Gold producers lift overall mining market cap

JOHANNESBURG (miningweekly.com) – A new report released by SNL Metals & Mining on Monday showed some “surprising” comebacks in commodity prices during the June quarter, with gold producers seen climbing in market capital rankings and a gradual improvement of the mining sector in general.

Reviewing the market caps of the top 25 mining companies, the report showed a quarterly 13% aggregate uptick in market caps by the end of June, reflecting a general upward shift, despite a year-on-year overall decline in market cap of 14%.

The year-on-year drag was attributed to a “heavily skewed” 34.3% decline in the market value of the largest mining company in the analysis, BHP Billiton, which suffered in part from the continuing fallout over the burst tailings dam at the Samarco iron-ore mine, BHP’s Brazil-based joint venture with Vale, in November.

However, benefiting from rising gold prices and declining mining costs, gold-focused mining companies had emerged on the top end of the growth seen in market caps.

Brexit, the UK’s decision to exit from the European Union in June, had added more breathing room amid global economic uncertainty, as the major banks raised their gold price targets, with gold rallying to a two-year high of $1 323.62/oz on June 27.

SNL reported that the share prices of Barrick Gold, Newmont Mining and Goldcorp, in particular, had surged some 189%, 117% and 65% respectively since the start of this year, which had pushed their rankings up 13, 11 and four points to number five, nine and 12 respectively, when compared with the corresponding quarter a year ago.

ASX-listed BHP remained in the top spot, despite its market cap decline, followed by London-listed mining giants Rio Tinto and Glencore, ranking at number two and three respectively, with respective year-on-year decreases in market cap of 24.9% and 44.4%.

Ranking at number four and also maintaining its ranking from the preceding quarter and year was Coal India.

Other notable climbers included major gold producers London-listed Fresnillo, Russian major Polyus Gold, ASX-listed Newcrest Mining and TSX-listed Agnico Eagle Mines, coming in at higher rankings of 11, 13, 17 and 20 respectively.

“At this time a year ago, all four companies placed well outside the top 25. Share-price increases were consistent for these companies as well, ranging from 63% to 132% since the beginning of the year,” SNL said.

Low-cost producer Polyus had the largest year-on-year improvement in market cap at 139%.

Anglo American saw its market cap decline 38% year-on-year and rise 23% quarter-on-quarter, maintaining its ranking of 18 from the preceding quarter, but slipping year-on-year from a ranking of 10.

TSX-listed Potash Corp of Saskatchewan slipped five rankings quarter-on-quarter and eight rankings year-on-year following a 48% reduction in market cap when compared with the corresponding quarter the year before.