Simmer and Jack, the gold producer and uranium hopeful, was the top performer of the JSE’s resource stocks in 2006, as the commodities it has interests in rose and its financing of new projects was closed.
The share price gained 375,2% from its close at the end of 2005 of R1,05 per share up to the R4,99 it closed at last Friday.
Simmers, which was a miniscule gold producer just a few years back, has nearly come good on its promise to increase gold production from 10 000oz to 400 000oz per year as it bought out the liquidated North West gold operations that DRDGold had closed, and achieved the mining right for mothballed Randfontein four shaft — formerly mined for gold and uranium.
Just recently the company listed its subsidiary, First Uranium Corporation, on the Toronto Stock Exchange raising the necessary funds to bring its projects to fruition. These include the tailings dumps at the Buffels operations (formerly North West) and re-opening Ezulwini.
The commodity bull market has definitely helped the company, increasing the viability of projects that were marginal at best just a few years ago.
The gold price has averaged over $600/oz in 2006 more than double since 2001, while spot uranium has averaged about $50/lb this year compared to $8,80/lb in 2001.
Not surprisingly, South Africa’s other listed uranium stock, sxr Uranium One, is the fourth best performer this year, gaining 175,8% up until last Friday and it will start producing its first yellow cake in the first quarter of 2007.
Sandwiched between the two, are fluorspar producer Sallies which managed to eliminate an onerous price contract and purchase a new operation in the year, and Village Main, riding the speculation wave, after Harmony Gold bought African Rainbow Minerals’ 37% stake in the cash shell. Speculation arose that Harmony may inject certain assets into the vehicle.
The 23 member Mining Index gained 42,8% in the year from 20 041 points in January to 28 618,42 by last Friday.
Northam Platinum shares experienced the highest price appreciation of 165,8% from R19 each to R50,50, as higher platinum prices helped the single mine producer generate large amounts of cash and profits.
African Rainbow Minerals gained by 135,8%, the second most as the company started to bring growth projects to account. Growth in assets such as platinum and the introduction of coal assets has helped reduce the dominance of the company’s 16% stake in Harmony which now makes up a third of ARM’s market capitalisation, compared to 63% at the start of the year.
The laggards on the Mining Index included Trans Hex and DRDGold. Trans Hex shares fell 15,3% in the year, as the company has still failed to deliver on its Angolan strategy and its South African mines experienced production problems. Meanwhile DRDGold’s shares had fallen 31,2% by last Friday, following the recent closure of the company’s Fijian gold mine.
Meanwhile, the gold index gained a mere 13,1% in the year to 2 845,97 points despite a domestic gold price increase of 37,5% from R104 000/kg to the current R143 000/kg as costs rose and index heavyweight AngloGold gained by only 1,4%.
The top performer in that index was junior developer, Aflease Gold, which gained 62,6% from R1,90 a share to R3,09. The company is busy constructing the Modder East gold mine on the East Rand.
The Platinum Index experienced a stellar year, gaining 76,4% from 44 930,98 points to 79 259,05 points. Northam was the top gainer in this index, and Lonmin, the world’s third largest producer, came in a close second with a 129,6% gain on higher prices and continued rumours of potential takeover offers.
Aquarius Platinum, although not part of the platinum index, gained by 173,1% during the year to R149,51 per share as the company continued to meet growth targets and set even higher ones for 2007. – I-Net Bridge