WA mining sector rises in Jan: Deloitte

06/02/2009 - 10:59

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The state's mining sector has bucked the trend of the Deloitte WA Index in January, with stock values rising by over 3 per cent.

The state's mining sector has bucked the trend of the Deloitte WA Index in January, with stock values rising by over 3 per cent.

By comparison, the overall market capitalisation of Western Australian listed companies fell a further $2.56 billion or 3.17 per cent to close at $73 billion.

According to Deloitte Perth office managing partner Keith Jones the slight recovery in the mining sector was positive however companies will need to remain focussed on cash conservation and cost control to succeed in 2009.

"During 2008, we witnessed a sharp reversal in the commodity price boom, which when combined with the world wide credit squeeze, has and will continue to place a significant constraint on the capacity of Western Australian companies to raise capital and credit," said Mr Jones.

"The Western Australian mining sector remains dependant upon offshore demand for commodities and any expected growth in value is closely linked to demand from China and impact of the worldwide economic crisis on commodity prices."

Movers and shakers within the Deloitte WA Index during January included Grange Resources, Herald Resources and Anvil Mining.

"Grange Resources Ltd recorded a gain of 412.89 per cent in market capitalisation in January," Mr Jones said.

"The key driver behind this gain was a share issue pursuant to a Share Sales Agreement entered into for the merger of Grange and Australian Bulk Minerals," Mr Jones explained.

During the month, Herald and Anvil also recorded gains with the market capitalisation of each company increasing by 337.04 per cent and 100.00 per cent respectively.

The gain in Anvil's market capitalisation was due to the company announcing that they had reached an agreement with their project partner, Gecamines, and the DRC government on their Kinsevere Project.

Major world indices began the 2009 calendar year in decline, further eroding shareholder value. The Nikkei recorded the largest loss of 9.77 per cent, closely followed by the US S&P 500, the Australian All Ordinaries and the FTSE 100, down 5.11 per cent, 5.95 per cent and 4.61 per cent respectively.

Commodity prices had mixed movements during January. The prices of silver and lead increased by 11.24 per cent and 10.23 per cent respectively. Silver prices increased due to its appeal to investors who are worried about the financial instability.

Aluminium slumped by 12.72 per cent in January.

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