Anglo’s revival on Brazil hopes
DRASTIC times calls for drastic measures. Mining giants have had to bow to intense pressure from falling commodity prices and announce mega cost-cutting measures and painful asset disposals.
Anglo American’s shares plummeted almost 80pc over a disastrous 12-month period to their lowest since the miner listed in 1999, before chief executive Mark Cutifani bit the bullet in December and shelved the dividend for 18 months and announced plans to sell more than half its assets.
The stock fell to a recent low of 221.5p but suddenly took on a new lease of life yesterday to close 31.5p or 14pc higher at 262.95p.
Buyers reappeared amid reports that South32 is on the verge of bidding £695m for Anglo’s niobium and phosphate business in Brazil. First-round bids were due by mid-February, and Anglo was apparently seeking to complete the sale in one transaction rather than split the assets.
Controversial commodities trader Glencore, another 70pc-plus faller in 2015, rallied 6.75p or 9pc to 78.62p, on hot gossip that former Barrick chief executive Aaron Regent is among remaining bidders for Glencore’s Lomas Bayas copper mine in Chile. Regent, who runs Magris Resources, is up against a number of Chilean-focused operators that have apparently offered Glencore £690m.
Broker Investec said: ‘Given that Aaron headed Barrick when it made the disastrous £5.3bn cash bid for Equinox (Lumwana mine in Zambia) back in 2011, he might be the perfect man to offer £690m for Lomas Bayas. We are sure Glencore would jump.’
Encouraged by a strong early rally on Wall Street which recouped an initial 50 points deficit to trade 240 points higher before lunch, the Footsie closed well off the bottom. Down 130 points at a three-year low, it recovered to close 42.74 points easier at 5918.23. The FTSE 250, on the other hand, sustained a hefty fall of 282.50 points to 16,413.27.
As expected, the Bank of England left UK interest rates unchanged at 0.5pc – a level they have been since March 2009. Some economists now believe they will remain there until possibly next year, what with the renewed oil price slump, spluttering wage growth and the approach of an unsettling vote on Britain’s European Union membership.
Investors checked out of InterContinental Hotels, 179p lower at 2309p, on a JP Morgan Cazenove downgrade. Legoland and Madame Tussauds owner Merlin Entertainments fell 23.1p to 406.7p after the same broker downgraded to underweight from neutral and cut its target price to 410p.
Shareholders of Frankie & Benny’s and Garfunkel’s chain Restaurant Group suffered from acute indigestion as the shares crashed 116p or 18pc to 522p after the company said it had been a casualty of the winter floods and warned the looming European referendum and wider economic uncertainty could affect consumers’ eating habits.
Like-for-like sales for the year ended December 27 rose by a disappointing 1.5pc, which chief executive Danny Breithaupt admitted was less than the 2pc ‘the market would have liked’.
He added that the company had had 11 restaurants in the North shut for the best part of two weeks because of the floods.
Travel company Thomas Cook lost 9.8p to 109.7p amid worries about bookings in the wake of yet another suicide bomber attack in Istanbul. The company has offered customers in Germany due to visit Istanbul in the next week or two the chance to cancel or change their bookings free of charge.
Betfair fell 227p to 3644p. The group expects its merger with Paddy Power to be completed during the first quarter of 2016.
Equipment hire company Lavendon jumped 9.25p to 136.5p after the board revealed it expects 2015 results to come in at the top end of market expectations. Middle East (35pc of earnings) growth has improved to 10pc in the fourth quarter from 3pc in Q3 giving 7pc growth for the full-year. Broker Canaccord Genuity is of the opinion that the shares offer significant value.
Buyers chased Blinkx 4.25p or 27pc higher to 19.75p following better-than-expected news that it was able to break even in the third quarter. The board continues to reduce the company’s cost base and is in the process of reducing headcount.
Sound Energy slipped 0.38p to 16.62p despite an agreement with Maghreb Petroleum Exploration to acquire a 25pc working interest in three Moroccan gas permits. Anglo Asian Mining firmed 0.25p to 5.12p after reporting record gold and copper production at its Gedabek mine in Azerbaijan.
Goals Soccer Centres lost 7.5p to 137.5p following a trading update. Managing director Keith Rogers is relocating to the US to become president of the business there as the board attempts to diversify the business from its reliance on the UK market.