FMG powers Deloitte WA Index
7th November 2010
Powered by a massive $3.4bn (21.4%) gain in the value of Fortescue Metals Limited (FMG) the market capitalisation of Western Australian listed companies which comprise the Deloitte WA Index increased by 4.9% in October 2010, closing the month at $175.5bn.
Commodity prices have again provided the base for growth across the mining sector and with continued improvement in performance and positive quarterly results, the upward trend in corporate values has continued.
Managing Partner of Deloitte in WA Keith Jones said the combination of sustained commodity demand, improving international confidence in economic recovery and continued progress on underlying operations is improving sentiment in the equities market. .
“We have also seen strong growth in many of the world’s major indices in the month of October,” Mr Jones said.
The S&P 500 rose by 3.4% amidst improving employment statistics in the United States and the impending federal decision to review monetary stimulus. The FTSE 100 and All Ordinaries, with increases of 2.2% and 2.1% respectively performed well, however, the Nikkei was undermined by uncertainty surrounding monetary policy and weak corporate performances, and saw a drop of 3.7%.
Palladium and silver were once again the stand out performers of the precious metals increasing by 14.67% and 13.82% respectively, while gold continued to benefit from the weaker US dollar and increased for the third consecutive month. Uranium gained a strong 11.83% for the month and despite a price drop in the later stages of September, the majority of the base metals recorded solid gains with gains in zinc (10.62%), lead (7.75%), iron ore (6.88%), tin (5.37%) and copper (2.26%). Aluminium and nickel on the other hand, decreased by 0.24% and 2.08% respectively.
The strength of commodities was apparent in the ‘Movers and Shakers’ of October 2010, being Marengo Mining Limited, Conquest Mining Ltd and Coalspur Mines Ltd, with increases in market capitalisation of 50.0%, 46.9% and 43.9% respectively.
Marengo Mining Limited recorded an increase in market capitalisation of $66m, to close the month of October at $199m. This growth stemmed from an increase in share price by 58.8% during the month, driven by the recent announcement of the intention to enter into formal agreements with China’s Nonferrous Metal Industry’s Foreign Engineering and Construction Co. Ltd (NFC). A Memorandum of Understanding was signed with NFC for the financing, construction and development of the Copper/Molybdenum/Gold Yandera Project, located in Papua New Guinea.
The market capitalisation of Conquest Mining Ltd increased by $88m for the month of October, to end at $276m. The primary contributor to this increase was the announcement of a share placement, intended to raise capital proceeds of $45m. These proceeds will fund the company’s proposed acquisition of HSK Gold Australia Pty Ltd, as well as going towards the optimisation studies and exploration expenditure at Mount Carlton and the Pajingo Gold Mine sites. The company also succeeded in increasing its relevant interest in North Queensland Metals to over 90%, which, along with positive high grade gold results from Mount Carlton, contributed to an increase in share price of 10.0%, to close the month at $0.55 per share.
Coalspur Mines Ltd closed the month of October 2010 with a market capitalisation of $505m, an increase of $154m from the previous month. The completion of $80m worth of equity placements spurred this growth, coupled with an increase in share price of 24.7% over the month of October. The acquisition of New Coal Leases, announced in June 2010, was also settled ahead of schedule, contributing a coal resource of 438 million tonnes with an associated mine permit. The acquisition will create the opportunity to advance the development of one of the largest thermal coal mines in North America.
Fortescue Metals Group made a number of announcements during the month of October, which saw a positive response from the market. These included the refinancing of the Company’s existing project-based Senior Secured Notes with a US$2.04 billion corporate bank facility; the achievement of a new export benchmark; and the successful closing out of a shipping dispute with Armada (Singapore) Pte Ltd.