Miners hit as gold, iron ore fall to multi-year lows

AS commodity prices continue to fall, gold and iron ore stocks were among the worst performers on the ASX this morning, with Atlas Iron shares falling to the lowest point since it became a producer.
Miners hit as gold, iron ore fall to multi-year lows Miners hit as gold, iron ore fall to multi-year lows Miners hit as gold, iron ore fall to multi-year lows Miners hit as gold, iron ore fall to multi-year lows Miners hit as gold, iron ore fall to multi-year lows

 

Kristie Batten

At around midday AEDT, Atlas Iron was down by almost 9.3% to A24.5c, its lowest price since 2005 and extending losses this year to over 78%.
 
BC Iron was down 2%, Mount Gibson was down 3% and Fortescue Metals Group was down by more than 3.6%.
 
It comes as iron ore hit a fresh five-year low overnight of $US76.46 per tonne after China moved to curb pollution ahead of the APEC summit this week by curtailing some steel production in Hebei.
 
Most analysts are confident that the price will improve before the end of the year.
 
“While the macro backdrop remains subdued relative to recent years, we continue to look for some degree of steel mill restocking of iron ore to support prices into year end,” RBC Capital Markets said.
 
Meanwhile, the gold price continued its recent slump overnight, with Comex gold for December delivery falling by another 2.1% to $1141.90 an ounce, a more than four-year low.
 
Comex gold has dropped around 7% over the past week after the Bank of Japan expanded its annual monetary base and increased its bond-buying program.
 
Economists from Patersons Securities warned investors to stay away from precious metals for now, while ANZ Research declared yesterday that the bears seemed to be “well and truly in charge”
 
“With increasingly negative sentiment in the gold market presently, it is difficult to find any pockets of optimism,” ANZ said.
 
Spot gold was last trading at $1143.26/oz, while the Australian dollar spot price was $A1334.86/oz.
 
Australian gold producers fell sharply on Monday and were being punished once again today.
 
Evolution Mining, Northern Star Resources and Resolute Mining were all down around 5% this morning, while Newcrest Mining and Regis Resources fell by more than 1% each.
 
It comes after Regis was upgraded to buy from hold at UBS, Hartleys and Deutsche Bank after a strong quarterly report last week.
 
Regis is a preferred pick in the gold space of Morgans and Macquarie due to its low costs and strong balance sheet.
 
Morgans also likes Evolution and Beadell Resources and upgraded Saracen Mineral Holdings to add due to recent share price weakness, while Macquarie said its other top picks of Northern Star, Saracen and Evolution remained “comfortably cashflow-positive at spot prices”
 
On a global scale, Macquarie said it was increasingly focused on gold companies with solid cornerstone assets and strong management teams.
 
“We believe that cornerstone assets will be the focus of merger and acquisition and valuation for the rest of the year.
 
“A number of senior producers have limited growth in front of them and this sets the stage for buying producing mines or buying one of the few projects that is permitted,” Macquarie said.
 
“Lower down the food chain, we also see the sector consolidating with intermediate producers growing via acquiring junior producers with quality assets.”

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