The value of Australia’s listed mining stocks dropped 7.5 per cent between January and March this year – the worst quarterly performance since June 2012. The share price falls comes in the same period mergers and acquisitionshit an eight year low in Australia, dragged down by fewer mining deals.
Commodities are also feeling the pinch with the price of gold losing its sparkle and coal asset sales in the headlines. The Reserve Bank of Australia has conceded commodity prices have declined somewhat recently but insists they are still at historically high levels. The RBA also reiterated its forecast for the imminent peak in resource investment, when it kept the key cash rate on hold this week.
Coal assets loose appeal
Amid reports coal exports fell 11.5 per cent in February, coal appears to be losing its appeal with investors and companies alike. Rio Tinto Limited (ASX:RIO) has reportedly put its Australian thermal coal assets up for sale after its new chief Sam Walsh flagged it will divest non-core operations earlier this year. The global miner is understood to be investigating selling down parts of its Queensland and New South Wales coal operations.
Whitehaven Coal Limited’s (ASX:WHC) stock has hit four year lows amid speculation former billionaire Nathan Tinkler is getting closer to offloading one of his most valuable assets, a 19.4 per cent stake in the coal producing company. The value of Mr Tinkler’s stake has fallen from about $1.1 billion to $410 million over the past year.
Exploration and production company Central Petroleum Limited (ASX:CTP) has outlined plans to expand its shale gas play and dispose of its coal assets for $1.8 million.
Silver lining to banking crises
FNN spoke with Chairman of Sprott Inc, Eric Sprott at Mines & Money in Hong Kong about his price forecasts for gold and silver. Mr Spott maintains his bullish outlook for gold, claiming the gold price will “be in the thousands somewhere - the multi-thousands in my mind” on the back of weak economic growth, money printing and banking crises. However, Mr Sprott is most bullish about silver:
“I happen to believe that this is the decade for silver, and why do I say that? Because I see what people are doing with their money in terms of investing in silver, and silver used to trade at a 16:1 ratio to gold - it trades at a 55:1 ratio to gold, but I see lots of buying in the silver market visa vie the gold market.”
To watch more of the interview click here:
Mining stocks drop 7.5% in Q1
BHP Billiton Limited’s (ASX:BHP) locally listed stock has booked its worst quarterly performance since September 2011, in the same period its first half profit fell 58 per cent and its CEO resigned.
Shares in rare earths developer Lynas Corporation Limited (ASX:LYC) slumped to a three year low amid concerns for the rare earths pricing outlook and permit uncertainty ahead of Malaysian elections.
Shares in gas exploration company Dart Energy Limited (ASX:DTE) shed a third of their value after cutting costs, revealing a company restructure and cancelling an international listing.
Approvals, deals and boosted reserves
Uranium explorer Toro Energy Limited’s (ASX:TOE) $269 million wholly owned Wiluna uranium project in Western Australia scored Federal Government environmental approval.
Australian Bauxite Limited (ASX:ABZ) has inked a deal with a major Chinese aluminium company to potentially fund the company’s first two bauxite projects.
Coal explorer Atrum Coal NL (ASX:ATU) has boosted the JORC resources at its Groundhog Anthracite Project in Canada and described the deposit as extraordinary.