its flagship East Kutai coal project (EKCP)  in Indonesia is nearing completion and will be published soon, to be followed by completion of a project feasibility study - currently 80 percent completed - by the end of the 2009 calendar year.

Rambler Metals & Mining PLC (TSX-V: RAB, AIM:RMM) confirmed the closing previously announced private placing. Rambler raised £5.5 million before expenses through the issuance of 27.5m ordinary shares at a price of 20p per share.

Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) has added another item to its Dutch assets portfolio, winning the license to another gas prospect in the West Netherlands Basin, where it already has four other exploration and production licenses.

Novel pesticides and plant nutritional products developer Plant Impact (AIM: PIM) has been granted a EUR1 million research grant from the European Union for the development of its nematicide technology and a soil delivery system.

Gulf Keystone Petroleum Ltd (AIM: GKP) said a preliminary evaluation of its Shaikan-1 well in the Kurdistan region of northern Iraq states that the well has discovered a significant resource of low gravity oil, and the range of oil  in-place for the structure is currently estimated to be a gross 1.0-5.3 billion barrels of oil, with a mean of 2.8 billion barrels.

West African focused gold deposit developer Cluff Gold (AIM & TSX: CLF) reported a 40% increase in total mineral resources at its flagship Baomahun gold project in Sierra Leone after an extensive drilling campaign with investigation into possible mineralisation extensions set to be launched shortly.

Edison Investment Research said iron ore focused investor Red Rock Resources (AIM: RRR) could be trading at a discount of up to 81% to its net asset value and had sufficient cash resources to fund its operations until the end of 2012.

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